Ann: Application for quotation of securities - TG6, page-3

When TG6 was established three sets of performance rights were established with progressively higher vesting conditions. From last year's annual report, Performance Classes A, B and C have all been awarded. They are shares that will be issued at some stage, the only question is when. There is no unexpected dilution because the shares have already been granted.


I think but I'm not 100% certain on this, that these performance rights are recognised in individuals tax returns when they are awarded as shares and the taxable income will be the value of the shares multiplied by the award price. Until then they are a performance award that doesn't have a specific price or knowledge of when they will be awarded. Management's preference would be to convert them at the lowest price possible because that will minimise the taxation payable. This is slightly ironic as shareholders don't want a lower price.

TG6 directors decided to vest the Class A and Class B performance rights at the start of April and this was announced on 3 April 2025. The award price was 10.5c. Depending on tax rates its probable tax was payable at 37c or 45c/$1 of value. The 3.4m shares across Class A and Class B created collective taxable income of $357,700 which would have created a collective tax bill of around $132.3k to $161.0k. That tax would have been payable in relation to the 2024/25 tax year. They didn't get the lowest point, but they were close.

Management took a gamble that the share price was not going to take off before July and they could wait until the new tax year to convert the last set. They got lucky and the share price didn't take off. The new tax year has rolled around and now we are in the 2025/26 tax year. The price is still comparatively low. TG6 management have decided to stop rolling the dice that the share price would remain low and locked in their last set of performance shares at 12.5c. This will set the tax payable on the last set and it will be payable in the 2025/26 tax year. If Management thought the TG6 outlook was poor, it would have been sensible to wait for something lower than 12.5c (they had until May 2027).

If there was an incoming CR, it would have been sensible for management to wait until the share price pressure of the CR to vest (and pay less tax). While not "price sensitive", I think people reading this phrase may consider it almost price sensitive. While you can never rule out a near-term CR, the chances of one at TG6 just decreased.

So while it doesn't show as such in the announcement, Management just made a collective "purchase" of ~$96k relating to their residual tax bill (assuming 47% marginal tax rates for 25/26). With this last large cash drain locked in, there is an increased chance of on-market purchases (if directors still have spare cash) because they now know the vesting price isn't 15c, 20c, 25c or higher each with a correspondingly larger tax bill. So directors, if you do have any spare cash, how about an on-market purchase??

The non-listed element of the share register is now pretty clean. Two sets of options with 30c and $1.125 expiries and nothing else.