Cipherpoint Limited
(Formerly known as Covata Limited)
Appendix 4E
Preliminary final report
1. Company details
Name of entity:
ABN:
Reporting period:
Previous period:
Cipherpoint Limited (Formerly known as Covata Limited)
61 120 658 497
For the year ended 31 March 2020
For the nine-month period ended 31 March 2019
2. Results for announcement to the market
In the current period, Cipherpoint Limited ('the Group') has adopted all of the new and revised Standards and
Interpretations issued by the Australian Accounting Standards Board that are relevant to its operations and effective for
annual reporting periods commencing on or after 1 January 2019.
In 2019, the Group changed its financial year from 30 June to 31 March. The financial statements have been prepared
for the year ended 31 March 2020, while the comparative accounting period is for the 9 months ended 31 March 2019,
therefore the results are not directly comparable.
On 16 July 2019, the Company completed the disposal of its SafeShare business through the sale of its shares in Cocoon
Data Holdings Pty Limited (‘Cocoon’) to Cybr5 Pty Ltd (‘Cybr5’). In accordance with AASB 5, the disposal group
comprising Cocoon and its subsidiaries has been classified as ‘held for sale’.
The comparative period (being the 9 months ended 31 March 2019) for the statement of profit & loss has therefore been
restated with the same classification applied.
Refer to Note 2 for the impact of adoption of AASB 16 on the Group.
Revenues from ordinary activities
down 31.1%
to
1,094,984
Revenues from continuing operations
up > 100.0%
to
673,478
Loss from ordinary activities after tax attributable to the owners of
Cipherpoint Limited
up > 91.92%
to
(673,045)
Loss for the year attributable to the owners of Cipherpoint Limited
up > 91.92%
to
(673,045)
$
Basic earnings per share
Diluted earnings per share
Year ended
31 Mar 2020
Cents
9 months
ended 31
Mar 2019
Cents
(1.97)
(1.97)
(24.34)
(24.34)
Dividends
There were no dividends paid, recommended or declared during the current financial period.
Comments
The loss for the Group after providing for income tax amounted to $673,045 (31 March 2019: $8,333,570).
Refer to the 'Review of operations' section of the Directors' report accompanying this Appendix 4E for further
commentary.
Cipherpoint Limited
(Formerly known as Covata Limited)
Appendix 4E
Preliminary final report
3. Net tangible assets
Net tangible assets per ordinary security
4. Control gained over entities
Reporting
Previous
period
Cents
period
Cents
1.46
(1.87)
The Company gained control of a German shelf company, renamed Cipherpoint GmbH in November 2019.
5. Loss of control over entities
Refer to notes 8, 10, 18 and 29 for further details on discontinued operations.
6. Dividends
Current period
There were no dividends paid, recommended or declared during the current financial period.
Previous period
There were no dividends paid, recommended or declared during the previous financial period.
7. Audit qualification or review
Details of audit/review dispute or qualification (if any):
The financial statements have been audited and an unqualified opinion has been issued. The auditor’s report contains a
paragraph addressing material uncertainty related to going concern.
8. Attachments
Details of attachments (if any):
The Annual Report of Cipherpoint Limited for the year ended 31 March 2020 is attached.
9. Signed
Signed ___________________________
Date: 26 May 2020
Ted Pretty
Chairman
Sydney
Cipherpoint Limited
(Formerly known as Covata Limited)
ABN 61 120 658 497
Annual Report - 31 March 2020
Cipherpoint Limited
(Formerly known as Covata Limited)
Contents
31 March 2020
Corporate directory
Directors' report
Auditor's independence declaration
Consolidated statement of re or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors' declaration
Independent auditor's report to the members of Cipherpoint Limited
Shareholder information
2
3
21
22
24
25
26
27
64
65
68
1
Cipherpoint Limited
(Formerly known as Covata Limited)
Corporate directory
31 March 2020
Directors
Edward Pretty (Executive Chairman)
Graham Mirabito
Steven Bliim
Joint Company secretaries
Steven Bliim
Patrick Gowans
Registered office
Share register
Auditor
Level 8, 171 Clarence Street
Sydney, NSW, 2000
Telephone: (02) 8412 8200
Boardroom Pty Limited
Level 12, 225 George Street
Sydney, NSW, 2000
Nexia Sydney Audit Pty Limited
Level 16, 1 Market Street
Sydney, NSW 2000
Stock exchange listing
Cipherpoint Limited shares are listed on the Australian Securities Exchange (ASX
code: CPT)
Website
www.cipherpoint.com
Corporate Governance Statement Cipherpoint Limited and the Board of Directors are committed to achieving and
demonstrating the highest standards of corporate governance. Cipherpoint Limited
has reviewed its corporate governance practices against the Corporate
Governance Principles and Recommendations (3rd Edition) published by the ASX
Corporate Governance Council.
