ANN UAL RE PORT2021
CORPORATE DIRECTORY
DIRECTORS
Mr Stephen Belben
Non-Executive Chairman
SHARE REGISTER
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace
Perth WA 6000
Mr Mathew Ratty
Managing Director and Chief Executive Officer
Telephone: +61 8 9323 2000
Facsimile: +61 8 9323 2033
Mr Renaud Besnard
Non-Executive Director
Mr Mark McConnell
Non-Executive Director
Mr Andrew Stott
Non-Executive Director
COMPANY SECRETARY
Ms Susan Park
PRINCIPAL AND REGISTERED OFFICE
Suite 10, 16 Brodie Hall Drive
Bentley WA 6102
Telephone: +61 8 9473 2500
Facsimile: +61 8 9473 2501
SECURITIES EXCHANGE LISTING
Adveritas Limited shares are listed on the
Australian Securities Exchange
(ASX: AV1)
SOLICITORS
Steinepreis Paganin
Level 4, The Read Building
16 Milligan Street
Perth WA 6000
BANKERS
Commonwealth Bank of Australia Limited
150 St Georges Terrace
Perth WA 6000
AUDITORS
Ernst & Young
The EY Building
11 Mounts Bay Road
Perth WA 6000
TABLE OF CONTENTS
Letter to shareholders
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit and Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
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71
ADVERITAS | ANNUAL REPORT 2021 LETTER TO SHAREHOLDERS
Mathew J. Ratty
Chief Executive Officer
Stephen Belben
Non-Executive Chairman
Dear Shareholder,
FY21 saw our Company deliver a rapid increase in its annualised revenue from customers, substantially expand its sales pipeline,
and invest in its sales capabilities to further scale growth.
Growing our customer base
We adopted our “three by three” sales model towards the end of FY20, and this model consistently produced results during FY21. It
incorporates three pricing models for our TrafficGuard SaaS product, and three routes to market:
Pricing models
Freemium
Land & Expand
fraud detection only, free of charge up to $2,500 of reported Google AdWord spend. To obtain fraud
prevention, clients are required to move to one of our fee-paying pricing models.
relatively low-priced monthly contracts for detection and prevention services. These contracts include
additional charges for usage above agreed maximum volumes.
Long-dated contracts
clients typically receive a 12-month (or longer) contract for detection and prevention services. Although
the monthly fee is higher than under the Land & Expand model, the fee on a data usage basis is more
economical.
Routes to market
Mass Market
through the Freemium product offering and sector marketing activity.
Direct Sales
through the Company’s sales force strategically located in the Asia Pacific region, North America, the
United Kingdom and Latin America.
Third Party Distribution
through partnerships with Ad Agencies, Campaign Management Platforms and Marketplace Services.
Client wins during FY21 that strengthened our presence in a number of industry sectors and across a number of key jurisdictions
such as Europe, Asia and Latin America included:
• GVC Australia, a subsidiary of GVC Holdings PLC which is a top 100 company on the London Stock Exchange. GVC Australia’s
subsidiaries include Ladbrokes and Neds.
• deezer, a French online music streaming service. deezer currently has 56 million licensed tracks in its library, 100 million playlists,
and 16 million active users in over 180 countries 1. deezer is the exclusive global music partner of fitness app FitBit which has been
acquired by Google.
• Lala Move, an on-demand delivery app which operates in cities across Asia and Latin America connecting over 7 million users
with more than 700,000 delivery drivers 2.
• Neon, a Brazilian online bank that raised US$300 million Series C funding in March 2021, and had over 9.4 million customers at
that time 3.
The second half of FY21 saw significant growth in annualised revenue, reaching $1 million at 30 June 2021, up 112% over the six months
from December 2020. We have continued to build on this momentum in FY22, with our annualised revenue up a further 41% to $1.4
million at the end of August 2021, reflecting the successful execution of our sales model and growth strategy.
1 Data sourced from deezer corporate website.
2 https://www.crunchbase.com/organization/easyvan
3 https://www.crunchbase.com/organization/banco-neon
1
ADVERITAS | ANNUAL REPORT 2021 LETTER TO SHAREHOLDERS (CONTINUED)
Growth in annualised revenue from Dec 2020
$1,6000,000
$1,400,000
$1,200,000
$1,6000,000
$1,000,000
$1,6000,000
$1,400,000
$800,000
$1,400,000
$1,200,000
$600,000
$1,200,000
$1,000,000
$400,000
$1,000,000
$800,000
$200,000
$800,000
$600,000
$0
$600,000
$400,000
$400,000
$200,000
$200,000
$0
Dec 20 qtr
Mar 21 qtr
Jun 21 qtr
Sep 21 qtr to date
$0
Dec 20 qtr
A key lead indicator of the potential to grow the Company’s paying customer base is the number of Freemium subscribers utilising
TrafficGuard. Over the course of FY21, our Freemium subscribers increased by over 400% to approximately 2,700 subscribers at 30
June 2021. This provides us with a sizeable base to convert into paying customers, especially considering we achieved a conversion
rate of approximately 15% over FY21 which is significantly higher than the global average of 2-5% 1.
Sep 21 qtr to date
Dec 20 qtr
Mar 21 qtr
Jun 21 qtr
Jun 21 qtr
Sep 21 qtr to date
Mar 21 qtr
3000
2500
2000
3000
1500
3000
2500
1000
2500
2000
500
2000
1500
0
1500
1000
1000
500
500
0
0
Cumulative Freemium subscribers
Jun 20
Sep 20
Dec 20
Mar 21
Jun 21
Jun 20
Jun 20
Sep 20
Sep 20
Dec 20
Dec 20
Mar 21
Mar 21
Jun 21
Jun 21
Our paying customer base increased significantly over the course of FY21:
200
150
100
200
50
200
150
0
150
100
100
50
50
0
0
Paying customers
Jun 20
Sep 20
Dec 20
Mar 21
Jun 21
Jun 20
Jun 20
Sep 20
Sep 20
Dec 20
Dec 20
Mar 21
Mar 21
Jun 21
Jun 21
Integrated sales and marketing process
We appointed Matthew Sutton as Global Chief Revenue Officer in January 2021. Matt is a highly accomplished sales executive
based in Singapore. He has wide ranging experience that has seen him working with CBS in China, and Twitter in Asia, and he has
set up multiple strategic partnerships with the likes of Facebook and Google.
Under Matt’s leadership, the Company has successfully implemented an end-to-end enterprise sales process and he is now
working on implementing an integrated sales and marketing process to drive inbound leads to the TrafficGuard self-sign-up
portal. We are planning on appointing a Global Chief Marketing Officer (CMO) who will be responsible for all aspects of profile
building, brand awareness, education and lead generation globally. The focus of the new CMO will not only be on generating leads
for enterprise clients, but highly geared towards driving users to our self sign up portal where clients can seamlessly onboard
themselves without the need for a sales person.
The enhanced sales and marketing capabilities will underpin our global scale-up and is expected to simultaneously grow the
number of enterprise clients and Freemium subscribers, and the conversion rate into paying customers.
2
ADVERITAS | ANNUAL REPORT 2021 LETTER TO SHAREHOLDERS (CONTINUED)
Industry Recognition
TrafficGuard received important recognition from the industry throughout FY21, including:
• winning a MarTech Breakthrough Award for Best PPC Optimisation;
• being listed as one of Australia’s Most Innovative Companies by The Australian Financial Review. TrafficGuard placed 8th on the
Technology list from over 600 nominated organisations across Australia and New Zealand;
• being named the Most Effective Anti-Fraud Solution at the 2020 Effective Mobile Marketing Awards;
• TrafficGuard’s PPC protection being recognised as the Best Search Software at The Drum Search Awards;
• winning the best App Analytics Platform at the 2020 App Growth Awards.;
• being listed as a finalist for the Most Effective Tech Platform in Mobile Marketing’s 2021 Effective Digital Marketing Awards;
• being listed as a finalist for Mumbrella’s 2021 Marketing Technology Company of the Year; and
• being named as a top performer by Sourceforge.
Relationship with Google strengthened
Google Cloud Platform provides a marketplace for global enterprises to cover their complete enterprise software needs. We
anticipate that TrafficGuard will be live on the Google Cloud Platform marketplace early in FY22. TrafficGuard has been selected
as the only certified ad verification vendor in this marketplace and the only company in the Australia and New Zealand region to
enter the marketplace in the last 12 months. Entering the Google Marketplace has many benefits including shorter contracting times,
exposure to all of Google Clouds customers, and the ability for the customer to transact with TrafficGuard seamlessly through the
marketplace, avoiding lengthy procurement times and legal delays.
In addition, we will have the support of the global Google Cloud Platform sales team.
During FY21, we successfully migrated our infrastructure service to the Google Cloud Platform. This move better aligns the
Company’s infrastructure systems with customer needs, economics, scale and Machine Learning requirements and sets the
business in good stead for further rapid growth while maintaining an industry-leading solution.
Our close collaboration with Google has enabled us to engineer systems that allow the management of large volumes of data with
an improved economy and flexible scale.
Outlook
The industry problem of fraud and invalid online traffic is a massive global issue. It is estimated that 40% of all digital advertising is
invalid and that $100 billion will be lost to fraud and invalid traffic in 2023. Our product, TrafficGuard, is the solution to this industry
problem. It is the world’s first full funnel measurement, verification and fraud prevention solution for digital advertising.
As FY21 closed, we had $3.2 million in cash and no debt. We raised a further $3 million in July via a placement to key existing and
new sophisticated investors, including Pathfinder Asset Management, New Zealand’s leading ethical investment fund. We have the
potential to raise up to $5.5 million in October 2021 through the exercise of 55.5 million options with a $0.10 exercise price. Board
members and senior management have already committed to exercise their options which will raise $1.3 million.
We stand in good stead to keep delivering on our primary objectives of:
• expanding the sales pipeline across key verticals;
• converting TrafficGuard trials into paying customers; and
•
investing in the sales and marketing team to scale growth
We look forward to a strong year of growing our Company and we thank you for your support.
Yours sincerely,
Mathew J. Ratty
Stephen Belben
Chief Executive Officer
Non-Executive Chairman
3
ADVERITAS | ANNUAL REPORT 2021 The directors present their report together with the consolidated financial report of Adveritas Limited (Adveritas or Company) and
its controlled entities (collectively referred to as the Group) for the financial year ended 30 June 2021 and the independent auditor’s
report thereon.
DIRECTORS
The names and details of the Company’s directors in office during the financial year and until the date of this report are set out
below. Directors were in office for this entire period unless stated otherwise.
MR STEPHEN BELBEN
Non-Executive Chairman
Mr Belben has over 20 years’ experience in both executive and non-executive director roles, at a number of public and private
companies. This experience follows 9 years as a senior partner at Ernst & Young, specialising in corporate and assurance work in
Australia. Whilst at Ernst & Young, Mr Belben was appointed the national partner in charge of one of the firm’s largest Industry Group’s
where he was responsible for the development and servicing of a major client base in that sector in Australia.
Mr Belben is a Chartered Accountant and holds a Bachelor of Accountancy degree and a Bachelor of Commerce Honours degree.
During the last three years, Mr Belben has not served as a director of any other ASX listed company.
MR MATHEW RATTY
Managing Director and Chief Executive Officer
Mr Ratty is an experienced investor focused on Australian and US equity and debt markets. He has extensive experience across
capital raising advice, seed investment negotiation, corporate strategy and financial modelling.
He is the co-founder of MC Management Group Pty Ltd, a venture capital firm operating in domestic and international debt and
equity markets. At MC Management Group Pty Ltd, which is a substantial shareholder the Company, Mr Ratty holds the position of
Head of Investment and is responsible for negotiating deal structures and asset pricing for companies in the healthcare, financial
and technology space.
Prior to this, Mr Ratty was a director and analyst at property development and equity company, Gladstone Bridge.
Mr Ratty holds a Bachelor of Commerce (Property and Finance) with first class honours in finance from Curtin University of
Technology.
During the last three years Mr Ratty has not served as a director of any other ASX listed company.
MR RENAUD BESNARD
Non-Executive Director
Mr Besnard is a senior executive responsible for growth and marketing at Unstoppable Domains in San Francisco. Mr Besnard’s roles
have included Vice President, Growth lab at PayPal, Senior Director of Global Growth and Product Marketing at Twitter, and Director
of Marketing for Asia-Pacific (excl. India) at Uber Technologies Inc. Prior to joining Uber, Mr Besnard was a long-standing Google
executive, having spent almost 10 years in senior positions in Europe and Asia.
Mr Besnard is very experienced at developing and executing marketing strategies and leading global growth marketing and global
product marketing campaigns across consumer and advertiser audiences.
Mr Besnard holds a Bachelor degree in Commerce from ESSCA Business School (France), a Masters in International Business from
the University of Manchester (UK) and an MBA from the University of Oxford (UK).
During the last three years, Mr Besnard has not served as a director of any other ASX listed company.
MR MARK MCCONNELL
Non-Executive Director
Mr McConnell is a successful business developer whose skills cover the areas of business strategy, investor relations, capital raising
and innovation. He has extensive experience in both listed and unlisted technology companies in Australia and abroad. He co-
founded the Citadel Group Limited in 2007, a leading software and technology company that specialises in secure enterprise
information management.
Mr McConnell currently serves as the Chief Executive Officer of Citadel Group Limited and acts as an advisor to HOF Capital, a global
technology investment firm that leverages its extensive networks to help founders build successful businesses.
Mr McConnell has a Bachelor of Science, a Graduate Diploma of Employment Relations, a Graduate Diploma of Logistics
Management, and a Masters of Business Administration. He is also a Fellow of the Australian Institute of Company Directors (FAICD).
During the last three years, Mr McConnell has served as an executive director of Citadel Group Limited (ASX: CGL) and as non-
executive director of Viva Leisure Limited (ASX: VVA). Citadel Group Limited delisted from the Australian Securities Exchange on 18
December 2020. Mr McConnell resigned as a director of Viva Leisure Limited on 6 November 2020.
4
DIRECTORS’ REPORTADVERITAS | ANNUAL REPORT 2021 MR ANDREW STOTT
Non-Executive Director
Mr Stott has significant experience in global technology mergers and acquisitions for listed and unlisted companies. He is originally
from the UK and worked in London and New York before moving to Singapore in 2012 to open the offices of an international tech-
focussed law firm. Mr Stott became the Asia managing partner, and regional head of corporate and advised on in excess of
US$20bn in transactions in Asia, Australia, Europe and the USA. Mr Stott established his own advisory firm in early 2018 and has
been working as a consultant to Adveritas since August 2018, helping implement its expansion strategy through relationships with
internationally based customers and partners.
Until June 2018, Mr Stott was also a Board member of the Asia Video Industry Association (AVIA), an industry lobbying association
representing the video industry in Asia. AVIA’s 130-member organisations include leading advertising and marketing agencies,
media groups, government regulatory bodies, telecom companies, new media service providers and network enablers.
Mr Stott holds an LLB Degree in Law and is a solicitor of the courts of England and Wales.
During the last three years, Mr Stott has not served as a director of any other ASX listed company.
INTERESTS IN THE SECURITIES OF THE COMPANY AND RELATED BODIES CORPORATE
As at 30 June 2021 and as of the date of this report, the interests of the directors in the securities of the Company were as follows:
As at 30 June 2021
As at the date of this report
Ordinary
shares
Share options
Performance
Rights
Ordinary
shares
Share options
Performance
Rights
720,000
2,090,000
-
720,000
2,090,000
-
22,710,544
3,999,092
1,000,000
22,710,544
3,999,092
1,000,000
-
2,000,000
M. McConnell
60,757,910
11,532,778
A. Stott
1,100,000
2,000,000
-
-
-
-
2,000,000
60,757,910
11,532,778
1,100,000
2,000,000
-
-
-
S. Belben
M. Ratty
R. Besnard
COMPANY SECRETARY
Ms Susan Park has over 20 years’ experience in the corporate finance industry and has extensive experience in Company Secretarial
and Non-Executive Director roles on ASX, AIM and TSX listed companies.
Ms Park holds a Bachelor of Commerce degree from the University of Western Australia majoring in Accounting and Finance, is a
Member of the Australian Institute of Chartered Accountants, a Fellow of the Financial Services Institute of Australasia and a Member
of the Australian Institute of Company Directors. She is also a Fellow of the Institute of Chartered Secretaries and Administrators and
Chartered Secretaries Australia.
DIVIDENDS
The directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a dividend to the
date of this report.
PRINCIPAL ACTIVITIES
The Company’s principal activity during the year was the provision of its TrafficGuard® SaaS (software as a service) products.
TrafficGuard is the world’s first full funnel measurement, verification and fraud prevention solution for digital advertising.
5
DIRECTORS’ REPORTADVERITAS | ANNUAL REPORT 2021 OPERATING AND FINANCIAL REVIEW
SALES MOMENTUM
Throughout the 2021 financial year, the Group has focussed on its “three by three” sales model which incorporates three pricing
models and three routes to market:
Pricing models
Routes to market
1
Freemium
1 Mass market
This comprises TrafficGuard’s free-of-charge detection
only service. The strategy is to make this service widely
available with the potential to upsell to TrafficGuard’s
fraud prevention services.
The mass market is accessed through the Freemium
offering.
2 Land and expand
2 Direct sales
Upgrading from the Freemium model enables clients
to subscribe to TrafficGuard’s fraud prevention service.
This comprises a fixed monthly SaaS fee, with additional
charges for excess data usage
Direct sales occur through the Group’s sales force located
in Asia Pacific (APAC), the United Kingdom, North America
and Latin America (LATAM).
3 Long-dated contracts
3 Third party distribution
Once clients fall within the “land and expand” model, there
is potential to upgrade their contract to a long-dated
contract model which provides benefits to the client on a
per data usage cost basis.
Third party distribution occurs through integrations with
Campaign Management Platforms, ad agencies and
marketplace services to provide even more options for
businesses to find and activate TrafficGuard.
The Group has experienced momentum across all three pricing models and tracked growth across its key revenue leading
indicators, being Freemium subscribers and conversions from Freemium to fee paying clients.
The Group had accumulated approximately 2,700 Freemium subscribers by 30 June 2021 and close to 180 fee paying clients.
Customers that signed long dated contracts during the year include:
• GVC Australia, a subsidiary of GVC Holdings PLC which is a top 100 company on the London Stock Exchange. GVC Australia’s
subsidiaries include Ladbrokes and Neds.
• deezer, a French online music streaming service. deezer currently has 56 million licensed tracks in its library, 100 million playlists,
and 16 million active users in over 180 countries1. deezer is the exclusive global music partner of fitness app FitBit which has been
acquired by Google.
