Appendix 4E
Preliminary final report
1 Company details
4 Control gained over entities
Name of entity
TZ Limited
ABN
26 073 979 272
Reporting period
For the year ended 30 June 2022
Previous period
For the year ended 30 June 2021
Not applicable.
5 Loss of control over entities
Not applicable.
6 Dividends
2 Results for announcement to the
Current period
market
Revenues from ordinary activities
up 31% to $21,428,560
the current financial period.
There were no dividends paid, recommended or declared during
Earnings before interest, tax,
depreciation and amortisation,
adjusted for impairment
(‘adjusted EBITDA’)
Profit from ordinary activities after
tax attributable to the owners of
TZ Limited
Profit for the year attributable to
the owners of TZ Limited
up 831% to $1,278,529
Previous period
There were no dividends paid, recommended or declared during
the previous financial period.
up 103% to $42,896
up 103% to $42,896
7 Dividend reinvestment plans
Not applicable.
Dividends
8 Details of associates and joint venture
There were no dividends paid, recommended or declared during
the current financial period.
Comments
The profit for the consolidated entity after providing for income
tax amounted to $42,896 (30 June 2021: loss of $1,658,204).
entities
Not applicable.
9 Foreign entities
Details of origin of accounting standards used in compiling the
The earnings before interest, tax, depreciation and amortisation
report:
(‘EBITDA’), adjusted for impairment, was a profit of $1,278,529 (30
June 2021: $137,364).
Not applicable.
EBITDA is a financial measure which is not prescribed by
Australian Accounting Standards (‘AAS’) and represents the profit
under AAS adjusted for non-specific non-cash and significant
items. The directors consider adjusted EBITDA to reflect the core
earnings of the consolidated entity.
Additional information supporting the Appendix 4E disclosure
requirements can be found in the Annual Report which contains
the Directors’ report and the 30 June 2022 Financial Statements
and accompanying notes.
3 Net tangible assets
10 Audit qualification or review
Details of audit/review dispute or qualification (if any):
The financial statements have been audited and an unmodified
opinion has been issued.
11 Signed
As authorised by the Board of Directors
Net tangible assets per
ordinary security
Reporting period
Previous period
Cents
1.36
Cents
(1.74)
Peter Graham
Chairman
As at 30 June 2022, the net tangible assets per ordinary security
31 August 2022, Sydney
of 1.36 presented above is inclusive of right-of-use assets and
lease liabilities.
TZ Limited Appendix 4E 2022 ANNUALREPORT Contents
Corporate
directory
Highlights
and overview
Chairmans
message
Chief Executive
Officers’ message
Directors’
report
Remuneration report
(audited)
Auditor’s independence
declaration
3
4
6
7
9
13
20
Statement of profit or loss and
other comprehensive income 21
Statement of
financial position
Statement of
changes in equity
Statement of
cash flows
Notes to the financial
statements
Directors’
declaration
Independent
auditor’s report
Shareholder
information
22
23
24
25
52
53
57
TZ Limited Annual Report 2022 2
General information
The financial statements cover TZ Limited as a
consolidated entity consisting of TZ Limited and
the entities it controlled at the end of 30 June
2022. The financial statements are presented
in Australian dollars, which is TZ Limited’s
functional and presentation currency.
TZ Limited is a listed public company limited by shares,
incorporated and domiciled in Australia. Its registered office and
principal place of business are:
Registered
office
Level 2, 40 Gloucester Street
The Rocks NSW 2000
Principal
Australia
Level 2, 40 Gloucester Street
place of
business
The Rocks NSW 2000
USA
999 E. Touhy Avenue, Suite 460
Des Plaines, IL 60018
Singapore
Suntec Tower 2, 9 Temasek Boulevard
#29-01 Singapore 038989
Europe
New Road, Oxford
OX11BY, United Kingdom
A description of the nature of the consolidated entity’s
operations and its principal activities are included in the
Directors’ Report, which is not part of the financial statements.
The financial statements were authorised for issue, in
accordance with a resolution of Directors, on 31 August 2022.
The Directors have the power to amend and reissue the financial
statements.
Corporate Governance Statement
The Directors and management are committed to conducting
the business of TZ Limited in an ethical manner and in
accordance with the highest standards of corporate governance.
TZ Limited has adopted and substantially complied with the
ASX Corporate Governance Principles and Recommendations
ASX code
TZL
ABN
26 073 979 272
Directors
Peter Graham
John D’Angelo
Simon White
Company
Mathew Watkins
secretary
Annual
General
Meeting
Thursday, 17 November 2022
Share
Computershare Investor
register
Services Pty Limited
Yarra Falls
452 Johnston Street
Abbotsford VIC 3067
T 1300 787 272
F +61 3 9473 2500
Auditor
PKF Brisbane Audit
Level 6, 10 Eagle Street
Brisbane QLD 4000
Solicitors
K&L Gates
Level 31, 1 O’Connell Street
Sydney NSW 2000
Bankers
St George Bank Limited
Level 3, 1 Chifley Square
Sydney NSW 2000
Stock
TZ Limited shares are listed
exchange
on the Australian Securities
listing
Exchange
Website
www.tz.net
TZ Limited’s public website
contains information regarding
its products and the company,
including an investor services
(Fourth Edition) (‘Recommendations’) to the extent appropriate
section
to the size and nature of its operations.
Email
info@tz.net
The Corporate Governance Statement, which sets out the
corporate governance practices that were in operation
during the financial year and identifies and explains any
Recommendations that have not been followed, was approved
at the same time as the annual report can be found at
tz.net/investors/corporate-governance
TZ Limited Annual Report 2022 3
Highlights and overview
R E V E N U E
$21.4 m
31%
A D J U S T E D E B I T D A
$1.3 m
831%
P R O F I T
$43 k
103%
Revenue
AUD$m
EBITDA
AUD$m
Profit
AUD$m
25
20
15
10
5
0
2018 2019 2020 2021 2022
2018 2019 2020
2021 2022
2
1
0
-1
-2
-3
-4
2018 2019 2020 2021
2022
5
0
-5
-10
-15
Profitable, scalable operations
Broader growth positioning
After several years focused on reducing operating costs,
Revenue growth has been driven by effective conversion of more
operational restructuring and product rationalisation, the focus
focussed sales efforts initiated in FY21.
has shifted in FY22 to more effectively and efficiently delivering
customer-service expectations and clarifying customer value
propositions.
During FY22, the business has also begun the process of
repositioning its core offer to leverage growing market
awareness of the demand for Edge-related IT solutions – namely,
Resolution of product and service performance issues has
information management systems that capture and integrate
resulted in both a substantial increase in client satisfaction and
data at exchange points in geographically distributed digital
substantial reductions in customer service costs associated with
networks.
problem resolution.
Broadening and clarifying the potential value to be leveraged
Product rationalisation has delivered a more standardised set
from TZ’s core Edge Logistics IT capabilities, rather than focusing
of software modules, framed around primary customer use-
on the physical role of TZ lockers as edge interface exchange
cases and readily customised to the customer-specific operating
points, has created a much broader platform for future growth.
environment.
TZ Limited Annual Report 2022 4
TZ Edge Logistics solutions
The new TZ Edge Logistics solutions positioning
more clearly reflects customer demand drivers,
Empowering the interface between person and
object
wider market growth potential, adjacent
market opportunities and core business
capabilities.
While smart lockers remain a key element of TZ Edge Logistics
solutions, the new positioning emphasises the opportunity for
customers to leverage TZ’s proprietary information management
and analysis capabilities to create value in a wide variety of
innovative ways, justifying widespread integration of TZ software
modules into customers’ logistics information management
systems.
The rapid development of digitally enabled management tools
has enabled individual items, such as IT hardware, postal items,
physical parts, stored documents and so on, to be identified
and inventoried through automated tracking systems. This
has opened the door to a wide variety of efficiency-creating
innovations in enterprise resource and logistics management.
Viewed from this perspective, TZ’s Smart Locker management
systems represent important exchange points in the
geographically diverse networks of places where items are
deposited or collected by people, in their transition from
businesses to buyers, postal senders to receivers, warehouses to
distribution points, and so on.
The core value of TZ Edge Logistics solutions lies in their
proven, advanced capability to empower two key operational
management capabilities:
› Auditable tracking – the ability to capture auditable data that
proves an individual has deposited or collected an item at a
particular time.
› Access management – the capacity to provide an identified
individual with unique access to a particular item.
These core capabilities underpin each of the distinct use-cases
that now frame our customised customer solution offers,
including:
›
›
›
Corporate personnel storage
Corporate asset management
Chain of custody
› Distribution logistics
›
Postal logistics
TZ Limited Annual Report 2022 5
Peter Graham
Non-Executive Chairman
Chairman’s message
The TZ Limited Board embarked upon a
restructuring three years ago aimed at
removing the debt and making the
operations profitable.
The Board is pleased to report a second
consecutive year of positive EBITDA in
announcing FY22’s outcome of adjusted
EBITDA of $1,278,529 (FY21 EBITDA $137,364).
TZ intends to build on these results in FY23. Focus will be on
increasing earnings and repaying the last remaining debenture
($2.5m), thus removing the security over the Company. It is the
Company’s aim to achieve debt repayment within the near term.
The challenging issues of “supply chain” remain. These issues led
the company to increase inventory from circa $1m to nearly $3m
– this was to avoid delays in deliveries and instalments through
the period of supply chain disruptions. TZ maintains a healthy
cash balance (over the past few months it ranges between $1.5m
to $2m) and a surplus of Accounts Receivable over Accounts
Payable (recent range $1.5m to $2m). The above, coupled with
forecast positive cashflow, should see the company retire the
debenture once satisfied that remaining liquidity would be
“sufficient working capital”.
The Board believes the biggest positive or step forward in FY22
was the building of the software platform income stream. The
management team developed a product that is being positively
accepted in the marketplace. The Monthly Recurring Revenue
(MRR) has grown to circa $260,000 per month with another
$26,000 per month to be added near term from the recently
announced Ricoh agreement (23 August 2022). Management
has the objective to grow this to around $500,000 per month
over the next 18 months.
The predominant risk going forward is the Company’s increased
cost base. The Company needed to build a more robust
infrastructure to cater for overall growth (revenue and earnings).
This entailed an increase in the number of employees (especially
the introduction of Operations in India) and significant software
development costs. The Board and management decided
the expansion necessary if the company was to grow without
substantial issues along the way.
Lastly, I want to conclude by acknowledging that the Board and
management are acutely aware that shareholders want a return
on their investment (especially given recent capital raises to
reduce debt were done at 12 and 12.5 cents). This is driving the
TZ team. In FY23 we are determined to reward shareholders
with an appreciation in the company’s value, resulting in a higher
share price.
TZ Limited Annual Report 2022 6
Chief Executive Officer’s message
At the end of my first year as Chief Executive
Officer (CEO), I am pleased to report that we
have made substantial progress towards
mitigating operational risks and putting in
place the systems and practices essential to
restore scalable profitability to the global
operations of TZ.
A solid platform for growth
The management team are assured that customer confidence
and substantial simplification of our solution-based service
offers provides the operational platform needed for sustained
growth in coming years. To gain further competitive advantage,
our aim is now to disrupt the traditionally hardware-focussed
Smart Locker marketplace by reframing customer opportunities
in terms of delivering significant operational advantages through
TZ API integration into their enterprise management systems.
A number of key initiatives, enabled by our centralised and
efficient management systems, will be critical to the scalable
development and realisation of new business opportunities –
in relation to both cross-selling within existing customers and
on-boarding of new customers. These include a broader, global
approach to leveraging third party hardware and business
management services, continued development of critical
sales partnerships, increasing focus on selling our TZ Cloud
subscriptions that generate monthly, recurring revenue streams,
and further innovating the scalable adaptability of core software
modules to address customer use-case opportunities.
Scalable, customisable, quality outcomes
In making the shift from Smart Locker hardware manufacturers
and suppliers to Edge Logistics solutions. TZ looks forward to
leveraging our hard-won reputation for innovative outcome
delivery at the highest level of quality while substantially reducing
the risks and costs associated with meeting or exceeding these
outcome expectations.
Focused sales delivery
A primary driver of our successful turn-around in revenue growth
during FY22 flowed from efforts invested to focus and streamline
sales around profitable opportunities in core areas of existing
strengths. This has seen an increase of 31% in customer sales
revenue, from $16.4M in FY21 to $21.4M in FY22.
Further effort has been invested during FY22 to frame our
customer solution offers more clearly around use-case value
propositions. These align with our standardised software
modules, establishing client expectations that can be delivered
more efficiently and reliably in a scalable way.
Mario Vecchio
Chief Executive Officer
M O N T H L Y R E C U R R I N G R E V E N U E ( M R R )
MRR
AU$k
500
400
300
200
100
0
Growth
projection
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
FY22
FY23
TZ Limited Annual Report 2022 7
Chief Executive Officer’s message continued
Integrated global management systems
and disciplines
Outlook
The staged process of operational management evolution
The final step towards globally consistent, best-practice
towards a sustainable and scalable level of performance
Enterprise Resource Planning (ERP) and Customer Relationship
consistent with globally competitive best practices will continue
Management (CRM) systems has enabled substantial increases
into the new financial year. It is anticipated that profit growth will
in operating efficiencies, risk mitigation and improved
increase through our software subscription revenue growth and
management decision making.
the scale out of TZ Cloud Services, secured in part by stronger
For example, FY22 saw the first globally integrated introduction of:
relationships with key selling partners.
›
›
Integrated, real-time financial reporting
Inventory management
› MRR subscription tracking
›
Staff manage approvals (cost oversight)
Improved product delivery experiences
A critical project management shift in FY22 has been the move
away from on-site assembly, programming and testing of
customised locker systems, to production manufacturing and
testing that enables functional installation with great efficient
outcomes, in a client friendly way. This has effectively minimised
many of the customer relationship management issues
TZ Cloud
One of our top priorities for customer relationship management
will be to convert existing and established customer
arrangements from perpetual software licencing to recurring
revenue-based subscriptions (MRR). This increasing familiar
approach to servicing for software-driven solutions is both
simpler and less costly to manage, and supports a deeper level of
integration into customers’ recurring operating budgets (i.e. as
opposed to CAPEX).
This transition is supported by our rapidly developing Cloud-
based deployment of information management software and
API capabilities. We anticipate that the company’s MRR will grow
experienced previously.
at 50% per annum.
Rebuild our core technology capabilities
Partnerships to drive growth
Cost reducing efforts over previous years had seen our
technology capabilities reduced to a bare minimum. In 2022
we have begun the process of rebuilding a team capable of
developing and maintaining an integrated stack of core software,
and translating it in to use case-based application modules that
are readily adaptable to each new client application. As the focus
shifts to operational information management solutions, we are
also strengthening our Application Programming Interface (API)
capabilities to enable more efficient and painless integration into
A key source of new business opportunity will be built on
relationships with strategic partners who look to TZ to provide
integrated capabilities in their own value-adding offers. The
rapid simplification and standardisation of our core capability
delivering modules will enable these partners to sell and
integrate their benefits with more confidence, knowing that
quality outcomes can be delivered while sustaining high-profit
margins and/or customer satisfaction levels. For example:
client’s own operational software systems.