Details of the corporate governance report is available on the Group website at
https://cipherpoint.com/ir/#governance
2
Cipherpoint Limited
(Formerly known as Covata Limited)
Directors' report
31 March 2020
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter
as the 'Group') consisting of Cipherpoint Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities
it controlled at the end of, or during, the year ended 31 March 2020.
Directors
The following persons were directors of the Company during the whole of the financial period and up to the date of this
report, unless otherwise stated:
Edward Pretty - Executive Chairman
Steven Bliim - Executive Director and COO
Graham Mirabito - Non-Executive Director (appointed 1 November 2019)
William McCluggage - Former Non-Executive Chairman (resigned 31 October 2019)
Principal activities
The principal activity of the Group is the development and commercialisation of intellectual property primarily in the field
of data security technology.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
The loss for the Group after providing for income tax amounted to $673,045 (31 March 2019: $8,333,570).
In 2019, the Group changed its financial year from 30 June to 31 March. The financial statements have been prepared
for the year ended 31 March 2020, while the comparative accounting period is for the 9 months ended 31 March 2019,
therefore the results are not directly comparable.
As at 31 March 2020, the Group held $920,935 (2019: $1,605,067) in cash and term deposits.
Highlights
●
In May 2019, the Group announced that it had signed a master Supply and Services agreement with DHL Information
Services (Europe) s.r.o. (DHL). The initial order was to the value of €244,360.
The Group consolidated its issued capital on the basis that every 20 fully paid ordinary shares be consolidated into
1 fully paid ordinary share. The purpose of the consolidation is to implement a more appropriate capital structure for
the Group.
The Company established its base for European operations in November 2019 in Heilbronn, Germany.
●
●
Product update
With the divestiture of SafeShare, Cipherpoint’s focus is on the remaining products cp.Protect and cp.Discover as well as
continuing to look for opportunities to resell dataglobal GmbH’s (“dataglobal”) content services capabilities.
This change in focus and rebranding to Cipherpoint required a significant upgrade to the website and collateral which was
completed in November 2019 and has now evolved into a second phase which began in December 2019 with search
engine optimisation and improvements in online lead generation.
Key development work undertaken during the financial year to 31 March 2020 included:
3
Cipherpoint Limited
(Formerly known as Covata Limited)
Directors' report
31 March 2020
cp.Protect
●
Version 10.1.2: This incremental update included improvements to Agentless Eclipse (for SharePoint Online/
OneDrive protection), permission enforcement, security and usability. Customers have been advised the Company
is no longer supporting versions older than version 10 and the support team is working with customers to assist in
upgrading.
Version 10.3.3: This version included support for SharePoint 2019, customer supplied encryption hardware (HSM),
Active Directory integration, performance improvements and bug fixes.
Projects are currently underway to improve both user interface and user experience as well as improve the underlying
performance of cp.Protect. These products are anticipated for completion in the quarter ending 30 June 2020.
●
●
cp.Discover:
cp.OEM
A framework to allow third party application developers to use cp.Protect within their own products has been prepared
and is being offered to potential customers. Further investment in this will depend on market interest.
cp.Cloud and cp.Cloud+
This is a major roadmap initiative to further extend the application of our existing cp.Protect value proposition to online
data repositories and collaboration tools. cp.Cloud which offers enterprises a single console for data control is now
complete and cp.Cloud+, now under development, will enable enterprises to create and manage their own encryption
keys for sensitive information that resides inside of Office 365, SharePoint Online and Microsoft Teams. This requires a
new approach for the technology and is anticipated to be completed by the quarter ending 31 December 2020.