• Lala Move, an on-demand delivery app which operates in cities across Asia and Latin America connecting over 7 million users
with more than 700,000 delivery drivers 2
• Neon, a Brazilian online bank that raised US$300 million Series C funding in March 2021, and had over 9.4 million customers at
that time 3
High profile customers such as these are important to Adveritas as they have the potential to upgrade their usage and also
strengthen the Company’s presence across a number of industry sectors and across a number of key jurisdictions such as Europe,
Asia and Latin America.
1 Data sourced from deezer corporate website.
2 https://www.crunchbase.com/organization/easyvan
3 https://www.crunchbase.com/organization/banco-neon
6
DIRECTORS’ REPORTADVERITAS | ANNUAL REPORT 2021
GOOGLE CLOUD PLATFORM MARKETPLACE SIGNIFICANTLY INCREASES EXPOSURE
It is expected that TrafficGuard will be live on the Google Cloud Platform marketplace in the first quarter of the 2022 financial year.
Google Cloud Platform provides a marketplace for global enterprises to cover their complete enterprise software needs.
TrafficGuard has been selected as the only certified ad verification vendor in this marketplace, following an extensive relationship
with Google Cloud Platform.
TrafficGuard will have direct exposure to all to Google Cloud Platform customers, with the support of the global Google Cloud
Platform sales team.
During the year, the Group successfully migrated its infrastructure service to the Google Cloud Platform. This move better aligns the
Company’s infrastructure systems with customer needs, economics, scale and Machine Learning requirements. These changes set
the business in good stead for further rapid growth while maintaining an industry-leading solution.
Instituting the partnership and close collaboration with Google has enabled the Group to engineer systems that allow the
management of large volumes of data with an improved economy and flexible scale. The net benefit to the Group will be an
improved cost of sale and higher margins.
INTEGRATED SALES AND MARKETING PROCESS
During the year, the Group strengthened its sales team through the appointment of Matthew Sutton as Global Chief Revenue
Officer. Mr Sutton is a highly accomplished sales executive and has run sales teams for CBS in China, bought and sold a start-up
ad-tech company in Singapore, launched and managed Twitter’s business across Asia, brought technology platforms to the APAC
market, set up multiple strategic partnerships with the likes of Facebook and Google, and built a data driven agency within Asia’s
largest telco holding group, Axiata.
Since his appointment, Mr Sutton as successfully implemented an end-to-end enterprise sales process. The Group is now
implementing an integrated sales and marketing process to drive inbound leads to its self sign up portal. As part of this process,
the Group is planning on appointing a Global Chief Marketing Officer who will be responsible for all aspects of profile building, brand
awareness, education and lead generation globally.
The enhanced sales and marketing capabilities will underpin the Group’s global scale-up and is expected to grow the number of
enterprise clients, while also rapidly growing Freemium subscribers and paying customers.
INDUSTRY RECOGNITION
TrafficGuard’s achievements during the year include:
• winning a MarTech Breakthrough Award for Best PPC Optimisation Platform at the MarTech Breakthrough Awards. TrafficGuard
was listed amongst other winners including Shopify, The Trade Desk and Adobe;
• being listed as one of Australia’s Most Innovative Companies by The Australian Financial Review, placing 8th on the Technology
list from over 600 nominated organisations across Australia and New Zealand. The prestigious annual list, published by The
Australian Financial Review and Boss Magazine, is based on a rigorous assessment process managed by Australia’s leading
innovation consultancy, Inventium, in conjunction with a panel of industry expert judges. The assessment measures an innovation
implemented in the past two years, the problem that the innovation is solving, the quality and uniqueness of the solution and the
level of impact that the innovation has had;
• being named the Most Effective Anti-Fraud Solution at the 2020 Effective Mobile Marketing Awards, recognised for real-time fraud
prevention that blocks invalid traffic before it infiltrates campaigns – protecting mobile marketers, agencies and ad networks
from the direct and indirect impacts of ad fraud and driving returns on advertising spend;
• TrafficGuard’s PPC protection being recognised as the Best Search Software at The Drum Search Awards. Through this award,
TrafficGuard has been recognised as an important tool for search advertising optimisation, helping businesses realise the
opportunity for superior advertising performance by eliminating ad fraud;
• winning the best App Analytics Platform at the 2020 App Growth Awards. The App Analytics Platform category recognises mobile
analytics, app analytics, ad tracking and attribution platform that has delivered the most value and understanding of big data
analytics in the past 12 months;
• being listed as a finalist for the Most Effective Tech Platform in Mobile Marketing’s 2021 Effective Digital Marketing Awards;
• being listed as a finalist for Mumbrella’s 2021 Marketing Technology Company of the Year; and
• being named as a top performer by Sourceforge.
EQUITY RAISING POST YEAR-END TO ACCELERATE GROWTH
At year-end, the Company had a cash balance of $3.2 million and no debt. To accelerate sales and marketing activities based
on multiple visible growth opportunities, the Group raised $3 million via placement post year-end to further strengthen its balance
sheet. The placement was supported by Pathfinder Asset Management (New Zealand’s leading ethical investment fund) and new
and existing sophisticated investors. 30 million shares were issued at an issue price of $0.10 per share, which equated to the 7-day
VWAP.
7
DIRECTORS’ REPORTADVERITAS | ANNUAL REPORT 2021 FINANCIAL SUMMARY
Revenue from software as a service
Grant income
JobKeeper and Cash Flow Booster stimulus income
Sundry income
Other income
Server hosting costs
Administration and occupancy costs
Marketing costs
Compliance and consultancy costs
Employment costs
Expected credit loss and bad debts expense
Finance costs
Overheads
Foreign exchange losses
Depreciation
Impairment loss
Expected credit loss – deferred consideration
Note
FY 2021
FY 2020
1
2
3
4
5
6
7
7
7
$
$
964,110
1,227,213
1,280,494
1,287,433
446,850
305,000
40,520
21,429
1,767,864
1,613,862
(2,000,489)
(2,119,094)
(681,224)
(518,228)
(843,657)
(744,230)
(1,052,639)
(883,354)
(6,030,246)
(5,506,082)
(3,596)
(279,343)
(48,269)
(54,245)
(10,660,120)
(10,104,574)
(57,081)
(50,325)
(136,337)
(136,342)
-
-
(113,525)
(567,869)
Share based payments (refer to Note 16 to the financial statements)
(859,244)
(1,343,842)
Other expenses
(1,052,662)
(2,211,903)
Loss before tax
Income tax expense
Loss after tax for the Group
Notes
(8,980,808)
(9,475,402)
(18,155)
(11,957)
(8,998,963)
(9,487,359)
1. Revenue in the current year is lower than in the prior year as a result of the SaaS contracts with the Group’s former performance
marketing business, Mpire Network Inc, being discontinued in February 2020.
2. Grant income relates to the Group’s research and development initiatives. In addition, in FY 2021 the Group received an Export
Market Development Grant of $100,000.
3. The increase in administration and occupancy costs is due to the redevelopment of the TrafficGuard website and the
deployment of additional data security measures.
4. The growth in marketing costs in FY 2021 results from increased advertising and the preparation of additional marketing materials
to support marketing initiatives.
5. The increase in compliance and consultancy costs in FY 2021 is mainly due to fees incurred in relation to the Company’s
intellectual property and legal fees in respect of the recovery of amounts owing by ClearPier Inc.
6. The higher employment costs in FY 2021 largely results from the fact that in the last quarter of FY 2020 all employees, including
directors, voluntarily agreed to temporarily reduce their salaries to assist the Group in limiting costs during the height of the
global COVID 19 pandemic. Salaries returned to their normal levels on 1 August 2020.
7. Although the Group actively pursues the amounts owing by ClearPier Inc, in FY 2020 it adopted a conservative stance in relation
to the balances owing by ClearPier Inc and recognised an expected credit loss of $847,212 being the total of the SaaS licence
fees outstanding ($279,343) and the deferred consideration receivable ($567,869). The Group also decided to write down its
remaining investment in Mpire Network Inc to nil.
8
DIRECTORS’ REPORTADVERITAS | ANNUAL REPORT 2021 SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the Group’s state of affairs during the course of the 2021 financial year.
SIGNIFICANT EVENTS AFTER BALANCE DATE
On 19 July 2021, the Group completed a $3,000,000 capital raising through the placement of 30,000,000 shares at a price of $0.10
per share to a small group of institutional and sophisticated investors.
No other event has arisen since 30 June 2021 that would be likely to materially affect the operations of the Group, or its state of
affairs which has not otherwise been disclosed in this financial report.
LIKELY DEVELOPMENTS AND EXPECTED FUTURE RESULTS
Continued sales momentum
The Group is planning on expanding both its sales and marketing teams so that it can drive revenue through its end-to-end
enterprise sales process and its integrated sales and marketing process which will drive inbound leads to the business. These
initiatives will result in:
• The expansion of the Freemium pipeline;
•
• upgrades of “land and expand” customers to larger and longer-dated contracts; and
• conversion of targets in the Enterprise-level pipeline into customers.
increased Freemium subscriber conversions;
Growing proprietary database
TrafficGuard’s proprietary big database of global ad fraud is growing rapidly, increasing its appeal to advertising customers and
creating potential for new products that will allow the Group to monetise this big data.
IP reputation scores are now becoming an actionable data point for advertisers globally.
To date, TrafficGuard has profiled over 700 million IPs around the world, of 4.6 billion IP addresses globally under IPv4. TrafficGuard
then uses its proprietary technology to essentially score that IP. Each day, TrafficGuard adds close to 1 million new IPs to its
reputation dataset. As TrafficGuard grows and adds additional clients and regions, this increases its unique advertising intelligence
on the key data point used for detection and prevention.
As advertising is moving from personal identifier to contextual targeting with new regulations including the removal of IDFA, the
location and network attributes, which are derived from IPs are more important than ever.
TrafficGuard’s years of clean profiled and organised IP intelligence and data set enables advertisers to filter out fraudulent IPs to
enhance returns from their digital advertising campaigns.
This IP intelligence and unique scoring allows for the commercialisation of other products in the future.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group is not subject to any particular or specific environmental regulation in any of the jurisdictions in which it operates and
therefore is not required to present further details in relation to environmental regulation.
SHARE OPTIONS
UNISSUED SHARES
As at 30 June 2021 and the date of this report, there were 65,596,109 unissued ordinary shares under options (30 June 2020:
62,246,109). Refer to the remuneration report and Note 16 for further details of the unissued ordinary shares under options outstanding.
Expiry Date
19 August 2021
25 October 2021
21 November 2021
27 March 2022
17 November 2022
3 July 2023
Exercise
Price
$0.15
$0.10
$0.20
$0.20
$0.18
$0.15
Number
on issue
400,000
55,496,109
200,000
3,000,000
1,500,000
5,000,000
65,596,109
Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any related body
corporate.
SHARES ISSUED AS A RESULT OF THE EXERCISE OF OPTIONS
During the financial year, 2,620,000 options were exercised to acquire ordinary shares (2020: 1,300,225).
9
DIRECTORS’ REPORTADVERITAS | ANNUAL REPORT 2021 PERFORMANCE RIGHTS
UNISSUED SHARES
As at 30 June 2021 there were 7,000,000 unissued ordinary shares under performance rights (30 June 2020: 26,600,000). Refer to
the remuneration report and Note 16 for further details of the performance rights outstanding.
Holders of performance rights do not have any right, by virtue of the performance right, to participate in any share issue of the
Company or any related body corporate.
SHARES ISSUED AS A RESULT OF THE CONVERSION OF PERFORMANCE RIGHTS
During the financial year 9,250,000 performance rights were converted into ordinary shares (2020: nil).
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company has agreed to indemnify all the directors of the Company for any liabilities to another person (other than the
Company or related body corporate) that may arise from their position as directors of the Company and its controlled entities,
except where the liability arises out of conduct involving a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract insuring the directors and officers of the Company
against any liability incurred in the course of their duties to the extent permitted by the Corporations Act 2001. The contract of
insurance prohibits disclosure of the nature of the liability and the amount of the premium.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Group has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit
engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been
made to indemnify Ernst & Young during or since the financial year.
DIRECTORS’ MEETINGS
The number of meetings of directors held by the Company during the year and the number of meetings attended by each director
were as follows:
Number of meetings held
10
S. Belben
M. Ratty
R. Besnard
M. McConnell
A. Stott
Number of meetings
eligible to attend
Number of meetings
attended
10
10
10
10
10
10
10
7
10
9
COMMITTEE MEMBERSHIP
Due to the Company’s relatively small size and board structure, separate Remuneration and Audit Committees have not been
constituted. The full board of directors assumes responsibility for any such matters as outlined in the Company’s corporate
governance plan.
NON-AUDIT SERVICES
The following non-audit services were provided by the Group’s auditor, Ernst & Young Australia and Ernst & Young Australia received
or is due to receive the following amounts for the provision of such services:
Tax compliance services
2021
$
56,975
2020
$
39,111
The directors are satisfied that the provision of non-audit services is compatible with the general standard of independence
imposed by the Corporations Act 2001. The nature and scope of each type of non-audit service provided means the auditor’s
independence was not compromised.
10
DIRECTORS’ REPORTADVERITAS | ANNUAL REPORT 2021 AUDITOR INDEPENDENCE
Section 307C of the Corporations Act 2001 requires the Company’s auditors, Ernst & Young Australia, to provide the directors of the
Company with an Independence Declaration in relation to the audit of the Financial Report. The directors received the Independence
Declaration set out on page 23 for the year ended 30 June 2021.
REMUNERATION REPORT (AUDITED)
This remuneration report for the year ended 30 June 2021 outlines the remuneration arrangements of the Group in accordance with
the requirements of the Corporations Act 2001 (Cth), as amended (the Act) and its regulations. This information has been audited
as required by section 308(3C) of the Act.
The remuneration report is presented under the following sections:
1.
Introduction
2. Remuneration governance
3. Remuneration outcomes
4. Executive contracts
5. Additional disclosures relating to performance rights, options and shares
6. Other transactions and balances with key management personnel and their related parties
1.
INTRODUCTION
The remuneration report details the remuneration arrangements for key management personnel (KMP) who are defined
as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group,
directly or indirectly, including any director (whether executive or otherwise) of the parent entity.
The list below outlines the KMP of the Group during the financial year ended 30 June 2021. Unless otherwise indicated, the
individuals were KMP for the entire financial year.
For the purposes of this report, the term “executive” indicates the executive directors and senior executives of the Group.
Non-Executive Directors (NEDs)
S. Belben
Non-Executive Chairman
R. Besnard Non-Executive Director
M. McConnell Non-Executive Director
A. Stott
Non-Executive Director
Executive Directors
M. Ratty
Managing Director and Chief Executive Officer
Senior Executives
L. Taylor
Chief Operations Officer
F. Muir
Chief Financial Officer
S. Park
Company Secretary
D. Cox
Global Growth Officer
J. Linden
Vice President of Sales North America, resigned 30 June 2021
M. Sutton
Global Chief Revenue Officer, appointed 4 January 2021
2.
REMUNERATION GOVERNANCE
2(a) Remuneration Philosophy
The performance of the Group depends upon the quality of the directors and executives. The philosophy of the Group in
determining remuneration levels is to:
-
-
-
set competitive remuneration packages to attract and retain high calibre employees;
link rewards to shareholder value creation; and
establish appropriate, demanding performance hurdles for variable executive remuneration.
11
DIRECTORS’ REPORTADVERITAS | ANNUAL REPORT 2021 REMUNERATION REPORT (AUDITED) (CONTINUED)
2(b) Remuneration Committee
The current size of the Group and structure of the board of directors does not warrant a separate remuneration committee.
The board of directors as a whole (Board) is currently responsible for determining and reviewing compensation
arrangements for directors and executives. Directors are excluded from discussions and voting on their own remuneration
arrangements.
The Board assesses the appropriateness of the nature and amount of remuneration of directors and executives on a periodic
basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder
benefit from the retention of a high quality Board and executive team.
2(c) Remuneration Structure: Non-Executive Director Remuneration
Fixed Remuneration
In accordance with best practice corporate governance, the structure of non-executive director and executive remuneration
is separate and distinct.
The Board seeks to set aggregate remuneration of non-executive directors at a level that provides the Group with the ability
to attract and retain high calibre directors, whilst incurring a cost that is acceptable to shareholders.
The ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time to
time by a general meeting. The aggregate remuneration set pursuant to Adveritas Limited’s constitution is $500,000 per year,
which may be varied by shareholders in general meeting.
The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned
amongst directors is reviewed annually. The Board does not currently seek external remuneration advice.
Each non-executive director receives a fee for being a director of the Company.
Options
1,250,000 options were issued to each non-executive director in the current year (2020: 750,000 options to each non-
executive director).
2(d) Remuneration Structure: Executive Director and Senior Executive Remuneration
(i) Objective
The Group aims to reward executives with a level and mix of remuneration commensurate with their position and
responsibilities so as to:
• Reward executives;
• Align the interests of executives with those of shareholders;
• Link reward with strategic goals and performance of the Group; and
• Ensure total remuneration is competitive by market standards.
(ii) Principles of Compensation
Compensation levels for employees of the Group are competitively set to attract and retain appropriately qualified and
experienced senior executives. Executive remuneration and other terms of employment are reviewed annually by the
Board having regard to the performance, relevant comparative information and expert advice if required.
(iii) Structure
Remuneration consists of the following key elements:
• Fixed Remuneration (base salary, superannuation and non-monetary benefits);
• Variable Remuneration
॰ Short-term incentives
॰ Long-term incentives
The Board establishes the proportion of fixed and variable remuneration for each executive.
Fixed Remuneration
The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to the position
and is competitive in the market. The Board periodically reviews fixed remuneration when extending or otherwise amending
the employment contracts of key executives. This review takes into account the overall performance of the executive and
of the Group. The Board considers the executive’s performance of the specific duties and tasks set out in their employment
contracts which were included based on the general nature of the executive’s role together with any specific requirements
from the Board.
Executives may be given the flexibility to receive their remuneration in a variety of forms including cash and fringe benefits. It is
intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Group.
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DIRECTORS’ REPORTADVERITAS | ANNUAL REPORT 2021 REMUNERATION REPORT (AUDITED) (CONTINUED)
Variable Remuneration – short-term incentive
The objective of short-term incentives is to link the achievement of the Group’s operational targets with the remuneration
received by the executives charged with meeting those targets. Operational targets are set periodically by the Board and
include matters such as the funding of the Company, the timing of technological developments and the implementation of
sales and marketing strategies.