Asset management
Reducing cost of inputs
A focus on reducing the costs of hardware elements including
locks and lockers was begun in FY22, which aims to realise
significant reduction in cost of sales over the coming year.
This effort reflects a more global approach to supply chain
sourcing, which also includes off-shoring of business operations
Many enterprises are now looking to integrate their IT asset
management with flexible third party solutions providers.
TZ’s Edge Logistics capabilities are integral for these solution
providers’ ability to maintain constant, auditable records of
hardware deployments, upgrades, repairs and maintenance
processes.
resourcing, including accounting some aspects of software
Critical security
development.
Government-related agencies that support mission-critical
management of physical assets with important legal provenance
or security implications. For example, Police departments in the
US are increasingly reliant on specialists to install systems that
deliver a legally compliant chain of custody for physical evidence,
as well as risk minimising management of firearms or other
dangerous goods
TZ Limited Annual Report 2022 8
Directors’ report
The Directors present their report, together with the financial statements, on
the consolidated entity (referred to hereafter as the ‘consolidated entity’ or ‘TZ’)
consisting of TZ Limited (referred to hereafter as the ‘company’ or ‘parent entity’)
and the entities it controlled at the end of, or during, the year ended 30 June 2022.
Directors
The following persons were Directors of TZ Limited during the
whole of the financial year and up to the date of this report,
unless otherwise stated:
John D’Angelo
Peter Graham
› Chairman
› Non-Executive Director
› Non-Executive Director
Simon White
(Appointed on 26 August 2021)
Scott Beeton
› Managing Director
(Resigned on 17 September 2021)
Principal activities
During the financial year the principal continuing activities
of the consolidated entity consisted of the development of
intelligent devices and smart device systems that enable the
commercialisation of hardware and software solutions for
the management, control and monitoring of business assets
and the provision of associated value added services through
Telezygology Inc., TZI Australia Pty Limited (‘TZI’), TZI Singapore
Pte Ltd and TZI UK Limited.
All of the operations of the consolidated entity are based in
Australia, the United States of America, United Kingdom and
Singapore.
Dividends
Review of operations and significant
changes in the state of affairs
Review of operations
The profit for the consolidated entity after providing for income
tax amounted to $42,896 (30 June 2021: loss of $1,658,204).
The financial highlights were the EBITDA result of $1.2m but even
more encouraging the positive cashflow in the 2HFY22. TZ had
what we referred to as a “transformative period” in the first half
where there were several changes to the company, including new
CEO, CFO, CTO and Head of Marketing. Therefore several personal
left the company resulting in substantial redundancy payments.
The redundancies, the new Sydney office, the expansion in India
led to 1HFY22 of an EBITDA loss of $1.13m. The full year result
of positive EBITDA of $1.2m illustrates the strong recovery and
resulting positive cashflow in the second half.
Capital
In July 2021 $2m debt was agreed to be converted into equity
with First Samuel and this was completed in August 2021 with
the issue of 16,666,667 shares at a deemed notional price of
12 cents per share. Simultaneously, a new debenture facility
of $2.5m with First Samuel was entered into with a maturity
date of 31 July 2022 and carrying a coupon rate of BBSW +
4.5%. The facility was fully drawn and as at balance date 30 June
2022, the debenture is TZ’s only debt. The maturity date has
subsequently been rolled to 31 October 2022. The company
wants to be secure in “working capital’ before making this last
debt repayment.
Board and management changes
There were no dividends paid, recommended or declared during
Simon White joined the board in August 2021. Simon worked
the current or previous financial year.
in corporate advisory and equity capital markets, with
significant exposure to IPO’s, equity placements and corporate
restructuring. Simon is Director of Investor Relations with
Paradigm Biopharma, an ASX Top 300 company. Simon is integral
in improving Corporate Governance at TZ Limited.
September 2021 saw Mario Vecchio appointed CEO to replace
Scott Beeton. As with Simon White, Mario was a “targeted
acquisition”. Vecchio tabled a strategic proposal centred on TZ
developing a “cloud based software business”. Vecchio’s career
was building software sales which he had demonstratively
achieved at previous employments, Progility Technologies,
APJC Bigswitch and Aryaka Networks.
TZ Limited Annual Report 2022 9
Directors’ report continued
Employee Incentive Scheme
In March 2022, the Company issued 1,962,500 fully paid
ordinary shares (‘Employee Shares’) to its employees pursuant
to TZ Limited’s employee Equity Incentive Plan (‘EIP’) which was
approved by shareholders during the Company’s 2021 Annual
Matters subsequent to the end of the
financial year
No matter or circumstance has arisen since 30 June 2022
that has significantly affected, or may significantly affect the
consolidated entity’s operations, the results of those operations,
General Meeting held on 27 January 2022. The Employee Shares
or the consolidated entity’s state of affairs in future financial
were issued to incentivise talent retention. The Employee Shares
years.
are subject to a voluntary escrow until 27 January 2025 (the
escrow can be waived by the Company in certain circumstances
at the Directors discretion under the EIP).
Operating risks and outlook
Likely developments and expected
results of operations
Further information on the future strategies is detailed in the
Managing Director’s report which precedes the Directors’ report
The board and management perceive the main risk to be the
and Annual Financial Statements.
Environmental regulation
The consolidated entity is not subject to any significant
environmental regulation under Australian Commonwealth or
State law.
global economic situation. Supply chain issues are subsiding
but the risk to general business conditions from an interest rate
tightening cycle are yet to be determined.
The company has a solid pipeline for 1H FY23 but like most
businesses TZ is uncertain what business conditions will be
like in 2H.
Significant changes in the state of affairs
In July 2021, the Company drew down the full value of a new
facility established in June 2021 for $2.5 million and repaid $2.1
million of the previous facility that expired at the end of July 2021.
The remaining $2 million of debt under the previous facility
was converted into shares following shareholder approval.
This resulted in 16,666,667 shares being issued to First Samuel
Limited.
In November 2021, the Company completed a capital raise
through placement of shares. The Company issued 27,570,000
fully paid ordinary shares at the price of $0.125 (12.50 cents) per
share. The raised funds were used for repayment of remaining
debt and general working capital.
In March 2022, the Company issued 1,962,500 fully paid
ordinary shares (‘Employee Shares’) to its employees pursuant
to TZ Limited’s employee Equity Incentive Plan (‘EIP’) which was
approved by shareholders during the Company’s 2021 Annual
General Meeting held on 27 January 2022. The Employee Shares
were issued to incentivise talent retention. The Employee Shares
are subject to a voluntary escrow until 27 January 2025 (the
escrow can be waived by the Company in certain circumstances
at the Directors discretion under the EIP).
There were no other significant changes in the state of affairs of
the consolidated entity during the financial year.
TZ Limited Annual Report 2022 10
Directors’ report continued
Information on the Directors in office as at the date of this report
Peter Graham
Non-Executive Chairman
John D’Angelo
Non-Executive Director
Simon White
Non-Executive Director
Peter is an experienced corporate advisor
John has vast international experience
Post a successful AFL career, Simon
with a unique financial background. From
in the areas of Marketing, Finance and
worked in corporate advisory and equity
chartered accounting with Ernst and
Engineering. He spent 15 years based
capital markets, with initial experience
Young early in his career, through Treasury
in Singapore in senior management
at Patersons Stockbroking before
roles with Westpac and UBS, and roles in
positions for JP Morgan and Hartree
joining Sequoia Financial Group (SEQ)
corporate finance and equities particularly
Partners (part owned by the investment
and then the Delcor Family office. In
in the gold and base metal resources
firm Oak-tree Capital). Prior to this,
this time Simon worked on IPO’s, equity
sector, Peter built a successful finance
he held management positions at
placements, corporate advisory and
career before branching into corporate
Chase Manhattan Bank and Mitsui
restructuring. He has worked on a variety
advisory in 1995.
Commodities.
of deals across many business sectors.
As a corporate advisor for over 20 years,
John began his career as an Engineer at
Recently, Simon has been Director
Peter developed an extensive institutional
BHP before moving into the Marketing
of Investor Relations with Paradigm
client base for Tolhurst and Pattersons
and Financial Risk Management areas for
Biopharma, an ASX Top 300 company.
before joining Sequoia in 2015.
the company where he spent some time
Simon’s skills in corporate governance
Today, Peter is the Head of Delcor
Corporate Advisory; Delcor Advisory
based in the USA. John holds a Bachelor
will be most beneficial to the TZ Limited
of Engineering (Hons).
Board.
Investment Group Pty Ltd is a substantial
Other current
None
directorships
Other current
None
directorships
shareholder of TZ Limited. Peter brings
significant finance and capital market
experience to the TZ Board.
Other current
None
directorships
Former
Chairman of
directorships
Carpentaria
(last 3 years)
Resources Ltd
(ASX: CAP)
None
Special
responsibilities
Interests in shares 14,041,704
fully paid ordinary
shares
Interests in options None
Former
None
Former
None
directorships
(last 3 years)
Special
None
responsibilities
Interests in shares 1,500,950
ordinary shares
Interests in options None
directorships
(last 3 years)
Special
None
responsibilities
Interests in shares None
Interests in options None
‘Other current directorships’ quoted above are current directorships for listed entities only
and excludes directorships in all other types of entities, unless otherwise stated.
‘Former directorships (in the last 3 years)’ quoted above are directorships held in the last
3 years for listed entities only and excludes directorships in all other types of entities, unless
otherwise stated.
TZ Limited Annual Report 2022 11
Directors’ report continued
Company Secretary
Meetings of Directors
Mathew Watkins was
appointed Company
The number of meetings of the company’s Board of Directors
(‘the Board’) and of each Board committee held during the year
Secretary on 25 November
ended 30 June 2022, and the number of meetings attended by
2021. Mathew is a Chartered
each Director were:
Accountant who has
extensive ASX experience
within several industries
including biotechnology,
bioscience, resources and
information technology.
Mathew specialises in ASX statutory reporting, ASX compliance,
corporate governance and board and secretarial support. He
is appointed Company Secretary on a number of ASX listed
companies. Mathew is employed at Vistra, a professional
company secretarial and accounting firm. Vistra has vast
experience working with listed entities and brings a strong
background of working with growing companies within the
technology hardware and equipment industry.
Full Board
Attended
Held *
Peter Graham Chairman
John D’Angelo
Simon White
Scott Beeton
13
13
11
2
* Represents the number of meetings held
during the time the Director held office.
13
13
11
3
TZ Limited Annual Report 2022 12
Remuneration report (audited)
The remuneration report, which has been
Non-Executive Directors’ remuneration
audited, outlines the Director and key
management personnel remuneration
arrangements for the consolidated entity
and the company, in accordance with the
Fees and payments to Non-Executive Directors reflect the demands
which are made on, and the responsibilities of, the Directors. Non-
Executive Directors’ fees and payments are reviewed annually. The
Board considers advice from shareholders and takes into account
the fees paid to Non-Executive Directors of comparable companies,
requirements of the Corporations Act 2001
when undertaking the annual review process. The Non-Executive
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.
Directors receive Director’s fees only. The company adheres to the
policy that Directors will not participate in any incentive program.
ASX listing rules require that the aggregate Non-Executive
Directors remuneration shall be determined periodically by a
general meeting. The amount of aggregate remuneration sought
The remuneration report is set out under the following main
to be approved by shareholders and the manner in which it is
headings:
›
Principles used to determine the
nature and amount of remuneration
› Details of remuneration
Service agreements
Share-based compensation
Additional information
›
›
›
›
apportioned amongst Directors is reviewed annually. The most
recent determination was at the AGM held on 30 November
2006, where the shareholders approved an aggregate
remuneration of $500,000.
Executive remuneration
The consolidated entity and company aims to reward executives
with a level and mix of remuneration based on their position and
Additional disclosures relating to key management
responsibility, which is both fixed and variable.
personnel
Principles used to determine the nature and
amount of remuneration
The objective of the consolidated entity’s and company’s
executive reward framework is to ensure reward for
The executive remuneration and reward framework has four
components:
›
›
›
Base pay and non-monetary benefits
Short-term performance incentives
Share-based payments
performance is competitive and appropriate for the results
› Other remuneration such as superannuation and long
delivered. The framework aligns executive reward with the
service leave
achievement of strategic objectives and the creation of value for
shareholders and conforms with the market best practice for
delivery of reward. The Board of Directors (‘the Board’) ensures
that executive reward satisfies the following key criteria for good
reward governance practices:
The combination of these comprises the executive’s total
remuneration.
Fixed remuneration, consisting of base salary, superannuation
and non-monetary benefits, are reviewed annually by the Board,
›
›
›
Set competitive remuneration packages to attract and retain
based on individual and business unit performance, the overall
high calibre employees
performance of the consolidated entity and comparable market
Link executive rewards to shareholder value creation
remunerations.
Establish appropriate demanding performance hurdles for
Executives can receive their fixed remuneration in the form of
variable executive remuneration
The Board reviews and is responsible for the consolidated
entity’s remuneration policies, procedures and practices.
TZ Limited’s employee Equity Incentive Plan (‘EIP’) was approved
by shareholder during the Company’s 2021 Annual General
Meeting held on 27 January 2022. The Plan was designed to
attract, retain, motivate and reward eligible persons (employees
and directors) of the Company (collectively the ‘Participants’)
by issuing securities to the Participants. The vesting of those
securities may be subject to certain performance criteria to be
determined by the Board.
cash or other fringe benefits (for example motor vehicle benefits)
where it does not create any additional costs to the consolidated
entity and adds additional value for the executive.
The short-term incentives (‘STI’) program is designed to align
the targets of the business units with the targets of those
executives in charge of meeting those targets. STI payments
are granted to executives based on specific annual targets and
key performance indicators (‘KPI’) being achieved. KPI’s can
include profit contribution, customer satisfaction, leadership
contribution and product management.
TZ Limited Annual Report 2022 13
Remuneration report (audited) continued
The long-term incentives (‘LTI’) includes long service leave and
Details of remuneration
share-based payments. As noted above, the EIP Plan has been
set up to reward executives based on long term incentive
measures in the form of restricted fully paid ordinary shares.
These include increase in shareholders’ value relative to the
entire market and the increase compared to the consolidated
entity’s direct competitors.
Amounts of remuneration
The key management personnel of the consolidated entity
consisted of the Directors of TZ Limited and the following
persons:
› Mario Vecchio
Consolidated entity performance and link to remuneration
Chief Executive Officer
Remuneration for certain individuals is directly linked to the
performance of the consolidated entity. Executives and other
employees can be issued with restricted fully paid ordinary
Resigned as Non-Executive Director on 6 October 2020
and
appointed as Chief Executive Officer on 17 September 2021
shares in the company. The number and the terms of the shares
›
Simon Van Es
issued are determined by the Board after consideration of the
Chief Operating Officer of TZ Limited
employee’s performance and their ability to contribute to the
achievement of the consolidated entity’s objectives. Refer to
the additional information section of the remuneration report
for details of the last five years earnings and total shareholders’
return (‘TSR’).
›
John Wilson
Vice President APAc and EMEA of TZ Limited
› Brian Leary
President of Telezygology Inc.