Marketing
In November 2019, the group undertook a complete redesign of the Company’s branding and website. The objective of
the redesign was to more easily distinguish the core capability of the Company’s stable of products as well as improve
the ease with which potential customers could find the Company on the internet.
Following the rebranding and redesign, focus quickly shifted to improving performance of the Group’s lead generation
and digital marketing capability. The Company retained a dedicated digital marketing resource in Europe. This subsequent
work has involved improving the readability of the Company’s product pages on the website as well as requiring small
investment in advertising through channels such as Google, LinkedIn and Xing as well as launching a series of campaigns
targeted at potential decision makers highlighting which problems the Company’s products solve.
As a result, the Group has experienced a dramatic increase in monthly inbound leads, from an average of 10 leads per
month to in excess of 50 leads per month. Another consequence of these improvements has seen a dramatic increase in
the Company’s search rankings on Google, particularly in Europe. This means that the Company can more easily be
found by those organisations searching for solutions to common data protection, digital transformation and risk
management problems.
Channel Development
Cipherpoint has renewed its focus on building a channel partner network for the revised product set, whilst continuing to
support direct sales where needed to establish market presence and gain firsthand experience in relation to how
customers are using the products. Progress has been good and key highlights are:
●
Asia Pacific
Three new sales through our Singapore partner, Total eBusiness Solutions. A partnership agreement with a larger
Australian based consulting services company is progressing with discussions on how to lead engagement with our
target segments continuing.
Europe
Cipherpoint GmbH was established in Germany in November 2019 to support DHL and expand business in the
Germany-Austrian and Swiss (DACH) region of Europe. To that end, Steven Bliim relocated to Germany along with
one of our senior engineers. Deployment with DHL has moved from staging and is now in production with new users
being added to the platform each month. Progress has been made with a number of strategic opportunities surfacing
during this time as well the engagement of new channel partners and resellers for the region. The level of interest
has confirmed our view that the European market continues to maintain an interest in additional protection of on-
prem SharePoint instances and will be ready to maintain that level of control once they are ready to commence
transition to cloud instances of SharePoint.
America
Cipherpoint is not proactively pursuing partners in these territories, but online marketing has seen a lift in interest
from potential customers and partners. The Company has signed a partnership agreement with a managed service
provider and continues to receive maintenance and services renewals from existing partners and direct customers
it has worked with previously.
●
●
4
Cipherpoint Limited
(Formerly known as Covata Limited)
Directors' report
31 March 2020
Cipherpoint – entering FY2021 with renewed confidence
As detailed throughout this report, the year has seen the Group’s growth in capability and opportunity.
The Board would like to publicly thank all involved at Cipherpoint for their hard work and dedication over the past year
and look forward to seeing results from the valued work they do.
Significant changes in the state of affairs
The Group changed its name to Cipherpoint Limited (ASX: CPT) from Covata Limited (ASX: CVT) following the general
meeting on 17 December 2019 consistent with the Company’s renewed focus on the cp.Protect product.
Divestment of SafeShare
The Group completed the disposal of the SafeShare business to Cyber 5 Pty Ltd in July 2019 for $5 million, which was
discharged as follows:
●
●
●
$2 million through the extinguishment of the Group’s obligations under convertible notes;
$2 million in cash at completion of the sale; and
$1 million in the form of a vendor terms loan from Cipherpoint (on terms which would be customary for unsecured
loans obtained from any major Australian bank, such as a business overdraft account, or such other terms as agreed
between Cybr5 and Cipherpoint).
The sale was subject to a global, perpetual, royalty-free licence of the IP and platforms developed by Cocoon and Covata
Australia Pty Limited (‘CVA’) back to Cipherpoint for use in its ongoing businesses, other than to be used for a
development of a product not connected to the Group’s core product range. Cipherpoint and Cybr5 have also entered
into a mutual collaboration and reselling relationship.