From time to time cash bonuses (short-term incentives) are paid where an executive has met a short-term objective of
the Group. Such bonuses are paid when specific criteria which are set by the Board are met. These criteria are linked to the
operational targets set by the Board. In some instances, cash bonuses are paid when the Board determines that an executive
has made contributions that are significant and beyond the normal expectations of their role. In making such determinations,
the Board will consider a number of factors including the area of the business that has been impacted by the executive’s
contributions and the alignment of these contributions to the Group’s overall strategy.
Variable Remuneration – long-term incentive
Long-term incentives are delivered in the form of options and performance rights.
Performance rights and options are generally issued in accordance with the terms and conditions of the Adveritas
Performance Rights and Options Plan (Plan) that has been approved by the Company’s shareholders.
Pursuant to the listing rules of the Australian Securities Exchange (Listing Rules), the Company’s shareholders are required
to re-approve the Plan and all unallocated securities issuable under it every three years. The Company’s current Plan was
approved by shareholders at the 2018 AGM.
The key features of the Plan are as follows:
• The Company’s board of directors (Board) may, from time to time, in its absolute discretion, make a written offer to any
eligible participant to apply for options or performance rights (Awards), upon the terms set out in the Plan and upon such
additional terms and conditions as the Board determines.
• An Award may be made subject to vesting conditions as determined by the Board in its discretion and as specified in the
offer for the Awards.
• The Board may in its absolute discretion resolve to waive any of the vesting conditions applying to Awards due to special
circumstances arising in relation to the eligible participant; or the Company passing a resolution for voluntary winding up;
or an order is made for the compulsory winding up of the Company.
• Where a change of control occurs, vesting conditions are deemed to be automatically waived.
• An Award will lapse upon the earlier of:
॰ an unauthorised dealing, or hedging of the Award;
॰ oa vesting condition in relation to the Award is not satisfied by its due date, or becomes incapable of satisfaction, as
determined by the Board in its absolute discretion;
॰ in respect of unvested Awards, the recipient of the unvested Awards ceases to be an eligible participant;
॰ in respect of vested Awards, the recipient of the vested Awards ceases to be an eligible participant and the Award
granted is not exercised within a one (1) month period (or such later date as the Board determines) of the date that
person ceases to be an eligible participant;
॰ the Board deems that an Award lapses due to fraud, dishonesty or other improper behaviour of the eligible participant;
॰ the Company undergoes a change of control or a winding up resolution or order is made and the Board does not
exercise its discretion to vest the Award; and
॰ the expiry date of the Award.
• The Board may, in its discretion, determine at any time up until exercise of Awards, that a restriction period will apply to
some or all of the shares issued to an eligible participant on exercise of those Awards (Restriction Period). In addition, the
Board may, in its sole discretion, having regard to the circumstances at the time, waive any such Restriction Period.
• There are no participation rights or entitlements inherent in the Awards and eligible participants will not be entitled to
participate in new issues of capital offered to shareholders during the currency of the Awards without exercising the Award.
In the event that an offer of an Award to an executive will result in the maximum Awards allowed under the Plan being exceeded,
the offer will not be covered by ASIC Class Order 14/1000 and the Company will be required to address the secondary sale
requirements of any shares issued upon exercise of the Award. This includes the Company lodging a cleansing notice under
Section 708A(5) of the Corporations Act 2001 (Cth) or a prospectus under Section 708A(11) of the same Act.
During the current year, 9,000,000 performance rights were granted to executives (2020: 6,750,000). There were no option
awards to executives in the current year (2020: nil).
The exercise price and vesting conditions of options awarded to executives and the vesting conditions of performance rights
awarded to executives is determined so as to ensure that these options and performance rights only have value if there is an
increase in shareholder wealth over time.
2(e) Remuneration Report Approval at 2020 Annual General Meeting
The remuneration report of Adveritas Limited for the year ended 30 June 2020 was approved by shareholders at the 2020
AGM.
13
DIRECTORS’ REPORTADVERITAS | ANNUAL REPORT 2021 REMUNERATION REPORT (AUDITED) (CONTINUED)
3.
REMUNERATION OUTCOMES
Remuneration of Key Management Personnel
During prior year, in response to the global COVID-19 pandemic (with effect from 23 March 2020) Non-Executive Director
fees were reduced to nil, the salary of Mr Ratty was reduced by 50% and the salaries of senior executives employed by the
Company were reduced by 30%. These reductions were made without there being any obligation on the Group to repay the
forgone amounts.
Post-
employment
Long-term
benefits
Share-based payments
Long service
leave
Performance
Rights
Short-term benefits
Salary &
fees
Commission
/ Bonus
$
54,923
42,725
40,150
28,483
36,615
28,483
40,150
31,084
$
-
-
-
-
300,527
48,333
235,928
100,000
472,365
48,333
366,703
100,000
276,386
258,571
107,557
101,970
60,530
72,373
235,602
243,993
-
86,644
217,437
103,332
218,379
-
-
25,000
-
-
-
-
34,670
39,129
-
-
3,311
-
2,677
-
Super
$
5,218
4,059
-
2,706
3,478
2,706
-
-
21,245
20,691
29,941
30,162
21,041
20,938
10,218
9,687
-
-
21,100
20,879
-
-
-
-
-
-
95,776
289,154
939,903
$
-
-
-
-
4,334
2,733
4,334
2,733
5,362
8,268
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
95,776
544,645
544,645
(47,140)
393,461
-
-
-
-
-
-
-
-
-
-
32,052
2,066
1,302
79,192
33,845
Options
$
Total
$
72,288
132,429
-
72,288
-
46,784
112,438
31,189
72,289
112,382
-
72,289
-
-
-
31,189
112,439
31,084
470,215
903,997
-
-
-
-
5,957
-
-
-
1,044,243
255,649
706,238
117,775
117,614
60,530
72,373
372,630
8,936
348,084
-
-
-
-
-
-
-
-
86,644
220,748
103,332
221,056
-
1,248,388
Performance
related
%
-
-
-
-
-
-
-
-
31
71
46
62
(18)
61
-
5
-
-
31
12
-
-
2
-
1
-
6
33
23
45
1,115,891
40,658
866,883
1,588,256
1,233,586
64,129
88,991
164,129
52,359
51,504
82,300
81,666
7,428
9,570
11,762
12,303
427,306
14,893
1,434,285
127,828
289,154
2,188,291
971,951
14,893
2,478,528
Non-Executive Directors
S. Belben 3
R. Besnard 3
M. McConnell 3
A. Stott 3
Executive Directors
M. Ratty 1, 3
Total Directors
Senior Executives
L. Taylor 2, 3, 8
F. Muir 3
S. Park 4
D. Cox 3
E. Rosenberg 5
J. Linden 3, 6
M. Sutton 7
Total Senior
Executives
Total
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
14
DIRECTORS’ REPORTADVERITAS | ANNUAL REPORT 2021 REMUNERATION REPORT (AUDITED) (CONTINUED)
3.
REMUNERATION OUTCOMES (CONTINUED)
Notes
1.
2.
3.
4.
5
6.
7.
8.
The bonus paid to Mr Ratty in the current year relate to the Company achieving a targeted share price. In the prior year,
the bonuses paid to Mr Ratty resulted from successfully raising capital, securing Tier 1 clients, expanding the US sales
team and the Company achieving a targeted share price.
The bonuses paid to Mr Taylor in the prior year relate to the successful achievement of key technical milestones.
Refer to section 5 below and Note 16 for further information on the vesting conditions attached to the options and
performance rights granted.
Ms Park provides company secretarial services through Park Advisory Pty Ltd (formerly Hunter Corporate Pty Ltd), an
entity controlled by her.
Mr Rosenberg resigned on 2 October 2019.
Mr Linden commenced employment on 10 January 2020 and resigned 30 June 2021.
Mr Sutton commenced employment on 4 January 2021. Prior to his employment, Mr Sutton provided contract sales and
marketing services to the Company over the period 19 August 2020 to 31 December 2020 and earned consultancy fees of
$69,494.
The net credit amount reflected for Mr Taylor’s performance rights is due to the lapsing of a number of performance
rights during the current year.
4.
EXECUTIVE CONTRACTS
Remuneration arrangements for executives are formalised in the employment agreements. The following outlines the details
of the contracts with executives:
Mathew Ratty, Managing Director and Chief Executive Officer
Mr Ratty’s current employment agreement commenced on 9 November 2018 (Mr Ratty held the position of Interim CEO up to
this date). The term of Mr Ratty’s contract was extended from 30 June 2021 to 30 June 2023 on 3 July 2020.
Details
• Remuneration:
Annual base salary – Mr Ratty’s contract was varied to increase the annual base salary from $265,000 to $290,000 (plus
statutory superannuation) with effect from 1 August 2020.
• Performance related bonuses – short term incentive: at the Board’s discretion, a cash bonus may be paid to Mr Ratty in
relation to the successful completion of various milestones periodically set by the Board. The cash bonus is not to exceed
50% of the annual salary in the financial year the bonus is earnt.
• Performance related bonuses – long term incentive: the following performance rights are held by Mr Ratty:
Milestones to be achieved
Date by which
milestone is to
be achieved
Quantum of performance
rights to vest upon
achievement of milestone
A total of 3,000 clients sign up to the Company’s Freemium offering
30 June 2023
1,000,000
• Termination:
The agreement may be terminated:
॰ by the Company without cause by giving twelve months’ notice, or immediately with payment in lieu of notice;
॰ by the Company giving one months’ notice if Mr Ratty is unable to perform his duties due to illness, accident or
incapacitation, for six consecutive months or a period aggregating more than six months in any twelve-month period; or
॰ by the Company immediately without notice following material breach or in the case of misconduct; or
॰ by Mr Ratty without cause by giving three months’ notice or immediately if the Company commits any serious or
persistent breach of the agreement.
• Other:
The agreement includes other general industry standard provisions for a senior executive.
15
DIRECTORS’ REPORTADVERITAS | ANNUAL REPORT 2021 REMUNERATION REPORT (AUDITED) (CONTINUED)
4.
EXECUTIVE CONTRACTS (CONTINUED)
Luke Taylor, Chief Operations Officer
Mr Taylor’s current employment agreement commenced on 20 August 2018 (Mr Taylor held the position of Chief Technology
Officer up to this date) and the term was extended from 30 June 2021 to 30 June 2023 on 5 July 2020.
Details
• Remuneration:
Annual base salary of $275,000 (plus statutory superannuation)
• Performance related bonuses – short term incentive: a cash bonus may be paid at any time during the term of the
agreement conditional upon the achievement of key performance indicators set by the Chief Executive Officer. The cash
bonus is not to exceed 25% of the annual salary in the financial year the bonus is earnt
• Performance related bonuses – long term incentive: the following performance rights are held by Mr Taylor:
Milestones to be achieved
Date by which
milestone is to
be achieved
Quantum of performance
rights to vest upon
achievement of milestone
A total of 3,000 clients sign up to the Company’s Freemium offering
30 June 2023
1,000,000
• Termination:
The agreement may be terminated:
॰ by the Company without cause by giving six months’ notice, or immediately with payment in lieu of notice;
॰ by the Company giving one months’ notice if Mr Taylor is unable to perform his duties due to illness, accident or
incapacitation, for six consecutive months or a period aggregating more than six months in any twelve-month period; or
॰ by the Company immediately without notice following material breach or in the case of misconduct; or
॰ by Mr Taylor without cause by giving three months’ notice or immediately if the Company commits any serious or
persistent breach of the agreement.
• Other:
The agreement includes other general industry standard provisions for a senior executive.
Matthew Sutton, Global Chief Revenue Officer (appointed 4 January 2021)
Mr Sutton’s employment agreement commenced on 4 January 2021 and has no fixed term.
Details
• Remuneration:
॰ Annual base salary of SGD$420,000 and a sign on bonus comprising the issue of 250,000 shares in the Company. As at
30 June 2021, the sign on bonus shares had not been issued to Mr Sutton.
॰ Commission of 7% on revenue from contracts entered into as a result of the sales efforts of Mr Sutton or his sales team.
• Long term incentives:
2,000,000 performance rights are to be issued to Mr Sutton and will vest on the achievement of an Annual Revenue Rate
(“ARR”) from new clients of US$5,000,000 as follows:
1. 60% of the performance rights, being 1,200,00 performance rights will vest on achievement of 60% of the ARR from new
clients, being US$3,000,000, within 18 months of employment commencement date; and
2. 800,000 performance rights will vest on a pro-rate basis on achievement of an ARR from new clients exceeding
US3,000,000 within 18 months of employment commencement date.
• Termination:
The agreement may be terminated:
॰ by the Company without cause by giving three months’ notice, or immediately with payment in lieu of notice;
॰ by the Company giving one months’ notice if Mr Sutton is unable to perform his duties due to illness, accident or
incapacitation, for two consecutive months or a period aggregating more than two months in any twelve-month period;
or
॰ by the Company immediately without notice following material breach or in the case of misconduct; or
॰ by Mr Sutton without cause by giving three months’ notice or at any time if the Company commits any serious or
persistent beach which is not remedied within twenty eight days.
• Other:
The agreement includes other general industry standard provisions for a senior executive.
16
DIRECTORS’ REPORTADVERITAS | ANNUAL REPORT 2021 REMUNERATION REPORT (AUDITED) (CONTINUED)
4.
EXECUTIVE CONTRACTS (CONTINUED)
David Cox, Global Growth Officer
Mr Cox’s current employment agreement commenced on 19 November 2018 and has no fixed term. Mr Cox currently holds
the position of Global Growth Officer. He held the position of Senior Vice President, Enterprise Sales from 13 July 2020 to 30
September 2020 and was the Chief Revenue Officer from 26 April 2019 to 12 July 2020. Prior to that Mr Cox was the Managing
Director, APAC Sales.
Details
• Remuneration:
॰ Annual base salary of $230,000 plus statutory superannuation.
॰ A maximum commission of 10% of revenue earned from new clients engaged by Mr Cox after 13 July 2020.
• Long term incentives:
On 11 September 2019 Mr Cox’s employment agreement was varied such that if Mr Cox achieves the milestones listed below
within 24 months of the variation, he will be offered the following options:
Milestones
Upon achievement of annualised contract revenue of US$3 million
Upon achievement of annualised contract revenue of US$5 million
Upon achievement of annualised contract revenue of US$7 million
Upon achievement of annualised contract revenue of US$10 million
Upon achievement of annualised contract revenue of US$15 million
Quantum of unlisted options
upon achievement of milestone
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
5,000,000
The exercise price of the options will be based on the 5-day VWAP at the time the offer is made.
On 26 February 2020, Mr Cox was awarded 750,000 performance rights which will vest 2 years from date of issue provided
Mr Cox remains a full-time employee of the Group.
• Termination:
The agreement may be terminated:
॰ by either party without cause by giving one months’ notice, or in the case of the Company, immediately with payment in
lieu of notice;
॰ by the Company by giving one months’ notice if Mr Cox is unable to perform his duties due to illness, accident or
incapacitation, for two consecutive months or a period aggregating more than two months in any twelve-month period; or
॰ by the Company by giving one months’ notice if Mr Cox commits any serious breach under the agreement that is not
remedied within fourteen days; or
॰ by the Company immediately without notice following material breach or in the case of misconduct; or
॰ by Mr Cox if at any time the Company commits any serious or persistent beach which is not remedied within twenty
eight days.
• Other:
The agreement includes other general industry standard provisions for a senior executive.
James Linden, Vice President of Sales North America (appointed 10 January 2020, resigned on 30 June 2021)
Mr Linden’s employment agreement commenced on 10 January 2020 and came to an end on 30 June 2021.
Details
• Remuneration:
॰ Annual base salary of US$162,000 plus social security and medical insurance.
॰ Commission of 7.5% on sales primarily introduced by Mr Linden.
• Termination:
The agreement may be terminated at any time by either party with or without cause and with or without notice.
• Other:
The agreement includes other general industry standard provisions for a senior executive.
17
DIRECTORS’ REPORTADVERITAS | ANNUAL REPORT 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
4.
EXECUTIVE CONTRACTS (CONTINUED)
Fiona Muir, Chief Financial Officer
Ms Muir’s employment agreement commenced on 25 June 2018 and has no fixed term.
Details
• Remuneration:
Ms Muir fulfils the role of Chief Financial Officer on a part time basis and is remunerated pro-rata based on an annual base
salary of $240,000 plus statutory superannuation.
• Termination:
The agreement may be terminated:
॰ by Ms Muir with one months’ notice, unless the Company is in breach of a material term of the agreement, in which case
Ms Muir may terminate it immediately;
॰ by the Company with one months’ notice or payment in lieu of notice;
॰ by the Company immediately without notice following material breach or in the case of misconduct
• Other:
The agreement includes other general industry standard provisions for a senior executive.
Susan Park, Company Secretary
• Ms Park provides company secretarial services through Park Advisory Pty Ltd (formally Hunter Corporate Pty Ltd). The
agreement with Park Advisory Pty Ltd commenced on 24 September 2017 and has no fixed term.
Details
• The Company pays a monthly fee together with any out of pocket expenses. The monthly retainer is based on standard
market rates. In the event assistance is required outside of the normal company secretarial role, the Company is charged
an additional fee based on the hours worked by Ms Park.
• The agreement may be terminated by the Company or Park Advisory Pty Ltd by giving two months’ notice.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
5. ADDITIONAL DISCLOSURES RELATING TO PERFORMANCE RIGHTS, OPTIONS AND SHARES
Performance Rights
Performance rights do not carry any voting or dividend rights and can only be converted into ordinary shares up until their
expiry date, provided the vesting conditions have been met.
The tables below disclose the movement in performance rights held by key management personnel during the current and
prior year. There is a nil exercise price payable on the conversion of performance rights into ordinary shares.
Number of performance rights
Opening
balance
Granted
during the
year
Vested
during the
year
Converted
into ordinary
shares during
the year
Lapsed during
the year
Closing
balance
2021
Executive directors
M. Ratty
Executives
L. Taylor
D. Cox
11,250,000
4,500,000
3,500,000
4,750,000
10,000,000
1,000,000
9,600,000
4,500,000
3,500,000
4,500,000
8,600,000
1,000,000
750,000
-
-
-
-
750,000
18
DIRECTORS’ REPORTADVERITAS | ANNUAL REPORT 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
5.