Resigned on 10 August 2022
Voting and comments made at the company’s 2021 Annual
›
Craig Sowden
General Meeting (‘AGM’)
At the last AGM, 99.81% of the shareholders voted to adopt
Chief Financial Officer of TZ Limited
Resigned on 25 November 2021
the remuneration report for the year ended 30 June 2021.
› Adam Forsyth
The company did not receive any specific feedback at the
Chief Technology Officer of TZ Limited
AGM regarding its remuneration practices.
Resigned on 25 February 2022
Peter Graham was re-elected as a Director while
Simon White was elected as a Director, both with
shareholder support of 99.85% of the votes cast on those
resolutions.
Shareholders, with 99.32% support, ratified the prior issue
of 9,374,138 shares in the Company to sophisticated and
prtofessional investors at a price of $0.132 (13.20 cents) per
share for the purpose of reducing the debt owed to First Samuel.
Shareholders, with 99.08% support, ratified the issue on
12 November 2021 of 27,570,000 fully paid ordinary shares
in the Company (Shares) at a price of $0.125 (12.5 cents) per
Share in relation to the placement conducted in November
2021 (November Placement) for the purpose of reducing the
Company’s debt.
Shareholders supported (with 99.52% of the vote) the adoption
of a new Employee Incentive Plan (EIP).
The approval for replenishing the 10% Placement Facility was
also passed with shareholders approving with 99.53% of the vote.
Lastly, the Resolution to replace the Company’s Constitution was
also well supported with 99.87% voting in favour.
The Board acknowledged and thank shareholders for their
support in passing all resolutions at the 2021 AGM.
TZ Limited Annual Report 2022 14
Remuneration report (audited) continued
2022
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Other**
Bonus
Super-
annuation
Employee
leave
Options
Share
grants
Cash salary
and fees
$
P Graham
105,000
Non-Executive
Directors
J D’Angelo
S White*
67,500
57,500
Executive
Directors
S Beeton*
206,297
$
-
-
-
-
M Vecchio
235,385
18,106
S Van Es
229,545
6,250
Other Key
Management
Personnel
J Wilson
B Leary
248,182
11,748
213,892
23,955
C Sowden*
145,482
A Forsyth*
174,740
-
-
1,683,523
60,059
Total
$
105,000
67,500
57,500
222,363
271,167
$
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
$
-
-
-
16,066
17,676
22,239
22,256
3,809
8,951
-
-
24,239
115,236
$
-
-
-
-
-
-
-
-
-
-
-
1,686
259,720
5,516
2,529
290,231
-
-
-
2,529
244,185
-
154,433
2,529
201,508
5,516
9,273
1,873,607
* Represents remuneration from date of appointment and/or to date of resignation
** Represents changes in the accrued amounts of annual leave over the year
2021
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Cash salary
and fees
Other**
Bonus
Super-
annuation
Employee
leave
Options
Share
grants
Non-Executive
Directors
P Graham
J D’Angelo*
M Vecchio*
$
61,250
75,545
23,494
$
-
-
-
Executive
Directors
S Beeton
226,485
23,497
Other Key
Management
Personnel
S Van Es
J Wilson
B Leary
198,068
-
296,752
(58,899)
207,497
4,908
C Sowden
221,747
(5,663)
A Forsyth
219,311
9,014
1,530,149
(27,143)
$
-
-
-
-
-
-
-
-
$
-
-
-
20,091
-
25,233
37,315
21,066
-
-
26,964
130,669
$
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
10,599
9,250
9,250
9,250
38,349
* Represents remuneration from date of appointment and/or to date of resignation
** Represents changes in the accrued amounts of annual leave over the year
TZ Limited Annual Report 2022 15
$
-
-
-
-
-
$
-
-
-
-
-
-
-
-
Total
$
61,250
75,545
23,494
270,073
198,068
273,685
258,970
246,400
-
-
264,539
1,672,024
Remuneration report (audited) continued
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Fixed remuneration
At risk - STI
At risk - LTI
Non-Executive
Directors
Executive
Directors
Name
P Graham
J D’Angelo
S White
S Beeton
M Vecchio
S Van Es
Other Key
Management
Personnel
B Leary
J Wilson
C Sowden
A Forsyth
Service agreements
2022
100%
100%
100%
100%
100%
99%
99%
99%
100%
99%
2021
100%
100%
-
100%
100%
100%
96%
96%
96%
97%
2022
2021
2022
2021
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1%
1%
1%
-
1%
-
-
-
-
-
-
4%
4%
4%
3%
Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these
agreements are as follows:
Name
Title
Agreement
commenced
Term of agreement
Details
Mario Vecchio
Simon Van Es
John Wilson
Chief Executive
Officer
Chief Operating
Officer
Vice President
APAC and EMEA
Brian Leary
President of
Telezygology Inc
20 September 2021
No fixed term
1 July 2021
No fixed term
8 September 2020
No fixed term
1 October 2018
renewal terms were
Initial term of 2 years,
amended subsequently
Base salary of $300,000 plus superannuation
and notice period of 3 months
Remuneration of $250,000 plus
superannuation and notice period of 3 months
Remuneration of $240,000 including
superannuation and notice period of 3 months
Base salary of USD$155,000 and notice period
of 3 months
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
TZ Limited Annual Report 2022 16
Remuneration report (audited) continued
Share-based compensation
Issue of shares
Details of shares issued in accordance with the TZ Equity Incentive Plan to Directors and other key management personnel as part of
compensation during the year ended 30 June 2022 are set out below:
Name
S Van Es
J Wilson
B Leary
A Forsyth
Date
11 March 2022
11 March 2022
11 March 2022
11 March 2022
Shares
125,000
187,500
187,500
187,500
Issue price
$0.0920
$0.0920
$0.0920
$0.0920
$
11,500
17,250
17,250
17,250
The shares are subject to escrow for a period of 36 months commencing on the date of the approval for the Employee Incentive Plan, being
the 2021 Annual General Meeting of the company, which was held on 27 January 2022.
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of Directors and other key management
personnel in this financial year or future reporting years are as follows:
Name
J Wilson
B Leary
C Sowden
A Forsyth
Number of options
granted
Grant date
Expiry date
Exercise price
Fair value per option at
grant date
165,000
165,000
165,000
144,000
144,000
144,000
144,000
144,000
144,000
144,000
144,000
144,000
6 August 2019
31 August 2024
6 August 2019
31 August 2025
6 August 2019
31 August 2026
6 August 2019
31 August 2024
6 August 2019
31 August 2025
6 August 2019
31 August 2026
6 August 2019
31 August 2024
6 August 2019
31 August 2025
6 August 2019
31 August 2026
6 August 2019
31 August 2024
6 August 2019
31 August 2025
6 August 2019
31 August 2026
$0.25
$0.40
$0.45
$0.25
$0.40
$0.45
$0.25
$0.40
$0.25
$0.25
$0.40
$0.25
$0.0605
$0.0579
$0.0654
$0.0605
$0.0579
$0.0654
$0.0605
$0.0579
$0.0654
$0.0605
$0.0579
$0.0654
Additional information
The earnings of the consolidated entity for the five years to 30 June 2022 are summarised below:
Sales revenue
Adjusted EBITDA *
2022
$
2021
$
2020
$
2019
$
2018
$
21,428,560
16,378,223
12,852,402
17,430,926
17,388,505
1,278,529
137,364
(3,739,568)
(3,480,093)
(2,636,165)
Profit/(loss) after income tax
42,896
(1,658,204)
(5,120,229)
(4,359,688)
(11,687,882)
* Earnings before interest, tax, depreciation, amortisation and other non-operating items
The factors that are considered to affect total shareholder remuneration (‘TSR’) are summarised below:
Share price at financial year end ($)
Basic earnings per share (cents per share)
2022
0.110
0.021
2021
0.110
1.549
2020
0.030
(6.360)
2019
0.090
(6.180)
2018
0.170
(18.450)
TZ Limited Annual Report 2022 17
Remuneration report (audited) continued
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:
Ordinary shares
Balance at the
start of the year
Additions
Disposals
Other*
P Graham
J D’Angelo
S White
S Van Es
M Vecchio
J Wilson
B Leary
S Beeton
C Sowden
A Forsyth
14,041,704
-
-
1,400,000
400,950
(300,000)
-
-
-
8,230
-
709,788
3,500
16,730
-
125,000
-
187,500
187,500
-
-
187,500
-
-
-
-
-
(709,788)
(3,500)
(15,206)
16,179,952
1,088,450
(1,028,494)
-
-
-
-
-
-
-
-
-
(189,024)
(189,024)
Balance at the
end of the year
14,041,704
1,500,950
-
125,000
-
195,730
187,500
-
-
-
16,050,884
* Other represents no longer being designated as a KMP, not necessarily a disposal of holding.
Option holding
The number of options over ordinary shares in the Company held during the financial year by each Director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Options over ordinary
shares
Balance at the
start of the year
Granted
Expired
Forfeited/other*
Balance at the end of
the year
J Wilson
B Leary
C Sowden
A Forsyth
495,000
432,000
432,000
432,000
1,791,000
-
-
-
-
-
-
-
-
-
-
-
-
(432,000)
(432,000)
(864,000)
495,000
432,000
-
-
927,000
*
Forfeited/other may represent no longer being designated as a KMP. It does not necessarily represent options that have been forfeited.
No options were exercised during the year ended 30 June 2022.
Other transactions with key management personnel and their related parties
There were no other transactions with KMP personnel and their related parties during the year ended 30 June 2022.
This concludes the remuneration report, which has been audited.
TZ Limited Annual Report 2022 18
Directors’ report
Shares under option
Non-audit services
Unissued ordinary shares of TZ Limited under option at the date
Details of the amounts paid or payable to the auditor for non-
of this report are as follows:
Grant date
6 August 2019
6 August 2019
6 August 2019
Expiry
date
Exercise
price
Number
under option
31 August
2024
31 August
2025
31 August
2026
$0.25
697,000
$0.40
697,000
$0.45
697,000
audit services provided during the financial year by the auditor
are outlined in note 28 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
2,091,000
in note 28 to the financial statements do not compromise
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.
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
Shares issued on the exercise of options
› None of the services undermine the general principles
There were no ordinary shares of TZ Limited issued on the
exercise of options during the year ended 30 June 2022 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
relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants issued by the
Accounting Professional and Ethical Standards Board,
including reviewing or auditing the auditor’s own work,
acting in a management or decision-making capacity for
the Company, acting as advocate for the Company or jointly
sharing economic risks and rewards
Officers of the Company who are former partners
of PKF Brisbane Audit
There are no officers of the Company who are former partners of
PKF Brisbane Audit.
Corporations Act 2001. The contract of insurance prohibits
Auditor’s independence declaration
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
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.
This report is made in accordance with a resolution of Directors,
pursuant to section 298(2)(a) of the Corporations Act 2001.
company or any related entity against a liability incurred by the
On behalf of the Directors
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
Peter Graham
Chairman
of the Company, or to intervene in any proceedings to which the
31 August 2022, Sydney
Company is a party for the purpose of taking responsibility on
behalf of the Company for all or part of those proceedings.
TZ Limited Annual Report 2022 19
Auditor’s independence declaration
TZ Limited Annual Report 2022 20
U ’ C C UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF TZ LIMITED I declare that, to the best of my knowledge and belief, during the year ended 30 June 2022, there have been no contraventions of: (a) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) any applicable code of professional conduct in relation to the audit. PKF BRISBANE AUDIT SHAUN LINDEMANN PARTNER BRISBANE 31 AUGUST 2022 Financial report
For the year ended 30 June 2022
Statement of profit or loss and other comprehensive income
Revenue
Expenses
Revenue
Other income
Interest income
Raw materials and consumables used
Employee benefits expense
Occupancy expense
Depreciation and amortisation expense
Communications expense
Professional and corporate services
Travel and accommodation expense
Net foreign currency exchange losses
Other expenses
Finance costs
Profit/(loss) before income tax expense
Income tax expense
Profit/(loss) after income tax expense for the year
attributable to the owners of TZ Limited
Other comprehensive income
Foreign currency translation
Items that may be reclassified
subsequently to profit or loss
Other comprehensive income for the year,
net of tax
Note
4
5
6
6
7
Consolidated
2022
$
2021
$
21,428,560
16,378,223
1,117,895
1,318,107
128
5,030
(10,228,802)
(8,710,112)
(8,330,540)
(6,789,554)
(204,831)
(975,644)
(102,274)
(922,483)
(274,761)
(28,743)
(1,175,492)
(235,315)
(213,467)
(852,463)
(15,076)
(757,021)
(85,637)
(41,343)
(946,756)
(883,004)
67,698
(1,593,073)
(24,802)
(65,131)
42,896
(1,658,204)
75,139
75,139
15,326
15,326
Total comprehensive income for the year attributable to the owners of TZ Limited
118,035
(1,642,878)
Basic earnings per share
Diluted earnings per share
Note
34
34
2022
Cents
0.021
0.021
2021
Cents
(1.549)
(1.549)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
TZ Limited Annual Report 2022 21
Financial report continued
As at 30 June 2022
Statement of financial position
Cash and cash equivalents
Trade and other receivables
Current assets
Contract assets
Inventories
Other
Assets
Total current assets
Property, plant and equipment
Non-current
assets
Right-of-use assets
Intangibles
Total assets
Current
liabilities
Total non-current assets
Trade and other payables
Contract liabilities
Borrowings
Lease liabilities
Provisions
Total current liabilities
Non-current
liabilities
Lease liabilities
Total non-current liabilities
Total liabilities
Liabilities
Net assets/(liabilities)
Issued capital
Equity
Reserves
Accumulated losses
Total equity/(deficiency)
Note
8
9
10
11
12
13
14
15
16
17
18
19
20
19
22
23
Consolidated
2022
$
2021
$
2,051,162
373,926
4,130,232
2,607,518
2,609,521
1,672,307
2,686,840
1,555,395
1,233,935
697,632
12,711,690
6,906,778
219,132
378,325
173,524
591,012
991,716
1,571,725
1,589,173
2,336,261
14,300,863
9,243,039
3,252,005
3,120,538
3,510,546
1,692,768
2,500,000
4,725,884
200,032
609,877
199,045
613,291
10,072,460
10,351,526
206,050
397,290
206,050
397,290
10,278,510
10,748,816
4,022,353
(1,505,777)
227,279,703
221,876,795
(4,211,903)
(4,232,391)
(219,045,447)
(219,150,181)
4,022,353
(1,505,777)
The above statement of financial position should be read in conjunction with the accompanying notes
TZ Limited Annual Report 2022 22
Financial report continued
For the year ended 30 June 2022
Statement of changes in equity
Consolidated
Issued
capital
$
Reserves
$
Accumulated
losses
$
Note
Total
deficiency
in equity
$
Balance at 1 July 2020
212,426,391
(4,275,193)
(217,506,070)
(9,354,872)
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
-
-
-
-
(1,658,204)
(1,658,204)
15,326
-
15,326
15,326
(1,658,204)
(1,642,878)
Transactions with
owners in their
capacity as owners:
Contributions of equity, net of
transaction costs
Share-based payments
Options cancelled during the
period
22
35
9,450,404
-
-
-
41,569
-
-
9,450,404
41,569
(14,093)
14,093
-
Balance at 30 June 2021
221,876,795
(4,232,391)
(219,150,181)
(1,505,777)
Consolidated
Issued
capital
$
Reserves
$
Accumulated
losses
$
Note
Total
deficiency
in equity
$
Balance at 1 July 2021
221,876,795
(4,232,391)
(219,150,181)
(1,505,777)
Profit after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with
owners in their
capacity as owners
Contributions of equity, net of
transaction costs
Share-based payments
Options cancelled during the
period
-
-
-
75,139
75,139
-
42,896
42,896
75,139
-
42,896
118,035
-
-
5,187,033
223,062
22
35
5,187,033
-
215,875
7,187
-
(61,838)
61,838
-
Balance at 30 June 2022
227,279,703
(4,211,903)
(219,045,447)
4,022,353
The above statement of changes in equity should be read in conjunction with the accompanying notes
TZ Limited Annual Report 2022 23
Receipts from customers (inclusive of GST)
21,513,683 14,159,747
Payments to suppliers and employees (inclusive of GST)
(23,357,466) (17,168,210)
Note
2022
2021
$
$
Financial report continued
For the year ended 30 June 2022
Statement of cash flows
Consolidated
Cash flows from
operating activities
Interest received
Government grants received
Interest and other finance costs paid
Income taxes paid
Net cash used in operating activities
Cash flows from
investing activities
Net cash used in investing activities
Payments for security deposits
Payments for property, plant and equipment
Payments for intangibles
Cash flows from
financing activities
Proceeds from issue of shares
Transaction costs on shares issued
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
33
13
15
22
128
5,030
476,411
1,391,668
(233,811)
(920,531)
(24,802)
(65,131)
(1,625,857)
(2,597,427)
-
(9,158)
(127,538)
(5,484)
(79,857)
(404,933)
(207,395)
(419,575)
3,446,250
9,820,384
(259,217)
(626,895)
2,500,000
-
(2,000,000)
(6,743,085)
(191,032)
(83,634)
3,496,001 2,366,770
1,662,749
(650,232)
373,926
1,043,158
14,487
(19,000)
Cash and cash equivalents at the end of the financial year
8
2,051,162
373,926
The above statement of cash flows should be read in conjunction with the accompanying notes
TZ Limited Annual Report 2022 24
Notes to the financial statements
Note 1 Significant accounting policies
Basis of preparation
The principal accounting policies adopted in the preparation of
These general purpose financial statements have been prepared
the financial statements are set out below. These policies have
in accordance with Australian Accounting Standards and
been consistently applied to all the years presented, unless
Interpretations issued by the Australian Accounting Standards
otherwise stated.
New or amended Accounting Standards and
Interpretations adopted
The consolidated entity has adopted all of the Accounting
Standards and Interpretations issued by the Australian
Accounting Standards Board (‘AASB’) that are mandatory for the
current reporting period.
Board (‘AASB’) and the Corporations Act 2001, as appropriate
for for-profit oriented entities. These financial statements also
comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board (‘IASB’).
Historical cost convention
The financial statements have been prepared under the
historical cost convention.
Any new or amended Accounting Standards or Interpretations
that are not yet mandatory have not been early adopted.
Critical accounting estimates
Going concern
These financial statements have been prepared on a going
concern basis, which assumes continuity of normal business
The preparation of the financial statements requires the
use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of
applying the consolidated entity’s accounting policies. The areas
activities and the realisation of assets and settlement of liabilities
involving a higher degree of judgement or complexity, or areas
in the ordinary course of business.
where assumptions and estimates are significant to the financial
Although the consolidated entity generated a net profit for the
year ended 30 June 2022 and recorded surplus net assets and
net current assets, the consolidated entity incurred cash outflows
from operating activities of $1,625,857 for the year (30 June 2021:
$2,597,427), and has recorded a $2.5m loan payable to First
Samuel Limited, with a maturity date of 31 October 2022.
statements, are disclosed in note 2.
Parent entity information
In accordance with the Corporations Act 2001, these financial
statements present the results of the consolidated entity only.
Supplementary information about the parent entity is disclosed
In assessing the appropriateness of the going concern concept
the following factors have been taken into consideration by the
in note 31.
Directors:
Principles of consolidation
›
The Directors are of the view the consolidated entity is on
track to meet revenue targets for the 30 June 2023 financial
year. It is expected that, as the monthly revenue levels
increase, the consolidated entity’s operating business units
will be in a position to contribute positive cash flow to the
bottom line
›
The Directors maintain a positive outlook on achieving
The consolidated financial statements incorporate the assets
and liabilities of all subsidiaries of TZ Limited (‘Company’
or ‘parent entity’) as at 30 June 2022 and the results of all
subsidiaries for the year then ended. TZ Limited and its
subsidiaries together are referred to in these financial
statements as the ‘consolidated entity’.
profitability in the 30 June 2023 financial year based on the
Subsidiaries are all those entities over which the consolidated
strength of the sales pipeline
In making their assessment, the Directors acknowledge that the
ability of the consolidated entity to continue as a going concern
is dependent on continuing to meet sales and profitability
forecasts, the generation of positive cash flows, the continued
support of shareholders and lenders and the raising of additional
share capital as and when required in the future.
The financial statements have been prepared on the going
concern basis for the above reasons. Accordingly, the financial
statements do not include any adjustments relating to the
recoverability and classification of recorded assets or to the
amounts and classification of liabilities that might be necessary
should the consolidated entity not continue as a going concern.
entity has control. The consolidated entity controls an entity
when the consolidated entity is exposed to, or has rights to,
variable returns from its involvement with the entity and has
the ability to affect those returns through its power to direct the
activities of the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the consolidated
entity. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on
transactions between entities in the consolidated entity are
eliminated. Unrealised losses are also eliminated unless the
transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies
adopted by the consolidated entity.
TZ Limited Annual Report 2022 25
Notes to the financial statements continued
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.
Where the consolidated entity loses control over a subsidiary,
it derecognises the assets including goodwill, liabilities and
non-controlling interest in the subsidiary together with any
cumulative translation differences recognised in equity. The
consolidated entity recognises the fair value of the consideration
received and the fair value of any investment retained together
with any gain or loss in profit or loss.
Operating segments
Operating segments are presented using the ‘management
Revenue recognition
The consolidated entity recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration
to which the consolidated entity is expected to be entitled in
exchange for transferring goods or services to a customer. For each
contract with a customer, the consolidated entity: identifies the
contract with a customer; identifies the performance obligations
in the contract; determines the transaction price which takes into
account estimates of variable consideration and the time value of
money; allocates the transaction price to the separate performance
obligations on the basis of the relative stand-alone selling price
of each distinct good or service to be delivered; and recognises
revenue when or as each performance obligation is satisfied in a
manner that depicts the transfer to the customer of the goods or
services promised.
approach’, where the information presented is on the same
Variable consideration within the transaction price, if any, reflects
basis as the internal reports provided to the Chief Operating
concessions provided to the customer such as discounts,
Decision Makers (‘CODM’). The CODM is responsible for the
rebates and refunds, any potential bonuses receivable from
allocation of resources to operating segments and assessing
the customer and any other contingent events. Such estimates
their performance.
Foreign currency translation
are determined using either the ‘expected value’ or ‘most likely
amount’ method. The measurement of variable consideration
is subject to a constraining principle whereby revenue will
only be recognised to the extent that it is highly probable that
The financial statements are presented in Australian dollars,
a significant reversal in the amount of cumulative revenue
which is TZ Limited’s functional and presentation currency.
recognised will not occur. The measurement constraint
Foreign currency transactions
continues until the uncertainty associated with the variable
consideration is subsequently resolved. Amounts received that
are subject to the constraining principle are recognised as a
Foreign currency transactions are translated into the entity’s
refund liability.
functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the
translation at financial year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into
Australian dollars using the exchange rates at the reporting date.
The revenues and expenses of foreign operations are translated
into Australian dollars using the average exchange rates, which
approximate the rates at the dates of the transactions, for the
period. All resulting foreign exchange differences are recognised
in other comprehensive income through the foreign currency
reserve in equity.
The foreign currency reserve is recognised in profit or loss when
the foreign operation or net investment is disposed of.
Sale of software and hardware
Sales of software and hardware are recognised at the point of sale,
which is where the customer has taken delivery of the goods.
Rendering of installation and commissioning services
Rendering of installation and commissioning services revenue is
recognised at the point in time when software and hardware has
been installed.
Rendering of maintenance services
Revenue from maintenance services is typically paid in advance
on an annual, quarterly or monthly basis. Revenue is recognised
over the period the customer support/hosting relates to (the
coverage period). Fees received in advance of the performance
of services are deferred and recognised as contract liabilities.
Rendering of professional services
Rendering of professional services revenue is recognised when
the service to the customer is completed.
TZ Limited Annual Report 2022 26
Notes to the financial statements continued
Interest revenue
Interest revenue is recognised as it accrues using the effective
interest method. This is a method of calculating the amortised
cost of a financial asset and allocating the interest income over
the relevant period using the effective interest rate, which is
the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset to the net carrying
amount of the financial asset.
Government grants
Grants from the government are recognised at their fair value
when there is reasonable assurance that the grant will be
received and that the consolidated entity will comply with all
attached conditions. Government grants relating to costs are
deferred and recognised in profit or loss as other income over
The carrying amount of recognised and unrecognised deferred
tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer
probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised
deferred tax assets are recognised to the extent that it is
probable that there are future taxable profits available to recover
the asset.
Deferred tax assets and liabilities are offset only where there
is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax
liabilities; and they relate to the same taxable authority on either
the same taxable entity or different taxable entities which intend
to settle simultaneously.
the periods necessary to match them with the costs that they are
Reclassification
intended to compensate.
Income tax
Comparative figures in the statement of profit or loss and
other comprehensive income and in the statement of financial
position have been reclassified to conform to the current year
The income tax expense or benefit for the period is the tax
presentation.
payable on that period’s taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes
in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised
for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary
differences at the tax rates expected to be applied when the
assets are recovered or liabilities are settled, based on those tax
rates that are enacted or substantively enacted, except for:
› when the deferred income tax asset or liability arises from
the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at
the time of the transaction, affects neither the accounting
nor taxable profits; or
› when the taxable temporary difference is associated with
interests in subsidiaries, associates or joint ventures,
and the timing of the reversal can be controlled and it is
probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary
differences and losses.
Current and non-current classification
Assets and liabilities are presented in the statement of financial
position based on current and non-current classification.
An asset is classified as current when: it is either expected to
be realised or intended to be sold or consumed in the entity’s
normal operating cycle; it is held primarily for the purpose of
trading; it is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent unless
restricted from being exchanged or used to settle a liability for at
least 12 months after the reporting period. All other assets are
classified as non-current.
A liability is classified as current when: it is either expected to be
settled in the entity’s normal operating cycle; it is held primarily
for the purpose of trading; it is due to be settled within 12
months after the reporting period; or there is no unconditional
right to defer the settlement of the liability for at least 12 months
after the reporting period. All other liabilities are classified as
non-current.
Deferred tax assets and liabilities are always classified as
non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held
at call with financial institutions, other short-term, highly liquid
investments with original maturities of three months or less that
are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
TZ Limited Annual Report 2022 27
Notes to the financial statements continued
Trade and other receivables
Property, plant and equipment
Trade receivables are initially recognised at fair value and
Plant and equipment is stated at historical cost less accumulated
subsequently measured at amortised cost using the effective
depreciation and impairment. Historical cost includes
interest method, less any allowance for expected credit losses.
expenditure that is directly attributable to the acquisition of the
Trade receivables are generally due for settlement within
items.
30- 60 days.
Depreciation is calculated on a straightline basis to write off the
The consolidated entity has applied the simplified approach to
net cost of each item of property, plant and equipment over their
measuring expected credit losses, which uses a lifetime expected
expected useful lives as follows:
loss allowance. To measure the expected credit losses, trade
receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any
allowance for expected credit losses.
Leasehold improvements
Plant and equipment
Office equipment
20 - 33%
20%
15 - 35%
Contract assets
Contract assets are recognised when the consolidated entity
The residual values, useful lives and depreciation methods are
reviewed, and adjusted if appropriate, at each reporting date.
has transferred goods or services to the customer but where the
Leasehold improvements are depreciated over the unexpired
consolidated entity is yet to establish an unconditional right to
period of the lease or the estimated useful life of the assets,
consideration. Contract assets are treated as financial assets for
whichever is shorter.
impairment purposes.
Inventories
An item of property, plant and equipment is derecognised upon
disposal or when there is no future economic benefit to the
consolidated entity.
Finished goods are stated at the lower of cost and net realisable
value on an average cost basis. Cost comprises of purchase
Right-of-use assets
and delivery costs, net of rebates and discounts received or
receivable.
A right-of-use asset is recognised at the commencement date
of a lease. The right-of-use asset is measured at cost, which
Stock in transit is stated at the lower of cost and net realisable
comprises the initial amount of the lease liability, adjusted
value. Cost comprises of purchase and delivery costs, net of
for, as applicable, any lease payments made at or before the
rebates and discounts received or receivable.
commencement date net of any lease incentives received, any
Net realisable value is the estimated selling price in the ordinary
course of business less the estimated costs of completion and
the estimated costs necessary to make the sale.
initial direct costs incurred, and, except where included in the
cost of inventories, an estimate of costs expected to be incurred
for dismantling and removing the underlying asset, and restoring
the site or asset.
Right-of-use assets are depreciated on a straightline basis over
the unexpired period of the lease or the estimated useful life
of the asset, whichever is the shorter. Where the consolidated
entity expects to obtain ownership of the leased asset at the end
of the lease term, the depreciation is over its estimated useful
life. Right-of-use assets are subject to impairment or adjusted for
any remeasurement of lease liabilities.
The consolidated entity has elected not to recognise a right-of-
use asset and corresponding lease liability for short-term leases
with terms of 12 months or less and leases of low-value assets.
Lease payments on these assets are expensed to profit or loss as
incurred.
TZ Limited Annual Report 2022 28
Notes to the financial statements continued
Intangible assets
Trade and other payables
Intangible assets acquired as part of a business combination,
Trade and other payables represent liabilities for goods and
other than goodwill, are initially measured at their fair value at
services provided to the consolidated entity prior to the end
the date of the acquisition. Intangible assets acquired separately
of the financial year and which are unpaid. Due to their short-
are initially recognised at cost. Indefinite life intangible assets
term nature they are measured at amortised cost and are not
are not amortised and are subsequently measured at cost less
discounted. The amounts are unsecured and are usually paid
any impairment. Finite life intangible assets are subsequently
within 30 days of recognition.
measured at cost less amortisation and any impairment.
The gains or losses recognised in profit or loss arising from
the derecognition of intangible assets are measured as the
difference between net disposal proceeds and the carrying
amount of the intangible asset. The method and useful lives of
finite life intangible assets are reviewed annually. Changes in the
expected pattern of consumption or useful life are accounted for
prospectively by changing the amortisation method or period.
Patents
Expenditure directly attributable to the registration of patents
is capitalised at cost and is amortised over the useful life of
15 years.