ADDITIONAL DISCLOSURES RELATING TO PERFORMANCE RIGHTS, OPTIONS AND SHARES
(CONTINUED)
Performance Rights (continued)
Number of performance rights
Opening
balance
Granted
during the
year
Vested during
the year
Converted
into ordinary
shares during
the year
Lapsed during
the year
Closing
balance
2020
Executive directors
M. Ratty
Executives
L. Taylor
D. Cox
8,250,000
3,000,000
1,250,000
6,600,000
3,000,000
1,000,000
-
750,000
-
-
-
-
-
-
-
11,250,000
9,600,000
750,000
The tables below disclose the fair values of performance rights granted to key management personnel during the current and
prior year.
2021
M. Ratty
L. Taylor
Fair
value per
performance
right at grant
date (cents)
Grant
date
Number
granted
Fair
value per
performance
right at grant
date (cents)
Grant
date
Number
granted
Class T
11/09/2020
4,500,000
0.11 05/07/2020
4,500,000
0.08
2020
M. Ratty
L. Taylor
D. Cox
Fair
value per
performance
right at grant
date (cents)
Grant
date
Number
granted
Grant
date
Number
granted
Class P
13/11/2019
1,000,000
17.49
20/11/2019
1,000,000
Class Q
13/11/2019
1,000,000
17.49
20/11/2019
1,000,000
Class R
13/11/2019
1,000,000
17.49
20/11/2019
1,000,000
Fair
value per
performance
right at grant
date (cents)
20.99
20.99
20.99
Fair
value per
performance
right at grant
date (cents)
Grant
date
Number
granted
Class S
23/01/2020
750,000
21.99
3,000,000
3,000,000
750,000
Details of the vesting conditions, expiry dates and status of the performance rights held by key management personnel on 30
June 2021 are set out below:
Tranche Vesting Condition
Number
Expiry date
Status at 30
June 2021
Class S
Executive continues to be a full-time employee of the Group at 26
February 2022.
750,000
25/04/2022 Not yet vested
Class T
A total of 3,000 clients sign up to the Company’s Freemium offering
2,000,000
30/06/2023 Not yet vested
19
DIRECTORS’ REPORTADVERITAS | ANNUAL REPORT 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
5.
ADDITIONAL DISCLOSURES RELATING TO PERFORMANCE RIGHTS, OPTIONS AND SHARES
(CONTINUED)
Options awarded, vested and lapsed during the year
Share options do not carry any voting or dividend rights, and can only be exercised once the vesting conditions, if any, have
been met, and only until the expiry date.
1,250,000 options were issued to each non-executive director during the current year (2020: nil). 500,000 options held by key
management personnel expired during the current year. Those options were granted on 26 October 2017 and had an exercise
price of $0.45. In the prior year, 1,000,000 options held by key management personnel expired. Those options had an exercise
price of $0.45.
The table below discloses the number of share options granted during the current year and the number of those options
that vested or lapsed during the current year. The table only shows options that were granted as part of remuneration to key
management personnel.
Options
granted
during
the year Grant date
Fair value
per option
at grant
date
Vesting
date
Exercise
price
Expiry date
Vested
during
year
Lapsed
during
year
Non-Executive Directors
S. Belben
1,250,000
11/09/2020
$0.06
11/09/2020
$0.15
03/07/2023
1,250,000
R. Besnard
1,250,000
11/09/2020
$0.06
11/09/2020
$0.15
03/07/2023
1,250,000
M. McConnell
1,250,000
11/09/2020
$0.06
11/09/2020
$0.15
03/07/2023
1,250,000
A. Stott
1,250,000
11/09/2020
$0.06
11/09/2020
$0.15
03/07/2023
1,250,000
-
-
-
-
Value of
options
granted
during
year
$72,288
$72,288
$72,288
$72,288
Options exercised during the year
The table below discloses the number of share options that were exercised by key management personnel during the current
year.
Options
exercised
during the
year
Grant date
Fair value
per option
at grant
date
Vesting date
Exercise
price
Expiry date
Value of
options
exercised
during year
Non-Executive Directors
A. Stott 1
600,000
17/12/2018
$0.06
24/12/2018
$0.15
24/12/2020
$33,345
Senior Executives
D. Cox
F. Muir
Notes
750,000
17/12/2018
$0.06
24/12/2019
$0.15
24/12/2020
$41,682
500,000
17/12/2018
$0.06
24/12/2019
$0.15
24/12/2020
$27,788
1
The options granted to Mr Stott vested on issue, which occurred on 24 December 2018.
20
DIRECTORS’ REPORTADVERITAS | ANNUAL REPORT 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
5.
ADDITIONAL DISCLOSURES RELATING TO PERFORMANCE RIGHTS, OPTIONS AND SHARES
(CONTINUED)
Option holdings of KMP
The table below discloses all options held directly, indirectly and beneficially by key management personnel.
Balance at
1 July 2020
Granted as
remuneration
Lapsed
Exercised
Balance at
30 June 2021
Exercisable
Not
exercisable
Non-Executive Directors
S. Belben
R. Besnard
840,000
1,250,000
-
1,250,000
1,250,000
(500,000)
M. McConnell
10,282,778
1,250,000
A. Stott
1,350,000
1,250,000
Executive Directors
M. Ratty
3,999,092
Senior Executives
500,000
750,000
F. Muir
D. Cox
Total
-
-
-
-
-
-
2,090,000
2,090,000
2,000,000
2,000,000
11,532,778
11,532,778
(600,000)
2,000,000
2,000,000
3,999,092
3,999,092
(500,000)
(750,000)
-
-
-
-
-
-
-
-
-
18,971,870
5,000,000
(500,000)
(1,850,000)
21,621,870
21,621,870
-
-
-
-
-
-
-
-
Share holdings of KMP
The table below discloses the shares held directly, indirectly and beneficially by key management personnel.
Balance at
1 July 2020
Granted as
remuneration
On conversion
of performance
rights
On exercise of
options
Net change
other
Balance at
30 June 2021
Non-Executive Directors
S. Belben
720,000
M. McConnell 1
25,032,593
A. Stott
500,000
Executive Directors
M. Ratty 2
17,780,544
Senior Executives
L. Taylor
D. Cox
F. Muir
Total
Notes
5,203,782
-
-
49,236,919
-
-
-
-
-
-
-
-
-
-
-
-
-
720,000
35,725,317
60,757,910
600,000
-
1,100,000
4,750,000
4,500,000
-
-
-
-
750,000
500,000
180,000
22,710,544
-
-
-
9,703,782
750,000
500,000
9,250,000
1,850,000
35,905,317
96,242,236
1.
Mr McConnell acquired 26,666,667 shares as part of a share placement approved by shareholders in September 2020.
He acquired a further 9,058,650 shares on market.
2. Mr Ratty acquired 180,000 shares on market.
21
DIRECTORS’ REPORTADVERITAS | ANNUAL REPORT 2021
REMUNERATION REPORT (AUDITED) (CONTINUED)
6.
OTHER TRANSACTIONS AND BALANCES WITH KEY MANAGEMENT PERSONNEL AND THEIR RELATED
PARTIES
During the current year, Adveritas Limited continued its consultancy agreement with 13811 Advisory Pte Ltd, a company of
which Mr Stott is the CEO and founder. The consultancy services include the provision of promotion and marketing services.
Under the agreement, Mr Stott was entitled to consultancy fees of $5,000 per month. These fees are in addition to the salary
and fees disclosed in section 3 of this report. At 30 June 2021, an amount of $5,000 was owing to 13811 Advisory Pte Ltd (2020:
$5,000).
During the current year, Adveritas Limited entered into an agreement with Almonte Advisory Inc, a company of which Mr
Besnard is the CEO and founder. The consultancy services include assisting the Company with its marketing execution and
supporting the Company’s business and product strategy. Under the agreement, Mr Besnard was paid USD $48,300 during
the current year. These fees are in addition to the salary and fees disclosed in section 3 of this report.
Signed in accordance with a resolution of the directors:
Stephen Belben
Non-Executive Chairman
Perth, Western Australia
Dated this 27th day of August 2021
22
DIRECTORS’ REPORTADVERITAS | ANNUAL REPORT 2021 AUDI TOR’S IN DEPEN DEN CE D ECLAR ATION
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s Independence Declaration to the Directors of Adveritas
Limited
As lead auditor for the audit of the financial report of Adveritas Limited for the financial year ended 30
June 2021, I declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Adveritas Limited and the entities it controlled during the financial
year.
Ernst & Young
Mark Cunningham
Partner
27 August 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
MC:DA:AVL:006
23
ADVERITAS | ANNUAL REPORT 2021
CO NSOLIDA TED STATEM ENT O F P ROFI T A ND LOSS
AND OTHER C OMPREH ENSIV E I NCOM E
For the year ended 30 June 2021
Revenue from contracts with customers
Interest income
Other income
Overheads
Server hosting costs
Administration costs
Compliance costs
Consultancy costs
Employment costs
Occupancy costs
Marketing costs
Expected credit losses and bad debts expense
Finance costs
Other Expenses
Foreign exchange losses
Depreciation
Impairment loss
Expected credit loss: deferred consideration
Share based payments
Loss before income tax
Income tax expense
Note
4
2021
$
964,110
10,856
2020
$
1,227,213
14,242
5(a)
1,757,008
1,599,620
5(b)
5(c)
5(d)
5(e)
5(f)
5(g)
5(h)
(2,000,489)
(2,119,094)
(607,483)
(448,140)
(315,144)
(322,646)
(737,495)
(560,708)
(6,030,246)
(5,506,082)
(73,741)
(70,086)
(843,657)
(744,230)
(3,596)
(279,343)
(48,269)
(54,245)
(10,660,120)
(10,104,574)
(57,081)
(50,325)
5(i)
(136,337)
(136,342)
11
16
6
-
-
(113,525)
(567,869)
(859,244)
(1,343,842)
(1,052,662)
(2,211,903)
(8,980,808)
(9,475,402)
(18,155)
(11,957)
Loss for the year attributable to the members of Adveritas Limited
(8,998,963)
(9,487,359)
Other comprehensive income net of tax
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
(1,774)
24,564
Total comprehensive loss for the year
attributable to the members of Adveritas Limited
(9,000,737)
(9,462,795)
Loss per share attributable to members of Adveritas Limited
Basic loss per share
Diluted loss per share
23
23
Cents
(2.60)
(2.60)
Cents
(4.68)
(4.68)
The Consolidated Statement of Profit and Loss and Other Comprehensive Income is to be read in conjunction with the notes to the
consolidated financial statements.
24
ADVERITAS | ANNUAL REPORT 2021 CO NSOLIDA TED STATEMENT O F F IN AN CI A L P O SI TIO N
For the year ended 30 June 2021
Note
2021
$
2020
$
7
8
9
10
11
12
6
13
10
10
13
14
17
15
15
3,231,414
8,351,840
343,094
192,746
401,058
163,487
3,767,254
8,916,385
44,914
505,268
-
-
550,182
38,104
606,322
-
34,000
678,426
4,317,436
9,594,811
1,327,471
13,446
769,873
-
539,696
550,862
103,110
1,983,723
90,597
1,411,332
468,950
62,560
531,510
557,678
46,664
604,342
2,515,233
2,015,674
1,802,203
7,579,137
43,237,080
39,941,684
(46,568,582)
(37,569,619)
5,094,942
5,166,535
38,763
40,537
1,802,203
7,579,137
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Prepayments
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Plant and equipment
Right-of-use assets
Investments
Goodwill
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Income tax payable
Provisions
Lease liabilities
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Lease liabilities
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Accumulated losses
Share based payment reserve
Foreign currency translation reserve
TOTAL EQUITY
The Consolidated Statement of Financial Position is to be read in conjunction with the notes to the consolidated financial statements.
25
ADVERITAS | ANNUAL REPORT 2021 CO NSOLIDA TED STATEM ENT O F C ASH F LOWS
For the year ended 30 June 2021
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Note
2021
$
2020
$
946,013
877,422
(10,065,938)
(9,536,248)
Research and development grant income received
5(a)
1,180,494
1,287,433
Other income received
Interest received
Interest expense on lease liabilities
Net cash flows used in operating activities
Cash flows from investing activities
Purchase of plant and equipment
Proceeds on disposal of plant and equipment
Deferred consideration received on disposal of controlled entity
Net cash flows (used in) / generated by investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue costs paid
Lease liability payments
Net cash flows provided by financing activities
711,514
11,619
177,187
15,676
10
7
(48,269)
(54,245)
(7,264,567)
(7,232,775)
(43,493)
(14,969)
1,292
-
(42,201)
-
29,458
14,489
10
2,393,000
13,974,428
(59,116)
(76,215)
(387,310)
(59,101)
2,257,669
13,528,017
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
(5,049,099)
6,309,731
8,351,840
2,046,991
Effects of exchange rate changes on cash and cash equivalents
(71,327)
(4,882)
Cash and cash equivalents at the end of the year
7
3,231,414
8,351,840
The Consolidated Statement of Cash Flows is to be read in conjunction with the notes to the consolidated financial statements.
26
ADVERITAS | ANNUAL REPORT 2021 CONSOLI DATED ST ATEM EN T O F CHA NGES I N EQ UITY
For the year ended 30 June 2021
Contributed
equity
Accumulated
losses
Share based
payments
reserve
Foreign
currency
translation
reserve
Total equity
$
$
$
$
$
Balance at 1 July 2020
39,941,684
(37,569,619)
5,166,535
40,537
7,579,137
Loss for the year
Other comprehensive income
Foreign exchange differences arising
on translation of foreign operations
Total comprehensive income /
(expenditure) for the year
Transactions with equity holders in
their capacity as owners
Ordinary shares issued
Share issue costs
Shares issued on conversion of
performance rights
Share based payments expense
-
-
-
(8,998,963)
(8,998,963)
2,393,000
(28,441)
930,837
-
3,295,396
-
-
-
-
-
-
-
-
-
-
(930,837)
859,244
(71,593)
-
(8,998,963)
(1,774)
(1,774)
(1,774)
(9,000,737)
-
-
-
-
-
2,393,000
(28,441)
-
859,244
3,223,803
Balance at 30 June 2021
43,237,080
(46,568,582)
5,094,942
38,763
1,802,203
Balance at 1 July 2019
26,305,580
(28,082,260)
3,905,193
15,973
2,144,486
Loss for the year
Other comprehensive income
Foreign exchange differences arising
on translation of foreign operations
Total comprehensive income /
(expenditure) for the year
Transactions with equity holders in
their capacity as owners
Ordinary shares issued
Share issue costs
Share based payments expense
-
-
-
(9,487,359)
-
(9,487,359)
14,136,089
(499,985)
-
13,636,104
-
-
-
-
-
-
-
-
-
1,261,342
1,261,342
-
(9,487,359)
24,564
24,564
24,564
(9,462,795)
-
-
-
-
14,136,089
(499,985)
1,261,342
14,897,446
Balance at 30 June 2020
39,941,684
(37,569,619)
5,166,535
40,537
7,579,137
The Consolidated Statement of Changes in Equity is to be read in conjunction with the notes to the consolidated financial
statements.
27
ADVERITAS | ANNUAL REPORT 2021
1. CORPORATE INFORMATION
The consolidated financial report of Adveritas Limited (Adveritas or Company) and its controlled entities (collectively
referred to as the Group) for the year ended 30 June 2021 was authorised for issue in accordance with a resolution of the
directors on 27 August 2021.
Adveritas is a for-profit company limited by shares incorporated and domiciled in Australia whose shares are publicly traded
on the Australian Securities Exchange. The Group’s registered office is in Bentley, Western Australia.
The nature of operations and principal activities of the Group are the creation of innovative software solutions that leverage
big data to drive business performance. TrafficGuard, is the Group’s first commercially available software as a service.
Information on the Group’s corporate structure and related party relationships is provided in Note 20.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This note provides a summary of the significant accounting policies adopted in the preparation of this consolidated financial
report. These policies have been consistently applied to all the years presented, unless otherwise stated.
(a) Basis of Preparation
The consolidated financial report is a general-purpose financial report which has been prepared on a historical cost
basis and is presented in Australian dollars.
(b) Statement of Compliance
The consolidated financial statements have been prepared in accordance with the requirements of the Corporations
Act 2001, Australian Accounting Standards and other authoritative pronouncements issued by the Australian Accounting
Standards Board and comply with the International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB).
(c) Changes in accounting policies, disclosures, standards and interpretations
(i) Accounting Standards and Interpretations issued but not yet adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective
and have not been adopted by the Group for the annual reporting period ended 30 June 2021 are outlined below.
Amendments to IAS1: Classification of Liabilities as Current or Non-current
In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying
liabilities as current or non-current. The amendments clarify:
• What is meant by a right to defer settlement
• That a right to defer must exist at the end of the reporting period
• That classification is unaffected by the likelihood that an entity will exercise its deferral right
• That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability
not impact its classification
The amendments will be applied retrospectively.
Application date of standard: 1 January 2023 Application date for the Group: 1 July 2023
Impact on the Consolidated Financial Statements: The Group does not anticipate any impact on its consolidated
financial statements.
28
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c) Changes in accounting policies, disclosures, standards and interpretations (continued)
(ii) New standards, interpretation and amendments adopted by the Group
The new standards, interpretations and amendments adopted by the Group in the current year are set out below.
The Group has not early adopted any of the accounting standards that have been issued but are not yet effective as of
balance date.
(a) Amendments to AASB 3: Definition of a Business
The amendment to AASB 3 clarifies that to be considered a business, an integrated set of activities and assets
must include, at a minimum, an input and a substantive process that together significantly contribute to the ability
to create output. Furthermore, it clarified that a business can exist without including all of the inputs and processes
needed to create outputs.
These amendments had no impact on the consolidated financial statements of the Group but may impact future
periods should the Group enter into any business combinations.
(b) Amendments to AASB 101 and AASB 108: Definition of Material
The amendments provide a new definition of material that states “information is material if omitting, misstating or
obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial
statements make on the basis of those financial statements, which provide financial information about a specific
reporting entity.”
The amendments clarify that materiality will depend on the nature or magnitude of information, either individually
or in combination with other information, in the context of the financial statements. A misstatement of information is
material if it could reasonably be expected to influence decisions made by the primary users.
These amendments had no impact on the consolidated financial statements of the Group, nor is there expected to
be any future impact on the Group.
(d) Basis of Consolidation
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee
and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee
if and only if the Group has:
• Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)
• Exposure, or rights, to variable returns from its involvement with the investee
• The ability to use its power over the investee to affect its returns
Generally, there is a presumption that a majority of voting rights results in control. To support this presumption, and when
the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee, including:
• The contractual arrangement(s) with the other vote holders of the investee
• Rights arising from other contractual arrangements
• The Group’s voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes
to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over
the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date
the Group gains control until the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the
parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit
balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies into line with the Group’s accounting policies.