Research and development costs
Research costs are expensed as incurred. Development
expenditure incurred on an individual project is capitalised
if the product or service is technically feasible, adequate
resources are available to complete the project, it is probable
that future economic benefits will be generated and expenditure
attributable to the project can be measured reliably. Expenditure
capitalised comprises costs of materials, services, direct labour
and an appropriate portion of overheads.
Capitalised development expenditure is stated at cost less
accumulated amortisation and any impairment losses and are
amortised over the period of expected future sales from the
related projects which vary from 3 to 5 years.
Impairment of non-financial assets
Contract liabilities
Contract liabilities represent the consolidated entity’s obligation
to transfer goods or services to a customer and are recognised
when a customer pays consideration, or when the consolidated
entity recognises a receivable to reflect its unconditional right
to consideration (whichever is earlier) before the consolidated
entity has transferred the goods or services to the customer.
Borrowings
Loans and borrowings are initially recognised at the fair value
of the consideration received, net of transaction costs. They are
subsequently measured at amortised cost using the effective
interest method.
Lease liabilities
A lease liability is recognised at the commencement date of a
lease. The lease liability is initially recognised at the present value
of the lease payments to be made over the term of the lease,
discounted using the interest rate implicit in the lease or, if that
rate cannot be readily determined, the consolidated entity’s
incremental borrowing rate. Lease payments comprise of fixed
payments less any lease incentives receivable, variable lease
payments that depend on an index or a rate, amounts expected
to be paid under residual value guarantees, exercise price of a
purchase option when the exercise of the option is reasonably
certain to occur, and any anticipated termination penalties.
Lease liabilities are measured at amortised cost using the
effective interest method. The carrying amounts are re-
Non-financial assets are reviewed for impairment whenever
measured if there is a change in the following: future lease
events or changes in circumstances indicate that the carrying
payments arising from a change in an index or a rate used;
amount may not be recoverable. An impairment loss is
residual guarantee; lease term; certainty of a purchase option
recognised for the amount by which the asset’s carrying amount
and termination penalties. When a lease liability is remeasured,
exceeds its recoverable amount.
Recoverable amount is the higher of an asset’s fair value less
costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the
asset using a pre-tax discount rate specific to the asset or cash-
generating unit to which the asset belongs. Assets that do not
have independent cash flows are grouped together to form a
cash-generating unit.
an adjustment is made to the corresponding right-of-use asset,
or to profit or loss if the carrying amount of the right-of-use asset
is fully written down.
TZ Limited Annual Report 2022 29
Notes to the financial statements continued
Finance costs
Finance costs attributable to qualifying assets are capitalised
as part of the asset. All other finance costs are expensed in the
period in which they are incurred.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries and other employee benefits
expected to be settled within 12 months of the reporting date
are measured at the amounts expected to be paid when the
liabilities are settled.
Other long-term employee benefits
Employee benefits not expected to be settled within 12 months
of the reporting date are measured at the present value of
expected future payments to be made in respect of services
provided by employees up to the reporting date. Consideration
is given to expected future wage and salary levels, experience of
employee departures and periods of service. Expected future
payments are discounted using market yields at the reporting
recognised in profit or loss for the period is the cumulative
amount calculated at each reporting date less amounts already
recognised in previous periods.
Market conditions are taken into consideration in determining
fair value. Therefore, any awards subject to market conditions
are considered to vest irrespective of whether or not that
market condition has been met, provided all other conditions
are satisfied.
If equity-settled awards are modified, as a minimum an
expense is recognised as if the modification had not been
made. An additional expense is recognised, over the remaining
vesting period, for any modification that increases the total fair
value of the share-based compensation benefit as at the date
of modification.
If the non-vesting condition is within the control of the
consolidated entity or employee, the failure to satisfy the
condition is treated as a cancellation. If the condition is not
within the control of the consolidated entity or employee and is
not satisfied during the vesting period, any remaining expense
for the award is recognised over the remaining vesting period,
unless the award is forfeited.
date on high quality corporate bonds with terms to maturity and
If equity-settled awards are cancelled, they are treated as if
currency that match, as closely as possible.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are
expensed in the period in which they are incurred.
Share-based payments
they had vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award
is substituted for the cancelled award, the cancelled and new
award are treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is
measured at fair value for recognition or disclosure purposes,
Equity-settled share-based compensation benefits are provided
the fair value is based on the price that would be received to sell
to employees.
Equity-settled transactions are awards of shares, or options
over shares, that are provided to employees in exchange for the
rendering of services.
The cost of equity-settled transactions is measured at fair value
on grant date. Fair value is independently determined using the
Black-Scholes option pricing model that takes into account the
exercise price, the term of the option, the impact of dilution,
the share price at grant date, expected price volatility of the
underlying share, the expected dividend yield, the risk free
interest rate for the term of the option, together with non-vesting
conditions that do not determine whether the consolidated
entity receives the services that entitle the employees to receive
payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions is recognised as an
expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is
calculated based on the grant date fair value of the award, the
best estimate of the number of awards that are likely to vest
and the expired portion of the vesting period. The amount
an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and
assumes that the transaction will take place either: in the
principal market; or in the absence of a principal market, in the
most advantageous market.
Fair value is measured using the assumptions that market
participants would use when pricing the asset or liability, assuming
they act in their economic best interests. For non-financial assets,
the fair value measurement is based on its highest and best use.
Valuation techniques that are appropriate in the circumstances
and for which sufficient data are available to measure fair value,
are used, maximising the use of relevant observable inputs and
minimising the use of unobservable inputs.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares
or options are shown in equity as a deduction, net of tax, from
the proceeds.
TZ Limited Annual Report 2022 30
Notes to the financial statements continued
Business combinations
Earnings per share
The acquisition method of accounting is used to account
for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition date
fair values of the assets transferred, equity instruments issued
or liabilities incurred by the acquirer to former owners of the
acquiree and the amount of any non-controlling interest in the
Basic earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to the owners of TZ Limited, excluding any costs
of servicing equity other than ordinary shares, by the weighted
average number of ordinary shares outstanding during the
financial year, adjusted for bonus elements in ordinary shares
acquiree. For each business combination, the non-controlling
issued during the financial year.
interest in the acquiree is measured at either fair value or at the
proportionate share of the acquiree’s identifiable net assets. All
Diluted earnings per share
acquisition costs are expensed as incurred to profit or loss.
On the acquisition of a business, the consolidated entity
assesses the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance with
the contractual terms, economic conditions, the consolidated
entity’s operating or accounting policies and other pertinent
conditions in existence at the acquisition date.
Where the business combination is achieved in stages, the
consolidated entity remeasures its previously held equity
interest in the acquiree at the acquisition date fair value and
the difference between the fair value and the previous carrying
amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer
is recognised at the acquisition date fair value. Subsequent
changes in the fair value of the contingent consideration
classified as an asset or liability is recognised in profit or loss.
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares and the
weighted average number of additional ordinary shares that
would have been outstanding assuming conversion of all dilutive
potential ordinary shares.
Goods and Services Tax (‘GST’) and other similar
taxes
Revenues, expenses and assets are recognised net of the amount
of associated GST, unless the GST incurred is not recoverable from
the tax authority. In this case it is recognised as part of the cost of
the acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST
Contingent consideration classified as equity is not remeasured
receivable or payable. The net amount of GST recoverable from, or
and its subsequent settlement is accounted for within equity.
payable to, the tax authority is included in other receivables or other
The difference between the acquisition date fair value of assets
payables in the statement of financial position.
acquired, liabilities assumed and any non-controlling interest in
Cash flows are presented on a gross basis. The GST components
the acquiree and the fair value of the consideration transferred
of cash flows arising from investing or financing activities which
and the fair value of any pre-existing investment in the acquiree
are recoverable from, or payable to the tax authority, are
is recognised as goodwill. If the consideration transferred
and the pre-existing fair value is less than the fair value of the
identifiable net assets acquired, being a bargain purchase to the
acquirer, the difference is recognised as a gain directly in profit
or loss by the acquirer on the acquisition date, but only after a
reassessment of the identification and measurement of the net
assets acquired, the non-controlling interest in the acquiree, if
any, the consideration transferred and the acquirer’s previously
held equity interest in the acquirer.
Business combinations are initially accounted for on a
provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional
assets or liabilities during the measurement period, based on
new information obtained about the facts and circumstances
that existed at the acquisition date. The measurement period
ends on either the earlier of (i) 12 months from the date of the
acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
presented as operating cash flows.
Commitments and contingencies are disclosed net of the
amount of GST recoverable from, or payable to, the tax authority.
New Accounting Standards and Interpretations
not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have
recently been issued or amended but are not yet mandatory,
have not been early adopted by the consolidated entity for the
annual reporting period ended 30 June 2022. The consolidated
entity has not yet assessed the impact of these new or amended
Accounting Standards and Interpretations.
TZ Limited Annual Report 2022 31
Notes to the financial statements continued
Note 2 Critical accounting judgements,
estimates and assumptions
The preparation of the financial statements requires
management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements.
Management continually evaluates its judgements and estimates
in relation to assets, liabilities, contingent liabilities, revenue
and expenses. Management bases its judgements, estimates
and assumptions on historical experience and on other various
factors, including expectations of future events, management
believes to be reasonable under the circumstances. The
resulting accounting judgements and estimates will seldom
equal the related actual results. The judgements, estimates and
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, historical collection rates, the impact of
the Coronavirus (COVID-19) pandemic and forward-looking
information that is available. The allowance for expected
credit losses, as disclosed in note 9, is calculated based on the
information available at the time of preparation. The actual credit
losses in future years may be higher or lower.
assumptions that have a significant risk of causing a material
Capitalised development costs
adjustment to the carrying amounts of assets and liabilities
(refer to the respective notes) within the next financial year are
discussed below.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that
the Coronavirus (COVID-19) pandemic has had, or may have,
Distinguishing the research and development phases of a new
project and determining whether the recognition requirements
for the capitalisation of development costs are met requires
judgement. After capitalisation, management monitors whether
the recognition requirements continue to be met and whether
there are any indicators that capitalised costs may be impaired.
on the consolidated entity based on known information. This
Impairment of non-financial assets other than goodwill and
consideration extends to the nature of the products and services
other indefinite life intangible assets
offered, customers, supply chain, staffing and geographic
regions in which the consolidated entity operates. Other than as
addressed in specific notes, there does not currently appear to
be either any significant impact upon the financial statements or
any significant uncertainties with respect to events or conditions
which may impact the consolidated entity unfavourably as at the
reporting date or subsequently as a result of the Coronavirus
(COVID-19) pandemic.
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 assessing
the value of the asset at fair value less costs of disposal and
using value-in-use models which incorporate a number of key
estimates and assumptions.
Revenue from contracts with customers
Determining when to recognise revenues from maintenance
Income tax
services recognised over time is dependent on the extent to
which the performance obligations have been satisfied. For
maintenance service agreements, revenue recognition requires
an understanding of the customer’s use of the related products,
historical experience and knowledge of the market.
Recognised amounts of contract revenues and related
receivables reflect management’s best estimate of each
The consolidated entity is subject to income taxes in the
jurisdictions in which it operates. Significant judgement and
estimates are required in recognising and measuring current
and deferred tax amounts. For any uncertain tax treatment
adopted relating to transactions or events, the consolidated
entity recognises and measures tax related amounts having
regard to both the probability that such amounts may be
contract’s outcome and stage of completion. This includes the
challenged by a tax authority and the expected resolution of
assessment of the profitability of ongoing contracts and the
such uncertainties. In such circumstances, tax balances are
order backlog. For more complex contracts in particular, costs
determined based on either most likely amount or expected
to complete and contract profitability are subject to significant
value probability based outcomes. Where final tax outcomes
estimation uncertainty.
vary from what is estimated, such differences will impact the
current and deferred tax provisions recognised in the financial
statements.
TZ Limited Annual Report 2022 32
Notes to the financial statements continued
Recovery of deferred tax assets
Note 3 Operating segments
Deferred tax assets are recognised for deductible temporary
differences only if the consolidated entity considers it is probable
that future taxable amounts will be available to utilise those
temporary differences and losses.
Lease term
The lease term is a significant component in the measurement
of both the right-of-use asset and lease liability. Judgement is
exercised in determining whether there is reasonable certainty
that an option to extend the lease or purchase the underlying
asset will be exercised, or an option to terminate the lease will
not be exercised, when ascertaining the periods to be included
in the lease term. In determining the lease term, all facts and
circumstances that create an economical incentive to exercise
an extension option, or not to exercise a termination option,
are considered at the lease commencement date. Factors
considered may include the importance of the asset to the
consolidated entity’s operations; comparison of terms and
conditions to prevailing market rates; incurrence of significant
penalties; existence of significant leasehold improvements; and
the costs and disruption to replace the asset. The consolidated
entity reassesses whether it is reasonably certain to exercise an
extension option, or not exercise a termination option, if there is
Identification of reportable operating segments
The consolidated entity operates in four operating segments
being Australia, United States of America (‘USA’), Europe
(including the United Kingdom) Middle East and Africa (‘EMEA’)
and Asia. The principal activities of each operating segment are
identical, being the sale of hardware and software products.
These segments are based on the internal reports that are
reviewed and used by the Board of Directors (being the Chief
Operating Decision Makers (‘CODM’)) in assessing performance
and in determining the allocation of resources.
Other segments represent the activities of the corporate
headquarters.
The information reported to the CODM, on at least a monthly
basis, is profit or loss and adjusted earnings before interest,
tax, depreciation and amortisation and other specific items
(‘Adjusted EBITDA’).
For information about revenue from products and services, refer
to note 4.
Intersegment transactions
a significant event or significant change in circumstances.
Transactions between segments are carried out at arm’s length
and are eliminated on consolidation.
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily
determined, an incremental borrowing rate is estimated to
Intersegment receivables, payables and loans
Intersegment receivables, payables and loans are eliminated on
discount future lease payments to measure the present value
consolidation.
of the lease liability at the lease commencement date. Such a
rate is based on what the consolidated entity estimates it would
have to pay a third party to borrow the funds necessary to obtain
an asset of a similar value to the right-of-use asset, with similar
terms, security and economic environment.
Major customers
During the year ended 30 June 2022, 2 customers (2021: 2
customers) each contributed more than 10% to the external
revenue of the consolidated entity. These 2 customers
contributed 23% (2021: 2 customers contributed 31%) of the
consolidated entity’s external revenue.
TZ Limited Annual Report 2022 33
Notes to the financial statements continued
Operating segment information
Consolidated - 2022
Australia
$
USA
$
EMEA
$
Asia
$
Sales to external customers
6,180,310
13,660,466
688,069
899,715
Intersegment sales
661,657
968
-
3,222
Total sales revenue
6,841,967
13,661,434
688,069
902,937
Revenue
Interest
128
-
-
-
Total segment revenue
6,842,095
13,661,434
688,069
902,937
Intersegment eliminations
Total revenue
Other
segments
$
-
-
-
-
-
Total
$
21,428,560
665,847
22,094,407
128
22,094,535
(665,847)
21,428,688
Adjusted EBITDA
1,265,890
2,237,984
(134,186)
381,421
(2,472,580)
1,278,529
Depreciation and amortisation
Interest revenue
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense
(975,644)
128
(235,315)
67,698
(24,802)
42,896
Consolidated - 2021
Australia
$
USA
$
EMEA
$
Asia
$
Sales to external customers
1,624,423
10,285,266
3,725,828
742,706
Other
segments
$
-
Total
$
16,378,223
Revenue
Interest
Total revenue
-
-
-
-
5,030
5,030
1,624,423
10,285,266
3,725,828
742,706
5,030
16,383,253
Adjusted EBITDA
119,151
526,850
1,209,709
341,394
(2,059,740)
137,364
Depreciation and amortisation
Interest revenue
Finance costs
Loss before income tax expense
Income tax expense
Loss after income tax expense
(852,463)
5,030
(883,004)
(1,593,073)
(65,131)
(1,658, 204)
All assets and liabilities, including taxes are not allocated to the operating segments as they are managed on an overall group basis.
Geographical information
Geographical non-current assets
Australia
United States of America
EMEA
Asia (Singapore)
2022
$
2021
$
1,333,307
2,125,005
251,899
205,204
3,011
956
4,626
1,426
1,589,173
2,336,261
TZ Limited Annual Report 2022 34
Notes to the financial statements continued
Note 4 Revenue
Consolidated
Note 5 Other Income
2022
$
2021
$
Consolidated
Sale and service revenue
21,428,560
16,378,223
Forgiveness of loan
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is
as follows:
Consolidated
2022
$
2021
$
Government
grant
Major product and service lines
Sale of hardware and software
17,555,924
12,909,081
Installation and commissioning
services
1,417,886
819,137
Other
Research and
development
incentive
JobSaver
JobKeeper
Cash Boost
Export market
development
Other
2022
$
641,484
2021
$
-
245,822
1,004,020
217,668
-
192,112
50,000
61,841
12,921
-
8,695
1,439
Maintenance and support services
2,441,734
2,279,654
Professional services
13,016
370,351
Other income
1,117,895
1,318,107
21,428,560
16,378,223
Forgiveness of loan
Timing of revenue recognition
Goods and services transferred at
a point in time
18,986,826
14,098,569
Business Administration Paycheck Protection Programme (‘PPP’)
In May 2020, the Company’s USA subsidiary, Telezygology
Inc., secured a PPP loan of US$464,862 under the US Small
Services transferred over time
2,441,734
2,279,654
established by the Coronavirus Aid, Relief and Economic Security
(‘CARES’) Act. The loan term had a two years term and carried an
21,428,560
16,378,223
interest rate of 1% per annum. During the year ended 30 June
2022, the loan was forgiven in full.
Refer to note 3 for details of revenue disaggregated by
geographical regions.
Government grant – Research and Development
Incentive
Government grant – Research and Development Incentive
represents reimbursements received from the Australian
Government for eligible research and development expenditure
incurred by the consolidated entity.
Government grant – JobSaver
Government grant – JobSaver represents JobSaver support
payments received from the New South Wales Government
during the Coronavirus (‘COVID-19’) pandemic to assist
eligible businesses cover their payroll costs. These have been
recognised as government grants in the financial statements and
recorded as other income over the periods in which the related
employee benefits are recognised as an expense.
TZ Limited Annual Report 2022 35
Notes to the financial statements continued
Government grant – JobKeeper
Note 7 Income tax expense
Government grant – JobKeeper represents JobKeeper support
payments received from the Australian Government which
are passed on to eligible employees during the Coronavirus
(‘COVID-19’) pandemic. These have been recognised as
government grants in the financial statements and recorded as
other income over the periods in which the related employee
benefits are recognised as an expense.
Government grant – Cash Boost
Government grant – Cash Boost represents cash boost support
payments received from the Australian Government as part of
its ‘Boosting Cash Flow for Employers’ scheme in response to
the Coronavirus (‘COVID-19’) pandemic. These non-tax amounts
have been recognised as government grants and recognised
as income once there is reasonable assurance that the
consolidated entity will comply with any conditions attached.
Note 6 Expenses
Consolidated
Profit/(loss) before income tax
includes the following specific
expenses:
2022
$
2021
$
Leasehold
improvements
-
109
Consolidated
Income tax
expense
2022
$
2021
$
Current tax
24,802
65,131
Aggregate income tax expense
24,802
65,131
Numerical
reconciliation
of income
tax expense
and tax at the
statutory rate
Profit/(loss) before
income tax expense
67,698 (1,593,073)
Tax at the statutory tax rate of 25%
(2021: 26%)
Current year tax losses not
recognised
Difference in overseas tax rates/
refunds
16,925
(414,199)
-
495,730
7,877
(16,400)
Income tax expense
24,802
65,131
The consolidated entity is in the process of determining its tax
loss position to carry forward.
Change in corporate tax rate
The corporate tax rate applicable to base rate entities reduced
from 26% to 25% for the 2021-22 income year. The consolidated
entity qualifies as a base rate entity as it has a turnover of less
Plant and equipment
74,200
81,449
than $50 million and less than 80% of its assessable income is
Depreciation
Office equipment
11,699
21,610
Right-of-use assets
212,959
85,659
derived from base rate entity passive income. The consolidated
entity has remeasured its deferred tax balances, and any
unrecognised potential tax benefits arising from carried forward
Total depreciation
298,858
188,827
tax losses, based on the effective tax rate that is expected to
Patents
-
8,078
Amortisation
Development costs
676,786
655,558
apply in the year the temporary differences are expected to
reverse or benefits from tax losses realised. The impact of the
change in tax rate on deferred tax balances has been recognised
Total amortisation
676,786
663,636
as tax expense in profit or loss or as an adjustment to equity to
Total depreciation and amortisation
975,644
852,463
the extent to which the deferred tax relates to items previously
recognised outside profit or loss.
Finance costs
Interest and finance
charges paid/payable
on borrowings
Interest and finance
charges paid/payable
on lease liabilities
Leases
Short-term lease
payments
Defined contribution
superannuation expense
201,472
872,970
33,843
10,034
Note 8 Current assets – cash and cash
equivalents
203,427
203,756
Consolidated
342,059
347,386
Cash and cash equivalents
2,051,162
373,926
2022
$
2021
$
Finance costs expensed
235,315
883,004
Share-based
payments
Options
7,187
41,569
Share grants
20,148
-
27,335
41,569
TZ Limited Annual Report 2022 36
Notes to the financial statements continued
Note 9 Current assets – trade and other
receivables
Consolidated
Trade receivables
2022
2021
$
$
4,130,232
2,555,515
Goods and services tax receivable
-
52,003
4,130,232
2,607,518
Allowance for expected credit losses
The ageing of the receivables and allowance for expected credit
losses provided for above are as follows:
Expected credit
loss rate
2022
%
2021
%
Consolidated
Not overdue
0 to 3 months overdue
3 to 6 months overdue
Over 6 months overdue
-
-
-
-
-
-
-
-
Carrying
amount
2022
$
2021
$
2,542,333
1,293,396
1,227,797
907,570
334,439
179,573
25,663
174,976
4,130,232
2,555,515
Allowance for
expected credit losses
2022
2021
$
-
-
-
-
-
$
-
-
-
-
-
Note 10 Current assets – contract assets
Note 11 Current assets – inventories
2022
2021
$
$
Consolidated
2022
2021
$
$
2,609,521
1,672,307
Finished goods - at cost
2,979,362
1,709,385
Consolidated
Contract assets
Reconciliation
Reconciliation of the written down values at the beginning and
end of the current and previous financial year are set out below:
Consolidated
Opening balance
Additions
2022
2021
$
$
1,672,307
325,042
11,540,623
1,672,307
Transfer to trade receivables
(10,603,409)
(325,042)
Closing balance
2,609,521
1,672,307
Less: Provision for impairment
(292,522)
(282,259)
Stock in transit - at cost
128,269
2,686,840 1,427,126
2,686,840
1,555,395
Note 12 Current assets – other
Consolidated
2022
2021
$
$
Prepayments and deferred expenses
1,079,140
546,834
Security deposits
154,795
150,798
Allowance for expected credit losses
1,233,935
697,632
The allowance for expected credit losses on contract assets for
the year ended 30 June 2022 is $nil (2021: $nil).
TZ Limited Annual Report 2022 37
Notes to the financial statements continued
Note 13 Non-current assets – property,
plant and equipment
Consolidated
2022
2021
$
$
Leasehold improvements - at cost
418,955
418,955
Less: Accumulated depreciation
(418,955)
(418,955)
-
-
Plant and equipment - at cost
2,115,249
2,114,214
Less: Accumulated depreciation
(2,040,409) (1,966,209)
74,840
148,005
Office equipment - at cost
941,505
811,033
Less: Accumulated depreciation
(797,213)
(785,514)
144,292
25,519
219,132
173,524
Reconciliations
Reconciliations of the written down values at the beginning and
end of the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2020
Additions
Transfers in/(out)
Exchange differences
Depreciation expense
Balance at 30 June 2021
Additions
Exchange differences
Depreciation expense
Balance at 30 June 2022
Leasehold
improvements
Plant and
equipment
Office equipment
$
109
-
-
-
(109)
-
-
-
-
-
$
202,525
-
26,995
(66)
(81,449)
148,005
1,035
-
(74,200)
74,840
$
73,317
5,484
(26,995)
(4,677)
(21,610)
25,519
126,503
3,969
(11,699)
144,292
Total
$
275,951
5,484
-
(4,743)
(103,168)
173,524
127,538
3,969
(85,899)
219,132
TZ Limited Annual Report 2022 38
Notes to the financial statements continued
Note 14 Non-current assets – right-of-use
Note 15 Non-current assets – intangibles
assets
Consolidated
2022
$
2021
$
Land and buildings - right-of-use
614,921
703,493
Less: Accumulated depreciation
(236,596)
(112,481)
378,325
591,012
The consolidated entity leases various premises under non-
cancellable operating leases expiring between 1 and 5 years,
in some cases, with options to extend. All leases have annual
CPI escalation clauses. The above commitments do not include
commitments for any renewal options on leases. Lease
Consolidated
2022
$
2021
$
Re-acquired right (Intevia Licence)
- at cost
10,138,090
10,138,090
Less: Accumulated amortisation
(8,035,887)
(8,035,887)
Less: Impairment
(2,102,203)
(2,102,203)
-
-
Patents - at cost
2,748,670
2,720,617
Less: Accumulated amortisation
(765,810)
(765,810)
Less: Impairment
(1,786,542)
(1,786,542)
196,318
168,265
conditions do not impose any restrictions on the ability of TZ
Development costs - at cost
10,892,660
10,823,936
Limited and its subsidiaries from borrowing further funds or
paying dividends.
Reconciliations
Reconciliations of the written down values at the beginning and
end of the current and previous financial year are set out below:
Less: Accumulated amortisation
(5,596,262)
(4,919,476)
Less: Impairment
(4,501,000)
(4,501,000)
795,398
1,403,460
991,716
1,571,725
Right-of-use assets
Reconciliations
Consolidated
Balance at 1 July 2020
Additions
Depreciation expense
Balance at 30 June 2021
Exchange differences
Depreciation expense
Balance at 30 June 2022
$
62,350
614,321
(85,659)
591,012
272
(212,959)
378,325
Reconciliations of the written down values at the beginning and
end of the current and previous financial year are set out below:
Consolidated
Balance at 1 July
2020
Additions
Exchange
differences
Amortisation
expense
Balance at 30 June
2021
Additions
Exchange
differences
Amortisation
expense
Balance at 30 June
2022
Development
costs
Patents
$
$
Total
$
164,891
1,680,689
1,845,580
26,604
378,329
404,933
(15,152)
-
(15,152)
(8,078)
(655,558)
(663,636)
168,265
1,403,460
1,571,725
11,133
68,724
79,857
16,920
-
16,920
-
(676,786)
(676,786)
196,318
795,398
991,716
TZ Limited Annual Report 2022 39
Notes to the financial statements continued
Impairment testing
At 30 June 2022, the cash generating units (‘CGU’) to which
intangible assets belong was tested for impairment. For the
purpose of impairment testing, the Package Asset Delivery (‘PAD’)
CGU is determined to be the sole CGU that benefits from the
core patented technology and product development costs. The
net carrying value of the CGU is as follows:
Consolidated
2022
$
2021
$
Package Asset Delivery - PAD
991,716
1,571,725
Impairment test performed
The recoverable value of the CGU was assessed on a fair value
basis (less likely costs of disposal). The fair value was determined
by management, through the assistance of a third party
valuations specialist.
The fair value hierarchy within which the fair value measurement
of the asset is categorised in its entirety is Level 3. The valuation
techniques used to measure the fair value less likely costs of
disposal were the Relief from Royalty Method and Multi Period
Excess Earnings Method. Management used the following key
estimates and assumptions in the valuation calculation:
Note 16 Current liabilities – trade and
other payables
Consolidated
Trade payables
2022
$
2021
$
1,840,073
2,159,131
Employee expense payables
322,942
118,966
Goods and services tax payable
289,616
-
Other payables
799,374
842,441
3,252,005
3,120,538
Refer to note 25 for further information on financial instruments.
Note 17 Current liabilities – contract
liabilities
Consolidated
2022
$
2021
$
Contract liabilities
3,510,546
1,692,768
Reconciliation
Reconciliation of the carrying values at the beginning and end of
the current and previous financial year are set out below:
Key items
Growth rate
Discount rate
Royalty rate
2022
1.50%
2021
2.25%
2022
$
2021
$
10.60%
11.50%
Opening balance
1,692,768
2,293,752
5.00%
5.00%
Amounts invoiced in advance
16,443,141
760,217
Customer attrition rate
10.00%
10.00%
EBITDA margin
50.00%
50.00%
Impairment test results
Based on the testing performed, the recoverable amount of the
CGU exceeded the carrying value and no impairment existed at
30 June 2022 (30 June 2021: no impairment).
Impairment test sensitivity
A reasonable possible change in the key assumptions used
to determine the recoverable amount of the CGU would not
cause the remaining carrying value of the CGU to exceed its
recoverable amount.
Transfer to revenue - included in
the opening balance
Transfer to revenue -
performance obligations satisfied
in the current period
Transfer to revenue - other
balances
(1,692,768)
(1,361,201)
(13,085,474)
152,879
-
-
Closing balance
3,510,546
1,692,768
Unsatisfied performance obligations
The aggregate amount of the transaction price allocated to the
performance obligations that are unsatisfied at the end of the
reporting period was $3,510,546 as at 30 June 2022 ($1,692,768
as at 30 June 2021) and is expected to be recognised as revenue
in future periods as follows:
Consolidated
Within 6 months
2022
$
2021
$
3,245,546
1,641,848
Greater than 6 months
265,000
50,920
3,510,546
1,692,768
TZ Limited Annual Report 2022 40
Notes to the financial statements continued
Note 18 Current liabilities – borrowings
Total secured liabilities
Consolidated
2022
$
2021
$
The total secured current liabilities are as follows:
2022
$
2021
$
Loan - First Samuel
2,500,000
4,000,000
Consolidated
Loan - First Samuel
- capitalised interest
Loan - PPP
-
-
111,044
614,840
2,500,000
4,725,884
Loan - First Samuel
2,500,000
4,000,000
Loan - First Samuel
- capitalised interest
-
111,044
2,500,000
4,111,044
Refer to note 25 for further information on financial instruments.