All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members
of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-
controlling interest and other components of equity while any resultant gain or loss is recognised in profit or loss. Any
investment retained is recognised at fair value.
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ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(e) Segment Reporting
An operating segment is a component of an entity that engages in business activities from which it may earn revenues
and incur expenses (including revenues and expenses relating to transactions with other components of the same
entity), whose operating results are regularly reviewed by the entity’s chief operating decision makers to make decisions
about resources to be allocated to the segments and assess their performance and for which discrete financial
information is available. This includes start-up operations which are yet to earn revenues.
Operating segments have been identified based on the information presented to the chief operating decision makers,
being the executive management team.
Information about other business activities are combined and disclosed in a separate category called “other”.
(f) Foreign Currency Translation
i.
Functional and presentation currency
Items included in the financial statements of each Group company are measured using the currency of the primary
economic environment in which the entity operates (“the functional currency”). The consolidated financial statements
are presented in Australian dollars, which is the parent’s functional and presentation currency. For each entity, the Group
determines the functional currency and items included in the financial statements of each entity are measured using
that functional currency.
ii.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of
the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are
recognised in profit or loss.
iii. Group companies
On consolidation, the assets and liabilities of foreign operations are translated into Australian dollars at the rate of
exchange prevailing at the reporting date and their statements of profit or loss are translated at exchange rates
prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation purposes are
recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive
income relating to that particular foreign operation is recognised in profit or loss. Any goodwill arising on the acquisition
of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the
acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of exchange at the
reporting date.
(g) Plant and Equipment
All plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item
can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised
when replaced. All other repairs and maintenance are charged to the profit or loss during the reporting period in which
they are incurred.
Depreciation is calculated over the estimated useful life of the asset as follows:
Plant and equipment
Leasehold improvements
Office equipment
Computer equipment
Method
Straight Line
Straight Line
Straight Line
Straight Line
Useful Lives
1.5 – 2.5 years
the term of the lease
2 – 10 years
1.5 – 4 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit
or loss.
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ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(h) Impairment of non-financial assets
Non-financial assets comprise of plant and equipment and goodwill. Non-financial assets other than goodwill are
tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be
recoverable. Goodwill is tested for impairment annually. An impairment loss is recognised for the amount by which the
asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value
(less costs of disposal) and value in use. For the purposes of assessing impairment, assets are grouped together at
the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash
inflows from other assets or groups of assets (cash-generating units). Impairment losses relating to goodwill cannot be
reversed in future periods.
(i) Cash and Cash Equivalents
Cash and short-term deposits in the Consolidated Statement of Financial Position comprise cash at banks and on hand
and short-term deposits with a maturity of three months or less.
For the purpose of the Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and short-term
deposits as defined above, net of outstanding bank overdrafts.
(j) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event,
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation.
Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate
asset but only when the reimbursement is virtually certain.
The expense relating to any provision is presented in the consolidated statement of profit and loss and other
comprehensive income net of any reimbursement.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash
flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate,
the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is
recognised as a finance cost.
(k) Revenue from contracts with customers
The Group has been in the business of providing its fraud mitigation software as a service to its customers. Revenue from
contracts with customers is recognised over time as the service is delivered to the customer, at an amount that reflects
the consideration to which the Group is entitled under the terms of the contract for that service. The Group has concluded
that it is the principal in its revenue arrangements because it controls the service before delivering it to the customer.
The Group’s performance obligation is the delivery of its software as a service to the customer over the period of time
that was agreed upon with the customer. The customer is required to pay the consideration agreed upon in the service
contract. The normal credit term is 30 to 60 days upon delivery of the service.
As a practical expedient, the Group does not disclose the transaction price allocated to the remaining performance
obligations as it recognises revenue from the customer at the amount that corresponds directly with the value to the
customer of the Group’s performance completed to date.
Contracts with customers may include a variable consideration in addition to the fixed monthly fee. The variable
consideration comprises a fee for each block of transactions that exceeds the transaction allowance included in the
fixed monthly fee. The variable consideration is recognised at the point in time when it can be reliably estimated and the
constraint applied.
Taxes collected from customers and remitted to government authorities are excluded from revenue.
Contract balances
Contract assets
A contract asset is the right to consideration in exchange for services transferred to the customer. If the Group performs
by transferring services to a customer before the customer pays consideration or before payment is due, a contract
asset is recognised for the earned consideration that is conditional.
Trade receivables
A receivable represents the Group’s right to an amount of consideration that is unconditional (i.e. only the passage of
time is required before payment of the consideration is due). Refer further to the accounting policy on financial assets
(Note 2(t)) for details on initial recognition, subsequent measurement and impairment.
Contract liabilities
A contract liability is the obligation to transfer services to a customer for which the Group has received consideration
(or an amount of consideration is due) from the customer. If a customer pays consideration before the Group transfers
goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due
(whichever is earlier). Contract liabilities are recognised as revenue when the Group performs under the contract.
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ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(k) Revenue from contracts with customers (continued)
Cost to obtain a contract
The Group pays sales commission to its employees for pre-determined milestones in relation to sales of is software
services. The Group has elected to apply the optional practical expedient for costs to obtain a contract which allows
the Group to immediately expense sales commissions because the amortisation period of the asset that the Group
otherwise would have used is one year or less.
(l) Government grants
Government grants are recognised as other income where there is reasonable assurance that the grant will be received
and all attached conditions will be complied with.
(m) Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired
in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are
carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles
are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is
incurred.
The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are
amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible
asset may be impaired. Intangible assets with indefinite useful lives are not amortised, but are tested for impairment
annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to
determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is
made on a prospective basis.
(n) Non-current assets held for sale and discontinued operations
The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered
principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups
classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell
are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and
income tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or
disposal group is available for immediate sale in its present condition.
Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made
or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale
expected to be completed within one year from the date of the classification.
Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately as current items in the consolidated statement
of financial position.
A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or
is classified as held for sale, and:
• represents a separate major line of business or geographical area of operations; and
• is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of
operations; or
• is a subsidiary acquired exclusively with a view to resale
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as
profit or loss after tax from discontinued operations in the statement of profit or loss.
(o) Impact of COVID-19 pandemic
In preparing the consolidated financial statements, the Group has considered the impact of COVID-19 pandemic.
Amounts received from the Federal Government in the form of JobKeeper and Cash Flow Booster payments have been
recognised as other income in the consolidated statement of profit and loss and other comprehensive income, and
have been separately disclosed in Note 5(a) to the consolidated financial statements. The impact of COVID-19 was
considered and assessed as not having a material impact in determining expected credit losses, provisions for employee
entitlements and other provisions, including impairment assessments.
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ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(p) Employee Benefits
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled wholly within
12 months after the end of the period in which the employees render the related service are recognised in respect of
employees services up to the end of the reporting period and are measured at the amounts expected to be paid when
the liabilities are settled.
Long service leave
The liability for long service leave is recognised and measured as 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 date on high quality corporate bonds with terms to maturity and
currencies that match, as closely as possible, the estimated future cash outflows.
(q) Income Tax
Current Tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable
profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively
enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent
that it is unpaid (or refundable).
Deferred Tax
Deferred tax is accounted for using the liability method in respect of temporary differences arising from differences
between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax
base of those items.
In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised
to the extent that it is probable that suffic ient taxable amounts will be available against which deductible temporary
differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not
recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other
than as a result of a business combination) which affects neither taxable income nor accounting profit. Furthermore, a
deferred tax liability is not recognised in relation to taxable temporary differences arising from goodwill.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, branches,
associates and joint ventures except where the Group is able to control the reversal of the temporary differences and
it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets arising from
deductible temporary differences associated with these investments and interests are only recognised to the extent that
it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences
and they are expected to reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the
asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted
or substantively enacted by reporting date.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner
in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and
the Company / Group intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax is recognised as an expense or income in the consolidated statement of profit and loss and
other comprehensive income except when it relates to items credited or debited directly to equity, in which case the
current and deferred tax is also recognised directly in equity.
(r) Contributed Equity
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.
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ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(s) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as
part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the consolidated
statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.
(t) Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
(u) Financial Assets
Initial recognition and measurement
Financial assets within the scope of AASB 9 are classified, at initial recognition, as subsequently measured at amortised
cost, fair value through other comprehensive income (OCI), and fair value through profit or loss. The classification
depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
The classification of financial assets that are debt instruments at initial recognition depends on the financial asset’s
contractual cash flow characteristics and the Group’s business model for managing them. With the exception of trade
receivables that do not contain a significant financing component or for which the Group has applied the practical
expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair
value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or
for which the Group has applied the practical expedient are measured at the transaction price determined under AABS
15. Refer to the accounting policy on revenue at Note 2(k).
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give
rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This
assessment is referred to as the SPPI test and is performed at an instrument level.
Financial assets at amortised cost
This category is the most relevant category to the Group. The Group measures financial assets at amortised cost if both
of the following conditions are met:
• The financial asset is held within a business model with the objective to hold financial assets in order to collect
contractual cash flows; and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject
to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
The Group’s financial assets at amortised cost include trade and other receivables.
Financial assets designated at fair value through OCI (equity instruments)
Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity instruments
designated at fair value through OCI when they meet the definition of equity under AASB 132 Financial Instruments:
Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income
in the statement of profit or loss when the right of payment has been established, except when the Group benefits from
such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI.
Listed equity instruments that are designated at fair value through OCI are not subject to impairment assessment.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
• Financial assets at amortised cost (debt instruments)
• Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)
• Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon
derecognition (equity instruments)
• Financial assets at fair value through profit or loss
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ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(u) Financial Assets (continued)
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is
primarily derecognised (i.e. removed from the Group’s consolidated statement of financial position) when:
• The rights to receive cash flows from the asset have expired; or
• The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the
received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a)
the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred
nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither
transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the
Group continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group
also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that
reflects the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum amount of consideration that the Group could be required to
repay.
Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value
through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the
contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective
interest rate.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the
next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit
risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure,
irrespective of the timing of the default (a lifetime ECL).
Financial assets at amortised cost
For contract assets, trade and other receivables, the Group applies a simplified approach in calculating ECLs. Therefore,
the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at
each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience,
adjusted for forward-looking factors specific to the debtors and the economic environment.
The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain
cases, the Group may also consider a financial asset to be in default when internal or external information indicates
that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit
enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering
the contractual cash flows.
(v) Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, or as
loans and borrowings, or as payables or as derivatives designated as hedging instruments in an effective hedge, as
appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs.
Subsequent measurement
The measurement of financial liabilities depends on their classification. The Group’s only financial liabilities are trade and
other payables.
Trade and other payables represent liabilities for goods or services provided to the Group prior to the end of the financial
year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other
payables are subsequently measured at amortised cost using the effective interest method and are presented as
current liabilities unless payment is not due within 12 months after the reporting period.
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ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(v) Financial liabilities (continued)
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the
terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition
of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is
recognised in the consolidated statement of profit and loss and other comprehensive income.
(w) Share-based payments
Consultants and employees (including senior executives) of the Group receive payment or remuneration in the form
of share-based payments, whereby the consultants or the employees render services as consideration for equity
instruments (equity-settled transactions).
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an
appropriate valuation model, further details of which are given in Note 16.
The cost of is recognised in the share based payments expense (Note 16), together with a corresponding increase in
equity, over the period in which the performance and / or service conditions are fulfilled.
The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects
the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments
that will ultimately vest. The expense or credit in the statement of profit or loss for a period represents the movement in
cumulative expense recognised as at the beginning and end of that period.
Service and non-market performance conditions are not taken into account when determining the grant date fair value
of awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number
of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair
value. Any other conditions attached to an award, but without an associated service requirement, are considered to be
non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate
expensing of an award unless there are also service and/or performance conditions.
No expense is recognised for awards that do not ultimately vest because non-market performance and/or service
conditions have not been met. Where awards include a market or non-vesting condition, the transactions are treated as
vested irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/
or service conditions are satisfied.
If the terms of an equity-settled award are modified, as a minimum, an expense is recognised as if the terms had not
been modified. An additional expense is recognised for any modification that increases the total fair value of the share
based arrangement, or is otherwise beneficial to the recipient, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not
yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award
and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if
they were a modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of diluted loss
per share (further details are given in Note 23).
(x) Loss per share
Basic loss per share is calculated as net loss attributable to members of the Company, adjusted to exclude any costs of
servicing equity (other than dividends), divided by the weighted average number of ordinary shares of the Company,
adjusted for any bonus element.
Diluted loss per share is calculated as net profit or loss attributable to members of the Company, adjusted for:
• costs of servicing equity (other than dividends);
• the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been
recognised as expenses; and
• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of
potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any
bonus element.
36
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(y) Significant accounting judgements, estimates and assumptions
The directors made estimates and judgements during the preparation of these consolidated financial statements
regarding assumptions about current and future events affecting transactions and balances.
These estimates and judgements are based on the best information available at the time of preparing the consolidated
financial statements, however as additional information is known then the actual results may differ from the estimates.
The significant estimates and assumptions made have been described below:
Revenue from contracts with customers
The Group applied the following judgements that significantly affect the determination of the amount and timing of
revenue from contracts with customers:
• The Group determined that revenue from its fraud mitigation software service is to be recognised over time because
the customer simultaneously receives and consumes the benefits provided by the Group.
• The Group has determined that it is the principal in its agreements with its customers because it has control over the
service before delivering it to the customer, it is primarily responsible for fulfilling the promise to deliver the service, and
it is responsible for establishing the price for the service to be delivered.
• Certain contracts with customers contain a variable consideration in relation to each block of transactions that
exceeds the transaction allowance included in the fixed monthly fee. The Group is required to use either the expected
value method or the most likely amount method based on which method better predicts the amount of consideration
to which it will be entitled. The Group has determined that the most likely amount method is appropriate.
Share-based payments
The Group measures the cost of equity-settled transactions by reference to the fair value of the equity instruments at
the date at which they are granted. Estimating fair value for share-based payment transactions requires determining
the most appropriate valuation model, which is dependent on the terms and conditions of the grant. The estimate also
requires making assumptions about the most appropriate inputs to the valuation model, including the expected life of the
share option, volatility and dividend yield. The assumptions and models used for estimating fair value for share-based
payment transactions are disclosed in Note 16.
Income Taxes
Judgement is required in assessing whether deferred tax assets are recognised in the consolidated statement of financial
position. Deferred tax assets are recognised only when it is considered more likely than not that they will be recovered,
which is dependent on the generation of sufficient future taxable profits. Assumptions about the generation of future
taxable profits depend on management’s estimates of future cash flows. Judgements are also required about the
application of income tax legislation.
The Group estimates that it has $23,200,572 (2020: $17,378,719) of tax losses carried forward. Although these losses
do not expire, they may not be capable of being used to offset taxable income elsewhere in the Group. The Group has
neither taxable temporary differences nor tax planning opportunities available that could partly support the recognition of
these losses as deferred tax assets. On this basis, the Group has determined that it cannot recognise deferred tax assets
in respect of the tax losses carried forward.
Further details on taxes are disclosed in Note 6.
Impairment of non-financial assets
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated
at Note 2(h). Impairment tests for other non-financial assets are performed only when impairment indicators have been
identified.
Impairment exists when the carrying value of an asset or cash-generating unit exceeds its recoverable amount, which
is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on
available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices
less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow model.
The cash flows are derived from the budget for the next two years. The assumptions used in the budget, such as growth
rates, and the discount rate used are subject to judgement and estimates.
The Group has assessed the goodwill recognised in relation to the FY 2016 acquisition of Croatian subsidiary, Appenture
d..o.o and has concluded that this goodwill has been impaired, and has written it down to nil. The Group has also
assessed the right-of-use asset recognised in accordance with AASB 16: Leases and has concluded that the right-of-use
asset has not suffered any impairment.
Provision for expected credit losses of trade receivables and contract assets
The Group uses a provision matrix to calculate ECLs for trade and other receivables and contract assets. The provision
rates are based on days past due and adjusted for forward looking expectations.
37
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(z) Going Concern
The consolidated financial statements have been prepared on a going concern basis which contemplates the continuity
of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of
business.
During the year ended 30 June 2021, the Group incurred a net loss after tax of $8,998,963 and a net cash outflow from
operating activities of $7,264,567. The cash and cash equivalents balance at 30 June 2021 was $3,231,414. The Group’s net
current asset position at 30 June 2021 was $1,783,531.
The ability of the Group to pay its trade creditors, continue its planned activities and maintain its going concern status is
dependent on the Group generating sufficient revenues and raising additional funds, as required. As at the date of this
report, the directors are satisfied that there are reasonable grounds to believe that the Group will be able to operate as a
going concern by generating sufficient revenues and raising further funds as required. In forming this view, the directors
have considered the ability of the Company to raise funds by way of a capital raising.
There are inherent uncertainties associated with the successful completion of a capital raising. Should the directors not
be able to manage these inherent uncertainties and successfully secure funding, there would be significant uncertainty
as to whether the Group would be able to meet its debts as and when they fall due and therefore continue as a going
concern.
These consolidated financial statements do not include any adjustments relating to the recoverability or classification of
recorded asset amounts nor to the amounts or classifications of liabilities that might be necessary should the Group not
be able to continue as a going concern.
3. SEGMENT INFORMATION
The Group’s operating segments comprise:
• Technology: responsible for the development and maintenance of the Group’s proprietary software offerings. These
activities are conducted primarily at the Group’s Australian head office and at its office in Croatia; and
• Sales and marketing: responsible for deploying the Group’s sales and marketing initiatives and for providing ongoing
customer service. These activities are carried out by sales and marketing personnel and consultants located in Australia,
Singapore, England, Latin America and the United States.
Costs allocated to the “other” segment include:
• Occupancy costs and general office administration costs for the Perth head office; and
• Employment costs relating to corporate and management team located in Perth.
The board of directors review internal management reports on a monthly basis that are consistent with the information
provided in the Consolidated Statement of Profit and Loss and Other Comprehensive Income, Consolidated Statement of
Financial Position and Consolidated Statement of Cash Flows. As a result, no reconciliation is required because, in aggregate,
the information as presented is what is used by the board to make strategic decisions. No operating segments have been
aggregated.