Loan – First Samuel
On 1 July 2021, the consolidated entity drew down the full
debenture facility of $2,500,000 that was established with First
Samuel on 30 June 2021, and which matures on 31 October
2022. This facility carries a coupon rate of BBSW + 4.5% per
annum and a facility fee of 1% per annum payable in advance.
The drawn funds were used to repay $2,111,044 of debt due
under the previous facility which existed at 30 June 2021 and
matured on 31 July 2021 as well as the facility fee of the new
debenture facility.
Of the total facility drawn down at 30 June 2021:
›
›
$2,111,044 was repaid on the 1 July 2021, from funds drawn
from the new loan facility
$2,000,000 was converted into ordinary shares of the
Company at a price of $0.12 per share on 16 August 2021
(refer to note 22)
Loan – PPP
In May 2020, the Company’s USA subsidiary, Telezygology
Inc., secured a PPP loan of US$464,862 under the US Small
Business Administration Paycheck Protection Programme (‘PPP’)
established by the Coronavirus Aid, Relief and Economic Security
(‘CARES’) Act. The loan term is two years and carries an interest
rate of 1% per annum. This PPP loan was treated as forgiven by
the US Small Business Administration and recorded as “paid in
full” in May 2022.
Assets pledged as security
The facilities are secured by first ranking security interest over
the assets of the consolidated entity.
Financing arrangements
Unrestricted access was available at the reporting date to the
following lines of credit:
Consolidated
Loan - First Samuel
(expired facility)
Loan - First Samuel
(current facility)
2022
$
-
2021
$
4,000,000
2,500,000
2,500,000
Loan - PPP
-
614,840
Loan - First Samuel
(expired facility)
Loan - First Samuel
(current facility)
2,500,000
7,114,840
-
4,000,000
2,500,000
-
Loan - PPP
-
614,840
2,500,000
4,614,840
Total
facilities
Used at the
reporting
date
Loan - First Samuel
(expired facility)
Loan - First Samuel
(current facility)
Loan - PPP
Unused
at the
reporting
date
-
-
-
-
-
2,500,000
-
2,500,000
TZ Limited Annual Report 2022 41
Notes to the financial statements continued
Note 19 Current liabilities – lease
Note 21 Non-current liabilities – lease
liabilities
liabilities
Consolidated
Lease liability
2022
$
2021
$
Consolidated
2022
$
2021
$
200,032
199,045
Lease liability
206,050
397,290
Refer to note 21 for further information.
Refer note 25 for details of the undiscounted future lease
Note 20 Current liabilities – provisions
Consolidated
2022
$
2021
$
Employee benefits
609,877
613,291
commitments.
Reconciliations
Reconciliations of the lease liability (current and non-current) at
the beginning and end of the current financial year are set out
below:
Consolidated
Opening balance
Additions
2022
$
2021
$
596,335
65,648
-
614,321
Accretion of interest
33,834
10,034
Payments - principal
(191,032)
(83,634)
Payments - interest
(33,834)
(10,034)
Exchange differences
779
-
Closing balance
406,082
596,335
TZ Limited Annual Report 2022 42
Notes to the financial statements continued
Note 22 Equity – issued capital
Consolidated
Ordinary shares - fully paid
Movements in ordinary share capital
Details
Balance
Issue of shares
Issue of shares
Issue of shares
Issue of shares
Less: share issue costs
Balance
Issue of shares
Issue of shares
Less: share issue costs
Balance
2022
Shares
2021
Shares
2022
$
2021
$
22,708,114
176,508,947
227,279,703
221,876,795
Date
Shares
Issue price
$
1 July 2020
91,725,605
212,426,391
26 November 2020
2,446,807
7 January 2021
2,000,000
29 April 2021
21,500,000
11 June 2021
58,836,535
-
$0.1050
$0.0900
$0.1200
$0.1200
256,915
180,000
2,580,000
7,060,384
(626,895)
30 June 2021
176,508,947
221,876,795
16 August 2021
16,666,667
12 November 2021
27,570,000
$0.1200
$0.1250
$0.1100
2,000,000
3,446,250
215,875
(259,217)
-
30 June 2022
222,708,114
227,279,703
Issue of shares – equity incentive plan
11 March 2022
1,962,500
Ordinary shares
Capital risk management
Ordinary shares entitle the holder to participate in any dividends
The consolidated entity’s objectives when managing capital are
declared and any proceeds attributable to shareholders should
to safeguard its ability to continue as a going concern, so that
the company be wound up, in proportions that consider both the
it can provide returns for shareholders and benefits for other
number of shares held and the extent to which those shares are
stakeholders and to maintain an optimal capital structure to
paid up. The fully paid ordinary shares have no par value and the
reduce the cost of capital.
company does not have a limited amount of authorised capital.
In order to maintain or adjust the capital structure, the
On a show of hands every member present at a meeting in
consolidated entity may adjust the amount of dividends paid to
person or by proxy shall have one vote and upon a poll each
shareholders, return capital to shareholders, issue new shares
share shall have one vote.
or sell assets to reduce debt.
Share buy-back
The consolidated entity would look to raise capital when an
opportunity to invest in a business or company or invest in
There is no current on-market share buy-back.
growth was seen as value adding.
Unquoted options
At 30 June 2022, there were 2,091,000 (2021: 2,091,000) options
on issue associated with share-based payment arrangements
(see note 35). Each option entitles the holder to subscribe for
one fully paid share in the company upon exercise at any time
from the date the vesting conditions have been satisfied until
expiry of the options.
The capital risk management policy remains unchanged from the
30 June 2021 Annual Report.
Capital is regarded as total equity, as recognised in the statement
of financial position, plus net debt. Net debt is calculated as total
borrowings less cash and cash equivalents.
TZ Limited Annual Report 2022 43
Notes to the financial statements continued
Note 23 Equity – reserves
Note 25 Financial instruments
Consolidated
2022
$
2021
$
Financial risk management objectives
Foreign currency reserve
(4,246,674)
(4,321,813)
Share-based payments reserve
34,771
89,422
(4,211,903)
(4,232,391)
Foreign currency reserve
The consolidated entity’s activities expose it to a variety of
financial risks: market risk (including foreign currency risk,
price risk and interest rate risk), credit risk and liquidity risk.
The consolidated entity’s overall risk management program
focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the financial performance
The reserve is used to recognise exchange differences arising
of the consolidated entity. The consolidated entity uses different
from the translation of the financial statements of foreign
operations to Australian dollars. It is also used to recognise
methods to measure different types of risk to which it is exposed.
These methods include sensitivity analysis in the case of interest
gains and losses on hedges of the net investments in foreign
rate and foreign exchange risks and ageing analysis for credit
operations.
risk.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits
provided to employees and Directors as part of their
remuneration, and other parties as part of their compensation
for services.
Movements in reserves
Movements in each class of reserve during the current and
previous financial year are set out below:
Risk management is carried out by senior finance executives
(‘finance’) under policies approved by the Board of Directors
(‘the Board’). These policies include identification and analysis
of the risk exposure of the consolidated entity and appropriate
procedures, controls and risk limits. Finance identifies, evaluates
and hedges financial risks within the consolidated entity’s
operating units. Finance reports to the Board on a monthly basis.
Market risk
Foreign currency risk
Foreign
currency
Share-based
payments
Consolidated
$
$
Total
$
The consolidated entity undertakes certain transactions
denominated in foreign currency and is exposed to foreign
currency risk through foreign exchange rate fluctuations.
Balance at 1 July 2020
(4,337,139)
61,946 (4,275,193)
Foreign currency
translation
Share-based
payments
Cancelled options
transferred to
accumulated losses
Balance at 30 June
2021
Foreign currency
translation
Share-based
payments
Cancelled options
transferred to
accumulated losses
Balance at 30 June
2022
15,326
-
15,326
-
-
41,569
41,569
(14,093)
(14,093)
(4,321,813)
89,422 (4,232,391)
75,139
-
75,139
Foreign exchange risk arises from future commercial
transactions and recognised financial assets and financial
liabilities denominated in a currency that is not the entity’s
functional currency. The risk is measured using sensitivity
analysis and cash flow forecasting.
The consolidated entity’s foreign exchange risk is managed to
ensure sufficient funds are available to meet foreign currency
commitments in a timely and cost-effective manner. The
consolidated entity will continually monitor this risk and consider
entering into forward foreign exchange, foreign currency swap
-
-
7,187
7,187
and foreign currency option contracts if appropriate.
(61,838)
(61,838)
assess currency risk at year end. The value of transactions
Creditors and debtors as at 30 June 2022 were reviewed to
denominated in a currency other than the functional currency of
(4,246,674)
34,771 (4,211,903)
the respective subsidiary was insignificant and therefore the risk
was determined as immaterial.
Price risk
Note 24 Equity – dividends
The consolidated entity is not exposed to any significant price
There were no dividends paid, recommended or declared during
risk.
the current or previous financial year.
TZ Limited Annual Report 2022 44
Notes to the financial statements continued
Interest rate risk
The consolidated entity’s main interest rate risk arises from long-
term borrowings. Borrowings issued at variable rates expose
the consolidated entity to interest rate risk. Borrowings issued at
fixed rates expose the consolidated entity to fair value interest
rate risk.
The consolidated entity invests surplus cash in term deposits
with fixed returns. The Board makes investment decisions after
considering advice received from professional advisors.
The consolidated entity monitors its interest rate exposure
continuously.
As at the reporting date, the consolidated entity had the following
variable rate exposures:
Consolidated
Cash and cash equivalents
Loan – First Samuel
2022
2021
Weighted average
interest rate
%
-
Balance
$
2,051,162
Weighted average
interest rate
%
0.10
5.38%
(2,500,000)
7.48%
Net exposure to cash flow interest rate risk
(448,838)
Balance
$
373,926
(4,111,044)
(3,737,118)
An analysis by remaining contractual maturities is shown in
‘liquidity and interest rate risk management’ below.
The consolidated entity has a net cash deficit totalling $448,838
(2021: net cash deficit $3,737,118). An official increase/decrease
in interest rates of 100 basis point (2021: 100 basis point)
percentage point would have an adverse/favourable effect on
profit before tax of $4,488 (2021: adverse/favourable $37,371)
per annum. The percentage change is based on the expected
volatility of interest rates using market data and analysts’
forecasts.
Credit risk
The consolidated entity has adopted a lifetime expected
loss allowance in estimating expected credit losses to trade
receivables through the use of a provisions matrix using fixed
rates of credit loss provisioning. These provisions are considered
representative across all customers of the consolidated entity
based on recent sales experience, historical collection rates and
forward-looking information that is available.
The consolidated entity has a concentration of credit risk
exposure with 1 customer (2021: 1 customers), which as at
30 June 2022 owed the consolidated entity $594,880 (2021:
$278,096) representing 14% (2021: 11%) of trade receivables. Of
this balance, $nil (2021: $210,678) was outside the customer’s
respective terms of trade, as a result management is confident
Credit risk refers to the risk that a counterparty will default
of collection and no impairment was made as at 30 June
on its contractual obligations resulting in financial loss to
2022. There are no guarantees against these receivables but
the consolidated entity. The consolidated entity has a strict
management closely monitors the receivable balance on a
code of credit, including obtaining agency credit information,
monthly basis and is in regular contact with this customer to
confirming references and setting appropriate credit limits.
mitigate risk.
The consolidated entity obtains guarantees where appropriate
to mitigate credit risk. The maximum exposure to credit risk at
the reporting date to recognised financial assets is the carrying
amount, net of any provisions for impairment of those assets, as
disclosed in the statement of financial position and notes to the
financial statements. The consolidated entity does not hold any
collateral.
There is a concentration of credit risk for cash at bank and cash
on deposit as most monies in Australia are held with one financial
institution, St George Bank.
Generally, trade receivables are written off when there is no
reasonable expectation of recovery. Indicators of this include
the failure of a debtor to engage in a repayment plan, no active
enforcement activity and a failure to make contractual payments
for a period greater than one year.
TZ Limited Annual Report 2022 45
Notes to the financial statements continued
Liquidity risk
Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid
assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay
debts as and when they become due and payable.
The consolidated entity manages liquidity risk by maintaining adequate cash reserves and
available borrowing facilities by continuously monitoring actual and forecast cash flows and
matching the maturity profiles of financial assets and liabilities.
Financing arrangements
Unused borrowing facilities at the reporting date:
Consolidated
Loan – First Samuel (current facility)
Remaining contractual maturities
2022
$
-
2021
$
2,500,000
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.
1 year or less
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Consolidated - 2022
Non-derivatives
Non-interest bearing
Weighted
average
interest rate
%
Trade payables
Other payables
GST payable
-
-
-
$
1,840,073
1,122,316
289,616
Interest-bearing – variable
Loan – First Samuel
5.38
2,500,000
$
-
-
-
-
Interest-bearing – fixed rate
Lease liability
6.87
200,032
206,050
Total non-derivatives
5,952,037
206,050
$
-
-
-
-
-
-
$
-
-
-
-
-
-
Consolidated - 2021
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing – variable
Loan – First Samuel
Interest-bearing – fixed rate
Total non-derivatives
Loan – PPP
Lease liability
Weighted
average
interest rate
%
-
-
7.48
1.00
7.57
1 year or less
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
$
2,159,131
961,407
4,111,044
614,840
$
-
-
-
-
$
-
-
-
-
199,045
218,238
179,052
8,045,467
218,238
179,052
$
-
-
-
-
-
-
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.
TZ Limited Annual Report 2022 46
Remaining
contractual
maturities
$
1,840,073
1,122,316
289,616
2,500,000
406,082
6,158,087
Remaining
contractual
maturities
$
2,159,131
961,407
4,111,044
614,840
596,335
8,442,757
Notes to the financial statements continued
Note 26 Fair value measurement
Note 29 Contingent liabilities
Unless otherwise stated, the carrying amounts of financial
The consolidated entity does not have any contingent liabilities at
instruments reflect their fair value. The carrying amounts of trade
30 June 2022 and 30 June 2021.
receivables and trade payables are assumed to approximate
their fair values due to their short-term nature. The fair value
of financial liabilities is estimated by discounting the remaining
contractual maturities at the current market interest rate that is
available for similar financial instruments.
Note 30 Related party transactions
Parent entity
TZ Limited is the parent entity.
Note 27 Key management personnel
disclosures
Subsidiaries
Compensation
The aggregate compensation made to Directors and other
members of key management personnel of the consolidated
entity is set out below:
Interests in subsidiaries are set out in note 32.
Key management personnel
Disclosures relating to key management personnel are set out in
note 27 and the remuneration report included in the Directors’
Consolidated
2022
$
2021
$
Report.
Short-term employee benefits
1,743,582
1,503,006
Transactions with related parties
Post-employment benefits
115,236
130,669
The following transactions occurred with related parties:
Share-based payments
14,789
38,349
1,873,607
1,672,024
Consolidated
Payment for other expenses:
Interest paid/(payable) to First
Samuel Limited - an entity with
significant influence
2022
$
2021
$
134,449
848,795
Note 28 Remuneration of auditors
During the financial year the following fees were paid or payable
for services provided by PKF Brisbane Audit, the auditor of the
Company:
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.
Consolidated
Audit services
- PKF Brisbane Audit
Audit or review of the financial
statements
Other services
- PKF Brisbane
Tax services
2022
$
2021
$
Loans to/from related parties
90,250
85,500
relation to loans with related parties:
The following balances are outstanding at the reporting date in
10,550
10,000
Consolidated
Current borrowings:
100,800
95,500
Loan from First Samuel Limited -
an entity with significant influence
2022
$
2021
$
2,500,000
4,111,044
Terms and conditions
Refer to note 18 for details of terms and conditions on the First
Samuel Limited loan facility.
TZ Limited Annual Report 2022 47
Notes to the financial statements continued
Note 31 Parent entity information
Set out below is the supplementary information about the parent
entity.
Guarantees entered into by the parent entity in
relation to the debts of its subsidiaries
Statement of profit or loss and other
comprehensive income
Parent
2022
$
2021
$
Loss after income tax
(937,073)
(849,470)
Total comprehensive income
(937,073)
(849,470)
Statement of financial position
Parent
2022
$
2021
$
The parent entity had no guarantees in relation to the debts of its
subsidiaries as at 30 June 2022 and 30 June 2021.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2022
and 30 June 2021.
Capital commitments – property, plant and
equipment
The parent entity had no capital commitments for property, plant
and equipment as at 30 June 2022 and 30 June 2021.
Total current assets
8,606,957
6,128,239
Significant accounting policies
Total assets
10,220,093
7,700,842
The accounting policies of the parent entity are consistent with
Total current liabilities
6,295,769
8,187,702
those of the consolidated entity, as disclosed in note 1, except for
Total liabilities
6,295,769
8,187,702
the following:
Issued capital
227,279,703
221,876,795
›
Investments in subsidiaries are accounted for at cost, less
Equity
Share-based
payments reserve
34,771
89,422
any impairment, in the parent entity.
› Dividends received from subsidiaries are recognised as
Accumulated losses
(223,390,150)
(222,453,077)
other income by the parent entity and its receipt may be an
Total equity/(deficiency)
3,924,324
(486,860)
indicator of an impairment of the investment.
Note 32 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 1:
Ownership interest
2022
2021
Name
Telezygology, Inc
TZ Holdings Inc
Principal place of business / Country of incorporation
United States of America
United States of America
TZ Development Technologies Inc
United States of America
TZ Tooling Inc
TZI Australia Pty Limited
TZ Administration Services Pty Ltd
TZI Singapore Pte Ltd
TZI UK Limited
United States of America
Australia
Australia
Singapore
United Kingdom
%
100
100
100
100
100
100
100
100
%
100
100
100
100
100
100
100
100
TZ Limited Annual Report 2022 48
Notes to the financial statements continued
Note 33 Cash flow information
Reconciliation of profit/(loss) after income tax to net cash used in operating activities
Consolidated
Profit/(loss) after income tax expense for the year
Depreciation and amortisation
Share-based payments
Adjustments for
Foreign exchange differences
Forgiveness of loan
Interest accrued on borrowings
Increase in trade and other receivables
2022
$
42,896
975,644
27,335
62,917
(641,484)
112,548
(1,522,714)
2021
$
(1,658,204)
852,463
41,569
(6,993)
-
(37,527)
(486,816)
Change in operating
assets and liabilities
Increase in contract assets
(937,214)
(1,347,265)
Decrease/(increase) in inventories
Decrease/(increase) in other operating assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in contract liabilities
Decrease in employee benefits
(1,131,445)
(336,579)
(92,125)
1,817,778
(3,414)
42,361
71,070
582,604
(600,984)
(49,705)
Net cash used in operating activities
(1,625,857)
(2,597,427)
Non-cash investing and financing activities
Consolidated
Additions to the right-of-use assets
Shares issued under employee share plan
Shares issued on conversion of loan
Forgiveness of loan
Changes in liabilities arising from financing activities
2022
$
-
215,875
2,000,000
641,484
2,857,359
Consolidated
Balance at 1 July 2020
Net cash used in financing activities
Shares issued on conversion of loan
Lease additions
Exchange differences
Balance at 30 June 2021
Net cash from/(used in) financing activities
Shares issued on conversion of loan
Forgiveness of loan
Exchange differences
Balance at 30 June 2022
Loan – First Samuel
Loan –º PPP
Lease liabilities
11,000,000
(6,743,085)
(256,915)
-
-
4,000,000
500,000
(2,000,000)
-
-
676,054
-
-
-
(61,214)
614,840
-
-
(641,483)
26,643
65,648
(83,634)
-
(256,915)
614,321
596,335
(191,032)
-
-
614,321
(61,214)
5,211,175
308,968
(2,000,000)
(641,483)
779
27,422
2,500,000
-
406,082
2,906,082
2021
$
614,321
-
256,915
-
871,236
Total
11,741,702
(6,826,719)
TZ Limited Annual Report 2022 49
Notes to the financial statements continued
Note 34 Earnings per share
Consolidated
Profit/(loss) after income tax
attributable to the owners of
TZ Limited
Consolidated
Weighted average number
of ordinary shares used in
calculating basic earnings
per share
Weighted average number
of ordinary shares used in
calculating diluted earnings
per share
Consolidated
Basic earnings per share
Diluted earnings per share
2022
$
2021
$
42,896
(1,658,204)
2022
2021
Number
Number
209,125,760 107,057,626
209,125,760 107,057,626
2022
Cents
0.021
0.021
2021
Cents
(1.549)
(1.549)
For the purpose calculating the diluted earnings per share the
denominator has excluded 2,091,000 options (2021: 2,091,000
options) as the effect would be anti-dilutive.
TZ Limited Annual Report 2022 50
Notes to the financial statements continued
Note 35 Share-based payments
TZ Limited’s employee Equity Incentive Plan
TZ Limited’s employee Equity Incentive Plan (‘EIP’) was approved
by shareholders during the Company’s 2021 Annual General
Meeting held on 27 January 2022. The Plan was designed to
attract, retain, motivate and reward eligible persons (employees
and directors) of the Company (collectively the ‘Participants’)
by issuing securities to the Participants. The vesting of those
securities may be subject to certain performance criteria to be
determined by the Board.
Set out below are summaries of options granted under the plan:
2022
Grant date
06/08/2019
06/08/2019
06/08/2019
Expiry date
Exercise price
Balance at the
start of the year
Granted
Exercised
Forfeited/
Expired
Balance at the
end of the year
31/08/2024
31/08/2025
31/08/2026
$0.25
$0.40
$0.45
697,000
697,000
697,000
2,091,000
-
-
-
-
-
-
-
-
-
-
-
-
697,000
697,000
697,000
2,091,000
Weighted average exercise price
$0.3667
$0.0000
$0.0000
$0.0000
$0.3667
2021
Grant date
06/08/2019
06/08/2019
06/08/2019
Expiry date
Exercise price
Balance at the
start of the year
Granted
Exercised
31/08/2024
31/08/2025
31/08/2026
$0.25
$0.40
$0.45
787,000
787,000
787,000
2,361,000
-
-
-
-
-
-
-
-
Forfeited/
Expired
Balance at the
end of the year
(90,000)
697,000
(90,000)
697,000
(90,000)
697,000
(270,000)
2,091,000
Weighted average exercise price
$0.3667
$0.0000
$0.0000
$0.3667
$0.3667
Note 36 Events after the reporting period
No matter or circumstance has arisen since 30 June 2022
that has significantly affected, or may significantly affect the
consolidated entity’s operations, the results of those operations,
or the consolidated entity’s state of affairs in future financial
years.
TZ Limited Annual Report 2022 51
Directors’ declaration
In the Directors’ opinion:
›
The attached financial statements and notes comply with
the Corporations Act 2001, the Accounting Standards,
the Corporations Regulations 2001 and other mandatory
professional reporting requirements
›
The attached financial statements and notes comply with
International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in
note 1 to the financial statements
›
The attached financial statements and notes give a true and
fair view of the consolidated entity’s financial position as at
30 June 2022 and of its performance for the financial year
ended on that date
›
There are reasonable grounds to believe that the Company
will be able to pay its debts as and when they become due
and payable
The Directors have been given the declarations required by
section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors made
pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the Directors
Peter Graham
Chairman
31 August 2022, Sydney
TZ Limited Annual Report 2022 52
Independent auditor’s report
TZ Limited Annual Report 2022 53
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TZ LIMITED Report on the Financial Report Opinion We have audited the accompanying financial report of TZ Limited (the company), which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the company and the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year. In our opinion the financial report of TZ Limited is in accordance with the Corporations Act 2001, including: a) Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2022 and of its performance for the year ended on that date; and b) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the consolidated entity in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. Independent auditor’s report continued
TZ Limited Annual Report 2022 54
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. For each matter below, our description of how our audit addressed the matter is provided in that context. 1. Carrying amount of intangible assets with finite useful lives Why significant How our audit addressed the key audit matter As at 30 June 2022 the carrying value of intangible assets with finite useful lives was $991,716 (2021: $1,571,725), as disclosed in Note 15. The group’s accounting policy in respect of intangible assets with finite useful lives is outlined in Note 1. The carrying amount of intangible assets with finite useful lives is a key audit matter due to: • the significant audit effort required to test the carrying amount of intangible assets with finite useful lives; and • the level of judgement applied in evaluating management’s assessment of impairment. As outlined in Notes 1 and 15, management assessed the carrying amount of intangible assets with finite useful lives through impairment testing utilising a fair value less costs of disposal model in which significant judgements are applied in determining key assumptions. The judgements made in determining the underlying assumptions in the model have a significant impact on the carrying amount of intangible assets with finite useful lives, and accordingly the amount of any impairment charge, to be recorded in the current financial year. In assessing this key audit matter, we involved senior audit team members who understand the industry. Our audit procedures included, amongst others: • evaluating management’s methodology for determining the carrying amount of intangible assets with finite useful lives by comparing the fair value less costs of disposal model with generally accepted valuation methodology and accounting standard requirements; • conducting sensitivity analysis on key assumptions such as weighted average cost of capital (WACC) and growth rates, within reasonable foreseeable ranges; • challenging the key assumptions used in the value in use model by: - assessing growth rates used in comparison to historical results - evaluating the WACC rate used in comparison to market and industry information available - assessing yearly revenue forecasts in comparison to historical results and approved budgets, and - assessing the impact of the COVID-19 pandemic on all key assumptions; • assessing the appropriateness of the group’s accounting policy for the capitalisation of development costs; • obtaining a list of additions to intangible assets and assessing against the recognition criteria of AASB 138 Intangible Assets; • assessing management’s estimate of future economic benefits related to the costs capitalised; and • assessing the appropriateness of the related disclosures in Note 1 and 15. Independent auditor’s report continued
TZ Limited Annual Report 2022 55
Other Information The Directors are responsible for the other information. The other information comprises the information included in the consolidated entity’s Annual Report, 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 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. Directors’ Responsibilities for the Financial Report The Directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the Directors are responsible for assessing the consolidated entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the consolidated entity or to cease operations, or 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 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the consolidated entity’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors. • Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the consolidated entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Independent auditor’s report continued
TZ Limited Annual Report 2022 56
auditor’s report. However, future events or conditions may cause the consolidated entity to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the consolidated entity to express an opinion on the group financial report. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2022. 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. Opinion In our opinion, the Remuneration Report of TZ Limited for the year ended 30 June 2022 complies with section 300A of the Corporations Act 2001. PKF BRISBANE AUDIT SHAUN LINDEMANN PARTNER BRISBANE 31 August 2022 Shareholder information
The shareholder information set out below was applicable as at 31 July 2022.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
Ordinary shares
Options over ordinary shares
Number of holders
% of total shares issued
Number of holders
% of total options issued
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a
marketable parcel
1,314
371
174
417
189
2,465
1,652
Equity security holders
Twenty largest quoted equity security holders
0.14
0.45
0.62
7.66
91.13
100.00
0.50
-
-
-
2
5
7
-
-
-
-
7.17
92.83
100.00
-
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary shares
Number held
% of total shares issued
First Samuel Ltd ACN 086243567 (ANF ITS MDA Clients A/C)
HSBC Custody Nominees (Australia) Limited
Delcor Advisory Investment Group Pty Ltd
One Managed Investment Funds Limited (TI Growth A/C)
Mr Scott Joseph Bogue
National Nominees Limited
Mr David Frederick Oakley (DFO Investment A/C)
Mr Philip Anthony Feitelson
One Managed Investment Funds Limited (TI Absolute Return A/C)
Briar Place Pty Limited (MJ Family A/C)
Mr David Frederick Oakley
Mr Erich Gustav Brosell
Exelmont Pty Ltd
Mr Peter Howells
Guthrie CAD/GIS Software Pty Ltd
Surflodge Pty Ltd (JE Lynch Staff Super FD A/C)
Guthrie CAD/GIS Software Pty Ltd (Guthrie Super Fund A/C)
Jalsu Pty Ltd (The Fisher Assets A/C)
Technical Investing Pty Limited (TI Family Wealth A/C)
Bourse Securities Pty Ltd
53,786,356
18,036,428
14,041,074
9,194,403
6,100,000
5,650,003
4,748,174
3,801,500
3,701,993
2,970,460
2,963,684
2,750,000
2,443,545
2,228,571
2,080,000
1,995,670
1,700,000
1,699,236
1,642,016
1,625,570
143,158,683
24.15
8.10
6.30
4.13
2.74
2.54
2.13
1.71
1.66
1.33
1.33
1.23
1.10
1.00
0.93
0.90
0.76
0.76
0.74
0.73
64.27
TZ Limited Annual Report 2022 57
Shareholder information continued
Unquoted equity securities
Options over ordinary shares
2,091,000
7
Number on
issue
Number of
holders
Substantial holders
Substantial holders in the Company, as disclosed in substantial
holding notices given to the Company, are set out below:
Ordinary shares
Number held
% of total shares issued
First Samuel Ltd ACN 086243567 (ANF ITS MDA Clients A/C)
Delcor Advisory Investment Group Pty Ltd
Technical Investing Pty Limited
53,032,227
14,041,074
11,818,412
23.81
6.36
6.10
Voting rights
Securities subject to voluntary escrow
The voting rights attached to ordinary shares are set out below:
Ordinary shares
Class
Expiry date
Number of shares
Ordinary shares
27 January 2025
1,962,500
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
Buy-backs
share shall have one vote.
Unquoted options
There are no voting rights attached to unquoted options. There
are no other classes of equity securities.
The Company is not currently undertaking any on-market buy-
backs.
Closing date for Director nominations
for Annual General Meeting
An election of Directors will be held at the Company’s 2022
Annual General Meeting on 17 November 2022.
Notice is hereby given in accordance with ASX Listing Rules 3.13.1
and Clause 14.7 of the Company’s constitution that the closing
date for receipt of nominations from persons wishing to be
considered for election as a Director is Thursday, 29 September
2022 (‘Closing Date’).
Nomination must be received in writing no later than 5.00pm
(AEST) on the Closing Date at the Company’s registered office.
TZ Limited Annual Report 2022 58
www.tz.net
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