Segment results for the year ended 30 June 2021
Revenue
Other income
Overheads
Other expenses
EBITDA
Reconciliation of reportable segment loss
EBITDA
Interest income
Interest expense
Depreciation
Income tax expense
Loss after income tax
38
Technology
$
-
1,180,494
Sales and
marketing
$
964,110
100,000
Corporate
Consolidated
$
-
$
964,110
476,514
1,757,008
(4,925,549)
(3,065,318)
(2,597,838)
(10,588,705)
-
-
(939,471)
(939,471)
(3,745,055)
(2,001,208)
(3,060,795)
(8,807,058)
(3,745,055)
(2,001,208)
(3,060,795)
(8,807,058)
-
(30,905)
(94,980)
-
-
10,856
10,856
(17,364)
(48,269)
(1,822)
(39,535)
(136,337)
(4,659)
(13,496)
-
(18,155)
(3,875,599)
(2,016,526)
(3,106,838)
(8,998,963)
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021 3. SEGMENT INFORMATION (CONTINUED)
Segment results for the year ended 30 June 2020
Technology
$
-
Sales and
marketing
$
1,227,213
Corporate
Consolidated
$
-
$
1,227,213
1,287,433
-
312,187
1,599,620
(5,041,781)
(2,603,690)
(2,404,858)
(10,050,329)
-
-
(2,075,561)
(2,075,561)
(3,754,348)
(1,376,477)
(4,168,232)
(9,299,057)
(3,754,348)
(1,376,477)
(4,168,232)
(9,299,057)
-
(33,115)
-
-
14,242
14,242
(21,130)
(54,245)
(92,502)
(1,855)
(41,985)
(136,342)
(11,957)
-
-
(11,957)
(3,891,922)
(1,378,332)
(4,217,105)
(9,487,359)
Technology
Sales and
marketing
Corporate
Consolidated
$
$
$
$
1,336,126
1,407,811
324,352
2,656,958
4,317,436
255,258
852,164
2,515,233
Technology
Sales and
marketing
Corporate
Consolidated
$
888,392
1,111,046
$
$
$
329,573
8,376,846
9,594,811
172,592
732,035
2,015,673
Revenue
Other income
Overheads
Other expenses
EBITDA
Reconciliation of reportable segment loss
EBITDA
Interest income
Interest expense
Depreciation
Income tax expense
Loss after income tax
Segment assets and liabilities at 30 June 2021
Assets
Liabilities
Segment assets and liabilities at 30 June 2020
Assets
Liabilities
Geographic information
Revenue from external customers by customer location:
Australia
Foreign countries (refer to note 4.1.for further details)
Total
Consolidated
2021
$
2020
$
178,515
785,595
964,110
2,193
1,225,020
1,227,213
Included in revenue from foreign countries is revenue arising from sales shown in the sales and marketing segment from one
customer which amounted to $252,636 (2020: $408,613).
39
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
3. SEGMENT INFORMATION (CONTINUED)
Geographic information (continued)
Non-current operating assets by location
Australia
United States
Asia Pacific
Other
Total
Non-current assets for this purpose consist of property, plant and equipment and goodwill.
4. REVENUE FROM CONTRACTS WITH CUSTOMERS
4.1 Disaggregated revenue information
Set out below is the disaggregation of the Group’s revenue from contracts with customers:
Consolidated
2021
$
35,721
1,301
2,063
5,829
44,914
2020
$
69,387
1,417
10
1,290
72,104
Consolidated
2021
$
2020
$
Revenue by type of goods or services
Revenue from the sale of software as a service
964,110
1,227,213
Total revenue from contracts with customers
964,110
1,227,213
Revenue by timing of revenue recognition
Services transferred over time
964,110
1,227,213
Total revenue from contracts with customers
964,110
1,227,213
Revenue by geographical region
North America
Latin America
Asia Pacific
Australia
Europe
Middle East
Other
127,979
333,693
225,733
178,515
67,310
24,390
6,490
337,352
542,033
344,679
2,193
532
344
80
Total revenue from contracts with customers
964,110
1,227,213
40
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
5. OTHER INCOME, OVERHEADS AND OTHER EXPENSES
This note provides a breakdown of the significant items included in ‘other income’, ‘overheads’ and ‘other expenses’ shown in
the Consolidated Statement of Profit and Loss and Other Comprehensive Income.
(a) Other income
Research and development grant 1
Export market development grant 2
JobKeeper and Cash Flow Booster stimulus income
Miscellaneous income
(b) Administration costs
IT costs
Office and general administration costs
Corporate travel
(c) Compliance costs
Accounting fees
ASX compliance fees
Audit and tax compliance fees
Regulatory body fees
(d) Consultancy costs
Legal
Investor relations
Other
(e)
Employment costs
Salaries and wages 3
Ancillary employment costs
Other
Consolidated
2021
$
2020
$
1,180,494
1,287,433
100,000
446,850
29,664
-
305,000
7,187
1,757,008
1,599,620
406,507
183,760
17,216
607,483
9,878
152,316
146,219
6,731
315,144
541,719
54,512
141,264
223,353
151,533
73,254
448,140
10,579
183,652
121,989
6,426
322,646
426,149
83,926
50,633
737,495
560,708
5,163,099
4,537,449
813,735
53,412
914,654
53,979
6,030,246
5,506,082
41
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
5. OTHER INCOME, OVERHEADS AND OTHER EXPENSES (CONTINUED)
(f) Marketing costs
Advertising and marketing materials
Travel, entertainment, trade shows and events
Public relations
(g)
Expected credit losses and bad debt expense
Trade receivables written off as a bad debt
Trade receivables: expected credit loss allowance recognised
Trade receivables: expected credit loss allowance reversed
(h) Finance costs
Interest expense on lease liabilities (refer to Note 10)
(i) Depreciation
Depreciation of property, plant and equipment
Depreciation of right-of-use asset
Consolidated
2021
$
2020
$
592,814
17,800
233,043
843,657
3,596
-
-
236,393
254,209
253,628
744,230
35,312
279,343
(35,312)
3,596
279,343
48,269
48,269
54,245
54,245
35,283
101,054
136,337
35,288
101,054
136,342
1.
2.
3.
The research and development grant income has been received from the Australian government as the Group has
undertaken qualifying research and development activities within Australia. Grant income is recognised when the funds
are received whilst research and development expenses are recognised when incurred. The grant income recognised in
the current year relates to FY20 research and development activities and was received in January 2021.
The export market development grant income has been received from the Australian government as the Group has
undertaken qualifying marketing activities outside of Australia. Grant income is recognised when the funds are received
whilst marketing expenses are recognised when incurred. The grant income recognised in the current year relates to
marketing activities in FY19 and FY20.
Refer to Note 24 for further detail on director and executive remuneration.
42
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
6.
INCOME TAX EXPENSE
Major components of income tax expense for the year are:
Current income tax
Current income tax charge
Deferred income tax
Consolidated
2021
$
2020
$
18,155
11,957
Deferred income tax charge relating to origination and reversal of temporary
differences
-
-
Income tax expense reported in income statement
18,155
11,957
Current income tax liability
Amount offset against income tax refund receivable (refer Note 8)
Income tax payable reported in statement of financial position
18,155
(4,709)
13,446
11,957
(11,957)
-
Reconciliation
A reconciliation of income tax expense applicable to accounting loss before income tax at the statutory income tax rate to
income tax expense at the Company’s effective income tax rate for the year is as follows:
Consolidated
2021
$
2020
$
Accounting loss before tax
(8,980,808)
(9,475,402)
Income tax benefit at the statutory income tax rate of 27.5% (2020: 27.5%)
(2,469,722)
(2,605,736)
Adjusted for:
Non-deductible share-based payment expenses
236,292
369,557
Non-deductible entertainment expenses
Non-deductible impairment loss
Non-deductible expected credit loss (deferred consideration)
Other non-deductible expenses
Non-assessable grant income
Other non-assessable amounts
442
-
-
33,895
3,324
31,219
156,164
13,561
(324,636)
(354,044)
(20,625)
(83,875)
Difference between the Australian statutory income tax rate and the statutory
income tax rate applicable to foreign operations
(7,127)
(4,824)
Tax losses and temporary differences not recognised as a deferred tax asset
(Australian tax: $2,687,986 (FY20: $2,242,875) Singapore tax: $12,898 (FY20:
$33,974) USA tax: $93,777CR (FY20: $209,763) Croatia tax: $3,206CR (FY20: nil))
2,569,636
2,486,611
18,155
11,957
43
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
6.
INCOME TAX EXPENSE (CONTINUED)
Tax Consolidation
The Company and its 100% owned Australian incorporated subsidiaries formed a tax consolidated group with effect from 1
July 2015.
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
Revenue losses
Capital losses
Temporary differences
Consolidated
2021
$
2020
$
23,200,572
17,378,719
399,612
339,111
4,147,332
4,387,273
27,747,516
22,105,103
Unrecognised deferred tax assets at 27.5% (2020: 27.5%)
7,630,567
6,078,903
Tax losses do not expire under current Australian legislation. Tax losses relating to foreign jurisdictions amount to $1,414,102
(2020: $1,881,122).
Deferred tax assets have not been recognised in respect of tax losses or temporary differences because it is not certain that
future taxable profit will be available in the near term against which the Group can utilise the benefits.
Availability of Tax Losses
The availability of the Group’s tax losses for future periods is uncertain and will be dependent on strict requirements being
satisfied with respect to continuity of ownership and the same business test imposed by income tax legislation.
The recoupment of tax losses as at 30 June 2021 is contingent upon the following:
• entities in the Group deriving future assessable income of a nature and of an amount sufficient to enable the benefit from
the losses to be realised;
•
•
the conditions for deductibility imposed by income tax legislation continuing to be complied with; and
there being no changes in income tax legislation which would adversely affect the entities from realising the benefit from
the losses.
7. CASH AND CASH EQUIVALENTS
For the purpose of the Consolidated Statement of Financial Position and the Consolidated Statement of Cash Flows, cash and
cash equivalents comprise the following at 30 June:
Cash at bank and on hand
Consolidated
2021
$
2020
$
3,231,414
8,351,840
The Group’s cash is mainly held with a banking institution in Australia with a AA credit rating. Cash at bank earns interest at
floating rates based on daily at call bank deposit and savings rates.
44
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
7. CASH AND CASH EQUIVALENTS (CONTINUED)
Reconciliation from the loss after tax to the net cash flows from operations
Net loss
Adjustments for non-cash items:
Depreciation
Loss on disposal of plant and equipment
Share based payments
Unrealised foreign exchange differences
Impairment loss
Expected credit loss: trade receivables
Expected credit loss: deferred consideration
Changes in assets and liabilities:
Increase in trade receivables1
(Increase) / decrease in other receivables
Increase in prepayments
Increase in trade and other payables 1
Increase in provision for employee entitlements
Increase in provision for income tax
Consolidated
2021
$
2020
$
(8,998,963)
(9,487,359)
136,337
-
136,342
1,572
859,244
1,343,842
44,705
34,000
-
-
29,693
113,525
244,030
567,869
(14,500)
(314,478)
96,570
(127,450)
(29,259)
(17,239)
588,273
5,581
13,445
39,559
237,319
-
Net cash generated by operating activities
(7,264,567)
(7,232,775)
1.
Movement is stated after adjusting for the effects of movements in foreign exchange rates from the beginning of the
financial year to the end of the financial year.
45
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
8. TRADE AND OTHER RECEIVABLES
CURRENT
Trade receivables (a)
Allowance for expected credit losses (b)
Net trade receivables
Deferred consideration receivable
Allowance for expected credit losses (b)
Net deferred consideration receivable
Income tax refund receivable
JobKeeper and Cash Flow Booster funding receivable
Sundry receivables
Deposits
GST receivables
Other receivables
Consolidated
2021
$
2020
$
480,435
465,934
(256,487)
(279,633)
223,948
186,301
567,869
567,869
(567,869)
(567,869)
-
-
16,266
-
970
37,309
64,601
119,146
21,358
135,000
2,013
35,966
20,420
214,757
343,094
401,058
(a) Trade receivables
Trade receivables are amounts due from customers for the sale of the Group’s software as a service. Trade receivables
are generally due for settlement within 30-60 days and are therefore classified as current assets. The Group’s accounting
policies for trade receivables are outlined in Notes 2(k) and 2(u).
(b) Allowance for expected credit losses
The movement in the allowance for expected credit losses is set out below:
Allowance for expected credit losses: trade receivables
Balance at 1 July
Allowance for expected credit losses recognised
Trade receivables written off as bad debts
Impact of movement in foreign exchange rate
Balance at 30 June
Allowance for expected credit losses: deferred consideration
Balance at 1 July
Allowance for expected credit losses recognised
Balance at 30 June
Consolidated
2021
$
2020
$
279,633
-
-
35,603
279,633
(35,603)
(23,146)
-
256,487
279,633
567,869
-
567,869
-
567,869
567,869
The allowance for expected credit losses on trade receivables relates to amounts owing by Mpire Network Inc. The allowance
for expected credit losses on the deferred consideration receivable relates to amounts owing by ClearPier Inc.
46
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
8. TRADE AND OTHER RECEIVABLES (CONTINUED)
(b) Allowance for expected credit losses (continued)
As part of the process whereby the Group disposed of 90% of Mpire Network Inc to ClearPier Inc, the Group agreed to
licence its nxus and TrafficGuard products to Mpire Network Inc for a minimum term of 1 year, commencing on 1 August
2018. The initial term of the licencing agreements came to an end on 31 July 2019, and under the terms of the agreements,
they automatically renewed for a further 12-months unless terminated 30 days before the end of the initial term. Mpire
Network Inc did not provide a termination notice to the Group. However, after the second term commenced, Mpire
Network Inc disputed the renewal mechanism and failed to pay a number of invoices relating to the second term of the
licencing agreements. In addition, ClearPier Inc defaulted on settling the deferred consideration in accordance with the
Sale and Purchase Agreement.
Although the Group is actively pursuing the outstanding amounts, in the prior year it recognised expected credit losses for
100% of the balances owing. No changes were made to the allowance for expected credit losses in the current year.
(c) Fair values of trade and other receivables
The fair value of trade and other receivables is assumed to approximate their carrying amounts due to their relatively
short-term in nature.
(d) Impairment and risk exposure
Information about the impairment of trade and other receivables, their credit quality and the Group’s exposure to credit
risk, foreign currency risk and interest rate risk can be found in Note 18.
9. PLANT AND EQUIPMENT
Consolidated: 2021
Leasehold
improvements
Computer
Equipment
Office
Equipment
$
$
$
Total
$
Cost
80,393
158,924
90,008
329,325
Accumulated depreciation
(78,112)
(125,484)
(80,815)
(284,411)
Carrying amount at 30 June 2021
2,281
33,440
9,193
44,914
Reconciliation
Carrying amount at 1 July 2020
18,360
Additions
Disposals
Impact of foreign exchange
-
-
-
15,654
33,682
(1,292)
-
4,090
9,810
-
(107)
38,104
43,492
(1,292)
(107)
Depreciation
(16,079)
(14,604)
(4,600)
(35,283)
Carrying amount at 30 June 2021
2,281
33,440
9,193
44,914
47
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021 9. PLANT AND EQUIPMENT (CONTINUED)
Consolidated: 2020
Leasehold
improvements
Computer
Equipment
Office
Equipment
$
$
$
Total
$
Cost
80,393
127,350
84,967
292,710
Accumulated depreciation
(62,033)
(111,696)
(80,877)
(254,606)
Carrying amount at 30 June 2020
18,360
15,654
4,090
38,104
Reconciliation
Carrying amount at 1 July 2019
34,439
Additions
Disposals
Impact of foreign exchange
Depreciation
Carrying amount at 30 June 2020
-
-
-
(16,079)
18,360
16,446
13,395
-
-
(14,187)
15,654
9,072
2,804
59,957
16,199
(2,842)
(2,842)
78
78
(5,022)
(35,288)
4,090
38,104
Refer to Note 2(g) for further details on the Group’s accounting policies for plant and equipment.
10. RIGHT OF USE ASSETS
The Group is the lessee in lease contracts for office premises and various items of office equipment. Leases of office premises
generally have lease terms of between 1 and 10 years, while office equipment generally has a lease term between 1 and 2
years. The Group’s obligations under its leases are secured by the lessor’s title to the leased assets. Generally, the Group is
restricted from assigning and subleasing the leased assets.
In the case of leases of office premises and low value office equipment with lease terms of 12 months or less, the Group has
applied the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions under AASB 16 on leases. In the case of
leases of office premises with lease terms over 12 months, the Group has recognised a right-of-use asset and an associated
lease liability.
Set out below are the carrying amounts of right-of-use assets and the movements during the year:
Consolidated
2021
$
2020
$
606,322
707,376
(101,054)
(101,054)
505,268
606,322
Office Premises
Opening balance
Depreciation expense
Closing balance
48
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
10. RIGHT OF USE ASSETS (CONTINUED)
Set out below are the carrying amounts of the lease liabilities and the movements during the year:
Lease Liabilities
Opening balance
Interest expense
Lease payments
Closing balance
Current lease liabilities
Non-current lease liabilities
The following are the amounts recognised in profit or loss in relation to leased assets:
Right-of-use-assets
Depreciation of right-of-use-assets
Interest expense on lease liabilities associated with right-of-use-assets
Short term or low value asset leases
Included in occupancy costs
Rent expense - short-term lease
Included in administration costs
Rent expense - low-value assets
Total amount recognised in profit or loss
Consolidated
2021
$
648,275
48,269
2020
$
707,376
54,245
(124,484)
(113,346)
572,060
648,275
103,110
468,950
572,060
90,597
557,678
648,275
Consolidated
2021
$
101,054
48,269
2020
$
101,054
54,245
41,600
34,672
1,500
192,423
1,500
191,471
The Group had total cash outflows for leases of $124,484 in the current year (2020: $113,346).
The Group has a lease contract that includes extension and termination options. These options are negotiated by
management to provide flexibility in managing the leased-asset portfolio and align with the Group’s business needs.
Management exercises significant judgement in determining whether these extension and termination options are reasonably
certain to be exercised (Note 2(c)(ii)(a).
11.
INVESTMENTS
Unlisted equity investment
Consolidated
2021
2020
$
-
-
$
-
-
Pursuant to the sale of its performance marketing business on 31 July 2018, the Group retains a 10% equity interest in Mpire
Network Inc. During the prior year, the Group considered a number of factors relating to its investment in Mpire Network Inc
which resulted in the value of this investment being estimated to be nil.
49
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
12. TRADE AND OTHER PAYABLES
Trade payables
Statutory liabilities
Other payables
Consolidated
2021
$
849,522
200,206
277,743
1,327,471
2020
$
503,735
119,693
146,445
769,873
Trade and other payables are non-interest bearing and are unsecured. Balances are usually settled within 30 days of
recognition.
The carrying amounts of trade and other payables are assumed to be the same as their fair values, due to their short-term
nature.
13. PROVISIONS
CURRENT
Employee benefits
Other provisions
NON-CURRENT
Employee benefits
Consolidated
2021
$
2020
$
539,696
-
539,696
478,229
72,633
550,862
62,560
46,664
The current provision for employee benefits relates to the Group’s liability for annual leave and long service leave. The non-
current provision for employee benefits relates only to the Group’s liability for long service leave.
Movement in the provisions for employee benefits for continuing operations is as follows:
Consolidated
2021
2020
Annual leave
Long service
leave
Annual leave
Long service
leave
Balance at 1 July
Amounts provided for during the year
Unused leave balances paid during the year
Leave taken during the year
$
351,624
420,693
(98,720)
(272,816)
$
173,269
28,206
-
-
Balance at 30 June
400,781
201,475
$
227,838
294,658
(9,331)
(161,541)
351,624
$
132,368
48,041
-
(7,140)
173,269
The balance is spilt as follows:
Current potion
Non-current portion
400,781
-
138,915
62,560
351,624
-
126,605
46,664
50
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
14. CONTRIBUTED EQUITY
(a) Issued capital
Consolidated
2021
$
2020
$
Ordinary shares, fully paid
43,237,080
39,941,684
Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the number of
shares held and in proportion to the amount paid up on the shares held. At shareholder meetings, each ordinary share
is entitled to one vote in proportion to the paid-up amount of the share when a poll is called, otherwise each shareholder
has one vote on a show of hands.
(b) Movements in share capital
2021
2020
Number
$
Number
$
Shares on issue at 1 July
320,386,408
39,941,684
158,898,924
26,305,580
Shares issued on exercise of performance
rights
Shares issued on exercise of options
Shares issued pursuant to a placement at
$0.055 per share 1
Shares issued pursuant to a placement at
$0.075 per share 1
Shares issued pursuant to a placement at
$0.075 per share 1
Shares issued pursuant to a placement at
$0.17 per share 1
Shares issued pursuant to a placement at
$0.075 per share 1
Shares issued pursuant to a Share Purchase
Plan
Shares issued as consideration for
placement services
Shares issued as consideration for investor
relations services
Share issue costs 2
9,250,000
2,620,000
930,837
393,000
-
-
1,300,225
145,023
-
-
-
-
-
-
-
-
33,975,543
1,868,655
33,333,333
2,500,000
28,710,000
2,871,000
20,706,759
3,520,149
26,666,667
2,000,000
-
-
-
-
-
-
-
-
-
40,928,222
3,069,601
1,439,286
79,161
1,094,116
82,500
(28,441)
-
(499,985)
Shares on issue at 30 June
358,923,075
43,237,080
320,386,408
39,941,684
1. Placements were made to sophisticated and professional investors.
2. Share issue costs is made up as follows:
Share issue costs paid during the year
Share issue costs included in trade and other payables at balance date
Fair value of shares issued as consideration for placement services
Consolidated
2021
$
2020
$
(25,602)
(387,310)
(2,839)
-
(33,514)
(79,161)
(28,441)
(499,985)
51
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
14. CONTRIBUTED EQUITY (CONTINUED)
(c) Capital Risk Management
The Group’s objective when managing capital is to safeguard its ability to continue as a going concern, so that it can
provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital.
No changes were made in the objectives, policies or processes for managing capital during the years ended 30 June
2021 and 30 June 2020.
Trade and other payables (Note 12)
Lease liabilities (Note 10)
Less: cash and cash equivalents (Note 7)
Net (Debt) / Capital
Equity
Total Capital
Capital and net debt
Gearing ratio
Consolidated
2021
$
1,327,471
572,060
1,899,531
2020
$
769,873
648,275
1,418,148
(3,231,414)
(8,351,840)
(1,331,883)
(6,933,692)
43,237,080
39,941,684
43,237,080
39,941,684
41,905,197
33,007,992
(3%)
(21%)
52
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
15. RESERVES
Foreign currency translation reserve
Consolidated
2021
$
2020
$
38,763
40,537
Share based payments reserve
5,094,942
5,166,535
Foreign currency translation reserve
Balance at beginning of year
Foreign exchange differences arising on translation of foreign operations
Balance at end of year
Share based payments reserve
Balance at beginning of year
Fair value of options issued to directors
Fair value of options issued as consideration for investor relations services
Fair value of options issued to staff
Fair value of Class H Performance Rights converted into ordinary shares
Fair value of Class I Performance Rights converted into ordinary shares
Fair value of Class J Performance Rights converted into ordinary shares
Fair value of Class T Performance Rights converted into ordinary shares
(674,805)
Fair value of Class H Performance Rights recognised
Fair value of Class I Performance Rights recognised
Fair value of Class J Performance Rights recognised
Fair value of Class K Performance Rights recognised
Fair value of Class L Performance Rights recognised
Fair value of Class M Performance Rights recognised
Fair value of Class N Performance Rights recognised
Fair value of Class O Performance Rights recognised
Fair value of Class P Performance Rights recognised
Fair value of Class Q Performance Rights recognised
Fair value of Class R Performance Rights recognised
Fair value of Class S Performance Rights recognised
Fair value of Class T Performance Rights recognised
Employee share scheme expense
Employee option scheme expense
-
-
-
(110,032)
(123,786)
(44,013)
(33,009)
(22,006)
(147,615)
(147,615)
(147,615)
422,372
824,328
1,644
-
40,537
(1,774)
38,763
15,973
24,564
40,537
5,166,535
3,905,193
289,154
91,456
5,981
(51,206)
(102,413)
(102,413)
-
-
28,625
-
-
-
-
47,461
94,924
94,924
95,054
101,317
32,779
21,776
7,027
147,615
147,615
147,615
226,586
226,586
7,554
60,470
Balance at end of year
5,094,942
5,166,535
53
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021 15. RESERVES (CONTINUED)
Nature and purpose of reserves
Foreign currency reserve
The foreign currency translation reserve is used to recognise foreign currency exchange differences arising on translation of
functional currency to presentation currency for foreign operations.
Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of equity-settled share-based payments provided to
employees, consultants and other third parties.
16. SHARE BASED PAYMENTS
The share-based payments expense recognised during the year is comprised as follows:
Options granted as consideration for investor
relations services
Options granted to non-executive directors
Vesting of options granted under employee
option plan 1
Options granted under employee option plan 1
Shares issued as consideration for investor
relations services
Vesting of performance rights classes H – O 1
Lapsing of performance rights classes H – O 1
Performance rights granted (classes P - R) 1
Lapsing of performance rights classes P – R
Performance rights granted (class S) 1
Vesting of performance rights (class S) 1
Lapsing of performance rights (class S)
2021
Number
granted
1,500,000
5,000,000
-
-
-
-
-
-
-
-
-
-
Performance rights granted (class T) 1
9,000,000
824,328
Vesting of shares issued under employee share
plan 1
-
1,644
859,244
2020
$
Number
granted
91,456
289,154
5,981
-
-
-
(332,846)
-
-
-
600,000
1,094,116
-
$
-
-
60,470
28,624
82,500
495,258
-
6,000,000
442,847
(442,845)
-
-
-
5,750,000
226,590
481,034
(58,662)
-
-
-
-
-
-
-
7,553
1,343,842
Notes
1.
There are vesting conditions attached to these securities. The fair value at grant date is recognised over the vesting
period.
54
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
16. SHARE BASED PAYMENTS (CONTINUED)
(a) Options
The movement in options during the year is set out below:
2021
2020
Opening balance
Options granted pursuant to investor relations
agreement
Number
62,246,109
1,500,000
Options granted to non-executive directors
5,000,000
Options granted under employee option plan
Options granted under employee option plan
Exercised during the year
Expired during the year
Closing balance
-
-
(2,620,000)
(530,000)
65,596,109
Fair value
per option at
grant date
(cents)
6.1
5.78
Fair value
per option at
grant date
(cents)
-
-
4.76
7.78
Number
64,446,334
-
-
400,000
200,000
(1,300,225)
(1,500,000)
62,246,109
The fair value of the options granted during the year was $380,610 (2020: $34,607).
The weighted average remaining contractual life for the share-based payment options outstanding as at 30 June 2021
was 0.47 years (30 June 2020: 1.23 years).
The exercise price for share based payment options outstanding as at the end of the period was a range of $0.10 to
$0.20 (30 June 2020: $0.10 to $0.45).
Holders of options do not have any voting or dividend rights in relation to the options.
(b) Performance Rights
The following table illustrates the movement in the number of performance rights on issue during the year:
Opening
balance at
1 July 2020
Granted
during the
year
Converted
into ordinary
shares during
the year
Lapsed
during the
year
Closing
balance at
30 June 2021
Class H
Class I
Class J
Class K
Class L
Class M
Class N
Class O
Class P
Class Q
Class R
Class S
Cass T
450,000
900,000
900,000
1,800,000
2,700,000
1,800,000
2,700,000
3,600,000
2,000,000
2,000,000
2,000,000
5,750,000
-
-
-
-
-
-
-
-
-
-
-
-
450,000
900,000
900,000
-
-
-
-
-
-
-
-
-
-
-
-
1,800,000
2,700,000
1,800,000
2,700,000
3,600,000
2,000,000
2,000,000
2,000,000
-
-
-
-
-
-
-
-
-
-
-
750,000
5,000,000
-
9,000,000
7,000,000
-
2,000,000
26,600,000
9,000,000
9,250,000
19,350,000
7,000,000
55
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
16. SHARE BASED PAYMENTS (CONTINUED)
(b) Performance Rights (continued)
The vesting conditions, performance milestones and expiry dates attached to the performance rights on issue at 30 June
2021 are set out below:
Tranche
Vesting Condition
Class S
These performance rights vest provided the employee remains a full-time employee
of the Group 2 years from date of issue
Class T
A total of 3,000 clients signed up to the Company’s Freemium offering
Expiry date
25 April 2022
30 June 2023
The fair value of performance rights granted during the year was $824,328 (2020: $2,218,844).
The performance rights were valued at grant date using the Black-Scholes model and took into account the following
assumptions:
Number granted
Exercise price
Expiry date
Dividend yield
Expected volatility
Risk-free interest rate
Class T
4,500,000
Nil
Class T
,4,500,000
Nil
30/06/2023
30/06/2023
0.00%
92.25%
0.26%
0.00%
87,74%
0.27%
Holders of performance rights do not have any voting or dividend rights in relation to the performance rights.
(b) Employee Incentive Share Plan
Under the Employee Incentive Share Plan, eligible employees may be granted up to $1,000 of fully paid ordinary shares
in the Company annually for no cash consideration. The number of shares issued to participants in the scheme is
calculated at $1,000 divided by the weighted average closing price of the Company’s share price based on the closing
ASX market prices over the five trading days before, but not including, the issue date, rounded down to the nearest whole
number.
There were no shares issued under the plan in the current year (2020: nil).
(c) Employee Incentive Option Plan
Under the Employee Incentive Option Plan, eligible employees may be granted options in the Company to recognise
work undertaken by the employees and to incentivise them further. The exercise price of options issued under the plan is
calculated so as to ensure that the options only have value if there is an increase in shareholder wealth over time.
During the current year, nil options were granted to employees under the plan (2020: 600,000).
17. ACCUMULATED LOSSES
Accumulated losses at the beginning of financial year
Net loss for the year
Consolidated
2021
$
2020
$
(37,569,619)
(28,082,260)
(8,998,963)
(9,487,359)
Accumulated losses at the end of financial year
(46,568,582)
(37,569,619)
56
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
18. FINANCIAL ASSETS AND FINANCIAL LIABILITIES
(a) Financial assets (other than cash and cash equivalents)
Financial assets at amortised cost
Trade and other receivables (Note 8)
Consolidated
2021
$
2020
$
343,094
773,966
Total financial assets (other than cash and cash equivalents)
343,094
773,966
Total current
Total non-current
(b) Financial liabilities
Financial liabilities at amortised cost
Trade and other payables (Note 12)
Interest bearing liabilities
Lease liabilities (Note 10)
343,094
773,966
-
-
343,094
773,966
Consolidated
2021
$
2020
$
849,522
503,735
572,060
648,275
Total financial liabilities
1,421,582
1,152,010
Total current
Total non-current
952,632
468,950
1,421,582
594,332
557,678
1,152,010
(c) Financial instruments risk management objectives and policies
The Group’s principal financial assets include trade and other receivables, and cash and short-term deposits derived
directly from its operations. The Group also holds a minority 10% equity investment in an unlisted entity. The Group has
assessed the fair value of this investment to be nil and recognised an impairment loss of $113,525 in the prior year. The
Group’s principal financial liabilities comprise trade and other payables and interest-bearing lease liabilities. The main
purpose of these financial liabilities is to finance the Group’s operations.
The Group is exposed to market risk, credit risk and liquidity risk. The Group’s senior management oversees the
management of these risks and are responsible for ensuring that financial risks are identified, measured and managed
in accordance with the Group’s policies and risk objectives. The Board of Directors reviews and agrees policies for
managing each of these risks, which are summarised below.
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity
price risk. Financial instruments affected by market risk include trade and other receivables, unlisted equity investments,
trade and other payables and interest-bearing lease liabilities.
57
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
18. FINANCIAL ASSETS AND FINANCIAL LIABILITIES (CONTINUED)
(c) Financial instruments risk management objectives and policies (continued)
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates is negligible given
that the terms of lease liability that has been recognised have been agreed upfront and are in place until 30 June 2021.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates
primarily to the Group’s operating activities (when revenue or expense is denominated in a foreign currency) and the
Group’s net investments in foreign subsidiaries.
The only material financial instruments denominated in a foreign currency held by the Group are cash amounts
denominated in United States Dollars (USD), certain trade and other receivables denominated in USD and certain trade
payables denominated in USD.
A summary of the AUD equivalent of the Group’s USD denominated financial instruments at the reporting date is as
follows:
Cash and cash equivalents
Trade and other receivables
Trade payables
Net exposure
Consolidated
2021
$
413,068
164,018
2020
$
313,783
184,279
(427,415)
(356,200)
149,671
141,862
The sensitivity analysis below relates to the foreign currency risk exposures in existence at the reporting date. The
following table demonstrates the sensitivity to a reasonably possible change in AUD / USD exchange rates, with all other
variables held constant.
Effect on loss before tax
Effect on pre-tax equity
(Higher)/Lower
Higher/(Lower)
2021
$
16,464
2020
$
15,605
2021
$
16,464
2020
$
15,605
(16,464)
(15,605)
(16,464)
(15,605)
+11%
-11%
Translation risk
All USD denominated balance sheet accounts are converted to AUD at spot rate at year end. Group net assets are
therefore sensitive to the exchange rate at year end. The following table demonstrates the sensitivity to a reasonably
possible change in AUD / USD exchange rates, with all other variables held constant.
Effect on net group assets
before Australian group tax
Effect on equity before
Australian group tax
(Higher) / Lower
Higher / (Lower)
2021
$
2020
$
2021
$
2020
$
141,884
197,145
141,884
197,145
(141,884)
(197,145)
(141,884)
(197,145)
+11%
-11%
58
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
18. FINANCIAL ASSETS AND LIABILITIES (CONTINUED)
(c) Financial instruments risk management objectives and policies (continued)
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract,
leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily in relation to trade
and other receivables) and from its financing activities, including deposits with banks and financial institutions, foreign
exchange transactions and other financial instruments.
i. Trade receivables and contract assets
Customer credit risk is managed by the Group’s established policy, procedures and control relating to customer credit
risk management. Credit quality of the customer is assessed based on the customer’s financial position, past working
experience with the customer (if any) and any other applicable factors. Individual credit limits are defined in accordance
with this assessment. Outstanding customer receivables are regularly monitored and followed up accordingly. At 30 June
2021, the Group had 176 customers (2020: 11) of whom 7 owed $404,008 and accounted for 84% of all trade receivables
outstanding.
An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit
losses. The provision rates are generally based on days past due after considering any other relevant forward-looking
information. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial
assets disclosed in Note 8. The Group does not hold collateral as security. The Group evaluates the concentration of
risk with respect to trade receivables as low, as its customers are located in different jurisdictions and operate in largely
independent markets.
Set out below is the information about the credit risk exposure on the Group’s trade receivables using a provision matrix:
30 June 2021
Days past due
Total
Current
$
Total gross carrying amount
480,435
215,401
Expected credit loss rate
0%
Expected credit loss
(256,487)
30
days
$
-
0%
30-60
days
$
8,547
0%
Net carrying amount
223,948
215,401
-
8,547
61-90
days
$
-
0%
-
> 90
days
$
256,487
100%
(256,487)
-
30 June 2020
Total
Current
$
Total gross carrying amount
465,934
184,122
Expected credit loss rate
Expected credit loss
(279,633)
0%
-
Net carrying amount
186,301
184,122
Days past due
30
days
30-60
days
61-90
days
$
-
0%
-
-
$
2,179
0%
-
2,179
$
-
0%
-
-
> 90
days
$
279,633
100%
(279,633)
-
The credit risk associated with the deferred consideration receivable (Note 8) is assessed in the same manner as trade
receivables.
Impairment of the deferred consideration receivable is assessed regularly. Management analyse the probability of
default on the obligation to determine whether any expected credit loss is to be recognised. During the prior year, an
expected credit loss of $567,869 was recognised.
59
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
18. FINANCIAL ASSETS AND LIABILITIES (CONTINUED)
(c) Financial instruments risk management objectives and policies (continued)
Credit risk (continued)
i. Trade receivables and contract assets (continued)
At 30 June, the exposure to credit risk for trade receivables and contract assets by geographic region was as follows:
North America
Latin America
Asia Pacific
Europe
Australia
Middle East
Other
Consolidated
2021
$
20,921
40,520
87,152
44,032
23,293
5,817
2,213
2020
$
99,942
119,117
52,295
-
1,900
-
2,021
223,948
275,275
At 30 June, the exposure to credit risk for trade receivables and contract assets by type of counterparty was as follows:
End-user customers
Consolidated
2021
2020
223,948
275,275
ii. Cash and cash equivalents
The Group held cash and cash equivalents of $3,231,414 at 30 June 2021 (2020: $8,351,840). All cash and cash
equivalents are held with banks which the Group considers to be low risk.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and funding to ensure that the Group can meet its
obligations when due. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and
matching the maturity profiles of financial assets and liabilities.
The Group holds the majority of its financial assets (excluding cash) as trade receivables with reputable customers who
have had no significant payment issues in the past and hence, does not have any material liquidity risk at the reporting
date.
The Group monitors rolling forecasts of liquidity reserves on the basis of expected cash flow.
Exposure to liquidity risk
The following tables compare the carrying amounts at balance date to the remaining contractual liabilities at various
maturities at balance date The contractual amounts are gross, undiscounted, include any contractual interest payments
and exclude the impact of netting arrangements:
30 June 2021
Contractual cash flows
Carrying
amount
$
Total
$
12 months
or less
$
Non-derivative financial liabilities
Trade payables
849,522
849,522
849,522
1-2
years
2-5
years
5-10
years
$
-
$
-
$
-
-
-
Lease liabilities
572,060
681,363
130,291
269,377
281,695
1,421,582
1,530,885
979,813
269,377
281,695
60
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
18. FINANCIAL ASSETS AND LIABILITIES (CONTINUED)
(c) Financial instruments risk management objectives and policies (continued)
Liquidity risk (continued)
Exposure to liquidity risk (continued)
30 June 2020
Contractual cash flows
Carrying
amount
$
12
months
or less
$
Total
$
Non-derivative financial liabilities
Trade payables
503,735
503,735
503,735
1-2
years
2-5
years
5-10
years
$
-
$
-
Lease liabilities
648,275
808,837
127,474
263,485
417,878
1,152,010
1,312,572
631,209
263,485
417,878
$
-
-
-
Fair values
Fair values of financial assets and liabilities have been assessed as being equivalent to their carrying values.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
The carrying amount of financial assets and financial liabilities recorded in the financial statements approximate their fair
values. The carrying amount of lease liabilities recorded in the financial statements approximate their fair values and are
all classified as level 3 instruments per the below valuation methodology.
For financial instruments carried at fair value, the Group uses various methods in estimating fair value. The methods
comprise:
• Level 1 – the fair value is calculated using quoted prices in an active market.
• Level 2 – the fair value is estimated using inputs other than quoted prices included in the Level 1 that are observable for
the asset or liability, either directly (as prices) or indirectly (derived from prices).
• Level 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
The equity investment held in Mpire Network is carried at nil value. The fair value for this investment was determined using
the Level 3 method.
19. COMMITMENTS AND CONTINGENCIES
(a) Lease Commitments – Group as lessee
Future minimum rentals payable under short-term and low-value leases are as follows:
Within one year
After one year but not more than five years
More than five years
Consolidated
2021
$
3,585
-
-
2020
$
2,845
-
-
3,585
2,845
(b) Property, Plant and Equipment Commitments
At balance date the Group had no contractual obligations to purchase plant and equipment (2020: nil).
(c) Other Commitments
On 30 September 2020, the Group entered into an agreement with Google Australia Pty Limited in which the Company
committed to a minimum spend of USD1,500,000 over 36 months on Google Cloud Platform services. If the spend on the
Google Cloud Platform service is less than USD1,500,000 over the 36 month period, a “true-up” payment of the difference
between accrued charges over the 36 months and the USD1,500,000 will be payable in additional to the accrued charges.
(d) Contingent Liabilities
At balance date the Group had no pending legal claims or other contingent liabilities (2020: nil).
61
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
20. GROUP STRUCTURE AND RELATED PARTY DISCLOSURES
(a) Group structure
The consolidated financial statements include the financial statements of Adveritas Limited (the parent entity) and the
entities listed in the following table.
Livelynk Group Pty Ltd 1
TrafficGuard Pty Ltd 2
TrafficGuard APAC Pte Ltd 2
TrafficGuard US Inc 2
Mpire Network Inc. 2
Appenture d.o.o 2
Country of incorporation
% Equity interest
2021
2020
Australia
Australia
Singapore
United States
Canada
Croatia
100
100
100
100
10
100
100
100
100
100
10
100
1 equity interest is held directly by Adveritas Limited.
2 equity interest is held directly by Livelynk Group Pty Ltd.
(b) Transactions with related parties
During the current year, Adveritas Limited continued its consultancy agreement with 13811 Advisory Pte Ltd, a company
of which Mr Stott is the CEO and founder. The consultancy services include the provision of promotion and marketing
services. Under the agreement, Mr Stott was entitled to consultancy fees of $5,000 per month. At 30 June 2021, an
amount of $5,000 was owing to 13811 Advisory Pte Ltd (2020: $5,000).
During the current year, Adveritas Limited entered into an agreement with Almonte Advisory Inc, a company of which Mr
Besnard is the CEO and founder. The consultancy services include assisting the Company with its marketing execution
and supporting the Company’s business and product strategy. Under the agreement, Mr Besnard was paid USD48,300
during the current year.
(c) Guarantees
None of the entities within the Group are guarantors.
21. EVENTS AFTER BALANCE SHEET DATE
On 19 July 2021, the Group completed a $3,000,000 capital raising through the placement of 30,000,000 shares at a price of
$0.10 per share to a small group of institutional and sophisticated investors.
No other event has arisen since 30 June 2021 that would be likely to materially affect the operations of the Group, or its state of
affairs which has not otherwise been disclosed in this financial report.
22. AUDITORS’ REMUNERATION
Remuneration of the Group’s auditor, Ernst and Young, was as follows:
Audit or review of the consolidated financial report
Tax compliance services provided
Consolidated
2021
$
80,654
56,975
137,629
2020
$
98,186
39,111
137,297
62
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
23. LOSS PER SHARE
Basic loss per share is calculated by dividing the loss for the year attributable to ordinary equity holders of the Company by
the weighted average number of ordinary shares on issue during the year.
Diluted loss per share is calculated by dividing the loss attributable to ordinary equity holders of the Company by the
weighted average number of ordinary shares on issue during the year plus the weighted average number of ordinary shares
that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
The following table reflects the data used in the calculation of the basic and diluted loss per share:
2021
Number
2020
Number
Weighted average number of ordinary shares used in the calculation of basic loss per
share
346,482,216
202,864,250
Weighted average number of ordinary shares used in the calculation of diluted loss
per share
346,482,216
202,864,250
Loss attributable to ordinary equity holders of Adveritas Limited for basic and diluted
loss
(8,998,963)
(9,487,359)
$
$
Basic earnings loss per share
Diluted loss per share
Cents
(2.60)
(2.60)
Cents
(4.68)
(4.68)
Classification of securities as ordinary shares
The Company has only one category of ordinary shares included in basic loss per share.
Classification of securities as potential ordinary shares
No securities have been classified as dilutive potential ordinary shares on issue in the current year because the options and
performance rights on issue are considered anti-dilutive on the basis that their inclusion in the calculation would reduce the
loss per share.
The number of potential ordinary shares considered anti-dilutive at year end are as follows:
• 65,596,109 options; and
• 7,000,000 performance rights
There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and
the date of authorisation of these consolidated financial statements.
24. DIRECTORS AND EXECUTIVE DISCLOSURE
Compensation of Key Management Personnel
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share based payments
Consolidated
2021
$
2020
$
1,677,247
1,397,715
82,300
11,762
81,666
12,303
416,982
986,844
2,188,291
2,478,528
63
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021
25. PARENT ENTITY INFORMATION
The following information relates to the legal parent entity of the Group, being Adveritas Limited. The information presented
has been prepared using consistent accounting policies as presented in Note 2.
As at 30 June
As at 30 June
2021
$
2020
$
2,468,261
8,001,957
2,088
2,538
2,470,349
8,004,495
633,897
15,907
649,804
471,463
5,874
477,337
1,820,545
7,527,158
40,004,978
36,709,582
3,780,795
3,852,389
(41,965,228)
(33,034,813)
1,820,545
7,527,158
(8,930,415)
(19,079,239)
-
-
(8,930,415)
(19,079,239)
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Share based payment reserve
Accumulated losses
Total equity
Financial Performance
Loss for the year
Other comprehensive income
Total comprehensive loss
64
ADVERITAS | ANNUAL REPORT 2021NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended 30 June 2021 D I R E C T O R S ’ D E C L A R A T I O N
For the year ended 30 June 2021
In the directors’ opinion:
(a)
The consolidated financial statements and notes of Adveritas Limited set out on pages 24 to 64 are in accordance with the
Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements, and
(ii) giving a true and fair view of the Group’s consolidated financial position as at 30 June 2021 and its performance for the
financial year ended on that date, and
(b)
Note 2(b) confirms that the consolidated financial statements also comply with the International Financial Reporting
Standards as issued by the International Accounting Standards Board.
(c)
Subject to Note 2(z), there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
This declaration has been made after receiving the declarations required to be made to the directors by the chief executive officer
and chief financial officer in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2021.
On behalf of the board
Stephen Belben
Non-Executive Chairman
Perth, Western Australia
Dated this 27th day of August 2021
65
ADVERITAS | ANNUAL REPORT 2021
INDEPEND ENT AUD ITOR’S RE P O RT
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor's report to the Members of Adveritas Limited
Report on the audit of the Financial Report
Opinion
We have audited the financial report of Adveritas Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30
June 2021, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year
then ended, notes to the consolidated financial statements, including a summary of significant
accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a) giving a true and fair view of the consolidated financial position of the Group as at 30 June 2021
and of its consolidated financial 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 are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 2(z) in the financial report, which describes the principal conditions that
raise doubt about the Group’s ability to continue as a going concern. These events or conditions
indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to
continue as a going concern. Our opinion is not modified in respect of this matter.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
MC:DA:AVL:007
66
ADVERITAS | ANNUAL REPORT 2021
IN DEPEN DENT AUDI TOR’S REPORT
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. In addition to the matter described in the Material Uncertainty
Related to Going Concern section, we have determined the matters described below to be the key
audit matters to be communicated in our report. For each matter below, our description of how our
audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
1. Share-based payment expense
Why significant
How our audit addressed the key audit matter
As disclosed in Notes 15 and 16 to the financial report,
the Group has awarded share-based payments to its
employees, directors and consultants during the year,
contributing to a total share-based payment expense of
$859,244.
Due to the complex and judgmental estimates such as
volatility used in determining the valuation of the share-
based payments, we considered the Group’s calculation
of the share-based payment expense to be a key audit
matter.
As part of our audit procedures, we assessed the
Group’s share based-payment expense calculations to
determine whether the balances were calculated in
accordance with Australian Accounting Standards.
We involved our valuation specialists to assess the
Group’s calculation of the fair value of share-based
payments issued during the year, including the key
assumptions used.
We also assessed the adequacy of the presentation
and disclosures in Notes 15 and 16 of the financial
report.
2. Revenue from contracts with customers
Why significant
How our audit addressed the key audit matter
The Group is in the business of providing its fraud
mitigation software, TrafficGuard, as a service to its
customers on a monthly basis. The Group applies AASB
15 Revenue from Contracts with Customers (“AASB
15”) to recognise revenue in respect of the provision of
software as a service over time.
The Group’s disclosures relating to revenue recognition
are included in the summary of accounting policies in
Note 2(k) to the financial report.
Revenue is a key metric by which the performance of
the Group and Key Management Personnel are assessed
and as a result we considered the accounting for
revenue to be a key audit matter.
As part of our audit procedures, we evaluated the
appropriateness of the Group’s revenue recognition
accounting policies.
We performed revenue transaction testing based on a
representative sample of the customer contracts to
ensure that the related revenue and trade receivables
are recorded appropriately, taking into consideration
the terms and conditions of the contracts. We also
performed revenue cutoff testing to determine
whether revenue and trade receivables are
recognised in the correct period.
We also considered the adequacy of the associated
disclosures set out in the financial report for
compliance with AASB 15.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
MC:DA:AVL:007
67
ADVERITAS | ANNUAL REPORT 2021
INDEPEND ENT AUD ITOR’S RE P O RT
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s 2021 Annual Report other than the financial report and our
auditor’s report thereon. We obtained the Directors’ Report that is to be included in the Annual
Report, prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the
Annual Report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
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 on the other information obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the 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 Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
MC:DA:AVL:007
68
ADVERITAS | ANNUAL REPORT 2021
IN DEPEN DENT AUDI TOR’S REP ORT
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment 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 Group’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 Group’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 auditor’s report. However, future events or conditions may cause the Group 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.
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 to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
MC:DA:AVL:007
69
ADVERITAS | ANNUAL REPORT 2021
INDEPEND ENT AUD ITOR’S RE P O RT
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 11 to 22 of the directors' report for the
year ended 30 June 2021.
In our opinion, the Remuneration Report of Adveritas Limited for the year ended 30 June 2021,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Mark P Cunningham
Partner
Perth
27 August 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
MC:DA:AVL:007
70
ADVERITAS | ANNUAL REPORT 2021 ASX A DDITI ONAL I NFORMATION
The following additional information is required by the Australian Securities Exchange. The information is current as at 17 September
2021.
CORPORATE GOVERNANCE
The Board of Adveritas Limited is committed to achieving and demonstrating the highest standards of Corporate Governance.
The Board is responsible to its Shareholders for the performance of the Company and seeks to communicate extensively with
Shareholders. The Board believes that sound Corporate Governance practices will assist in the creation of Shareholder wealth and
provide accountability. In accordance with ASX Listing Rule 4.10.3, the Company has elected to disclose its Corporate Governance
policies and its compliance with them on its website, rather than in the Annual Report. Accordingly, information about the Company’s
Corporate Governance practices is set out on the Company’s website at www.adveritas.com.au/about-us/corporate-governance.
SECURITY HOLDING
The security holding information outlined below is current as at 17 September 2021.
1.
SUBSTANTIAL SHAREHOLDERS
Substantial shareholders in the Company and the number of equity securities over which the substantial shareholder has a
relevant interest as disclosed in substantial holding notices provided to the Company are listed below:
Details set out in substantial shareholder notice
Holder name
Mark McConnell
Registered holder of securities:
Mera Vale No. 4 Pty Ltd
Mera Vale No. 1 Pty Ltd
Aventos Investments Limited
B. McConnell
Number of shares
Voting interest
Date of lodgement
of notice
60,407,910
17.10%
23/11/2020
49,915,035
8,000,000
1,162,875
1,330,000
2. NUMBER OF HOLDERS OF EACH CLASS OF EQUITY SECURITY
Ordinary fully paid shares
There are 2,012 holders of the 388,923,076 ordinary fully paid shares on issue.
Each shareholder is entitled to one vote per share. In accordance with the Company’s constitution, on a show of hands every
number present in person or by proxy or attorney or duly authorised representative has one vote. On a poll every member
present in person or by proxy or attorney or duly authorised representative has one vote for every fully paid ordinary share
held.
Listed Options
There are 191 holders of the 55,496,109 listed options on issue.
Unlisted Options
There are 6 holders of the 9,700,000 unlisted options on issue.
There are no voting rights attached to these options.
Performance Rights
There are 7 holders of the 6,250,000 unlisted performance rights on issue.
There are no voting rights attached to these performance rights.
3.
RESTRICTED SECURITIES
As at 17 September 2021, the following shares are under voluntary escrow:
•
1,000,000 shares are escrowed until 30 October 2021
• 500,000 shares are escrowed until 20 January 2022
• 5,750,000 shares are escrowed until 28 May 2022
71
ADVERITAS | ANNUAL REPORT 2021 ASX A DDITI ONAL INFORMATI O N
4. DISTRIBUTION SCHEDULES
Shareholders
Spread of holders
Nil Holding
1
1,001
5,001
10,001
–
–
–
–
1,000
5,000
10,000
100,000
Over 100,000
Total on register
Listed Option Holders
Spread of holders
Nil Holding
1
1,001
5,001
10,001
–
–
–
–
1,000
5,000
10,000
100,000
Over 100,000
Total on register
Unlisted Option Holders
Spread of holders
Nil Holding
1
1,001
5,001
10,001
–
–
–
–
1,000
5,000
10,000
100,000
Over 100,000
Total on register
72
Number of
Shareholders
Number of
Shares
-
71
361
336
918
326
-
11,970
1,303,620
2,623,300
34,304,439
350,679,747
2,012
388,923,076
Number of
Option Holders
Number of
Options
-
11
23
10
84
63
191
-
4,229
81,307
68,939
3,234,968
52,106,666
55,496,109
Number of
Option Holders
Number of
Options
-
-
-
-
-
6
6
-
-
-
-
-
9,700,000
9,700,000
ADVERITAS | ANNUAL REPORT 2021
Performance Right Holders
Spread of holders
Nil Holding
1
1,001
5,001
10,001
–
–
–
–
1,000
5,000
10,000
100,000
Over 100,000
Total on register
5.
TOP 20 SHAREHOLDERS
ASX A DDITI ONAL I NFORMATION
Number of
Performance
Rights Holders
Number of
Performance
Rights
-
-
-
-
-
7
7
-
-
-
-
-
6,250,000
6,250,000
Number
% of issued
capital
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
15
17
18
19
Holder name
MERA VALE NO 4 PTY LTD
DAWS & SON PTY LTD
MC MANAGEMENT GROUP PTY LTD
ADMAN LANES PTY LTD
SURF COAST CAPITAL PTY LTD
MR LUKE TAYLOR
MERA VALE NO1 PTY LTD
49,915,035
42,366,668
15,197,862
10,000,000
9,800,000
9,700,000
8,000,000
3,500,000
3,199,000
3,150,000
2,907,902
2,897,825
2,895,366
12.83
10.89
3.91
2.57
2.52
2.49
2.06
2.03
1.92
1.72
1.48
1.41
1.22
0.90
0.90
0.82
0.81
0.75
0.75
0.74
MORGAN STANLEY AUSTRALIA SECURITIES (NOMINEE) PTY LIMITED
7,905,854
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
BNP PARIBAS NOMS (NZ) LTD
UBS NOMINEES PTY LTD
UNAVAL NOMINEES PTY LTD UNAVAL MANAGEMENT RETIREMENT
MR MATHEW JAMES RATTY
7,462,638
6,700,000
5,764,533
5,500,000
4,750,000
MS SUSAN MARGARET FORRESTER + MR BRUCE FORRESTER
3,500,000
ZESSHAM PTY LTD
BPCULTRA PTY LTD
MRS REBECCA JOY DRENOVSKI
CS THIRD NOMINEES PTY LIMITED
CITICORP NOMINEES PTY LIMITED
20
BNP PARIBAS NOMINEES PTY LTD
205,112,683
52.74
6. MARKETABLE PARCELS
There are 370 shareholders with less than a marketable parcel of $500 based on a share price of 10 cents.
7. ON-MARKET BUY-BACK
The Company is not currently undertaking an on-market buy-back.
73
ADVERITAS | ANNUAL REPORT 2021
Adveritas Limited
Suite 10, 16 Brodie Hall Drive, Bentley WA 6102
+61 8 9473 2500
ABN: 88 156 377 141