Excluded from the sale were all assets in and shares of CipherPoint Software, Inc. and all customers of its Eclipse product,
the rights to the dataglobal GmbH classification IP, all IP to Cipherpoint’s data security console, and all other IP and/or
associated technical support and architecture materials which are held outside of Cocoon or CVA.
The sale has freed up resources to allow management to focus on the Eclipse product.
dataglobal
●
●
●
In September 2019, the Company announced that it was no longer pursuing the acquisition of dataglobal GmbH,
Heilbronn ('dataglobal'). Despite its best efforts, the Company was unable to reach the minimum subscription
required to complete the proposed transaction with dataglobal under the terms of the offer.
The Board is of the view that the strategy underpinning the acquisition, being a vision to create a content services
player, remains compelling. The Board notes it will be open to and will consider all options to pursue the same or
alternative transaction(s) in content services going forward, whether in the short or medium term.
The Company continues to enjoy a close relationship with dataglobal. Notwithstanding the merger transaction is no
longer being pursued at this time, dataglobal has offered to support the Company with marketing, channel and direct
customer introductions and office accommodation for the business based in Heilbronn Germany. Both parties have
agreed to collaborate and will look for further ways to work together.
Resumption of trading
Following its suspension on 30 January 2019, in connection with the pursuit of the dataglobal transaction, the Company’s
quoted securities were reinstated to trading by the ASX on 2 December 2019.
5
Cipherpoint Limited
(Formerly known as Covata Limited)
Directors' report
31 March 2020
Matters subsequent to the end of the financial year
The following events have arisen since 31 March 2020 which may affect the Group's operations, the results of those
operations, or the Group's state of affairs in future financial years.
Asset recovery
As shareholders may be aware the Company was subject to a backdoor listing of its data security business in 2014. At
that time, the Company traded as Prime Minerals Limited and held various mining tenements directly and through its
subsidiaries.
A review of ASX records, annual reports and agreements created at or around that time (copies of which we have now
recently obtained) have revealed that in 2008 the Company sold its interests in certain mining exploration tenements in
an area known as the Barrambie project in Western Australia. The sale to Neometals Limited (then called Reed Resources
Limited) included an entitlement to a Net Smelter Royalty (NSR) of 2% over output from a defined tenement area. The
Company is presently seeking advice with respect to the NSR. At this time, the Company has not formed a view on the
potential value of the NSR, if any.
Capital raising
The Company released its Share Placement Plan (‘SPP’) Prospectus on 27 April 2020 to raise up to $500,000.
Shareholders each will be entitled to subscribe for up to $30,000 of shares at a price of 1.3c per share.
Shareholders will note that the ASX has waived SPP requirements for the number of shares issued to be limited to 30%
of the issued capital and the issue price to be at least 80% of the VWAP. The SPP issue price is a matter for reasonable
determination by the Board. These temporary measures will expire on 31 July 2020 unless ASX decides to remove or
extend them.
The decision of the Board on the terms of the SPP has been made after assessing the alternatives in the context of the
Coronavirus Economic Response Package Omnibus Act 2020, the concessions made by the ASX on capital raisings
during the Covid-19 crisis and also reviewing comparable market discounts.
Investment and Co-Venture discussions
The Company has been meeting with potential equity investors in Europe given the focus of the business in that market.
All discussions have been conducted under suitable Non-Disclosure Agreements and are preliminary and non-binding in
nature. One structure that has been discussed is creating a joint venture entity into which the business of the Company
will be transferred with new European investors injecting capital into that vehicle. The Company has taken preliminary
advice that, subject to the final terms of any arrangement, this would not be a disposal of its main undertaking as its main
undertaking before the transfer will be the same as after any such transfer (i.e. software services). Any such arrangement
may require consultation with ASX and potentially shareholder approval. The potential investor is presently conducting
due diligence on the business and has spoken with the Company’s largest customer. There is no guarantee that these
discussions will result in any venture or investment.
COVID-19
Subsequent to the reporting date, the existence of the infectious disease COVID-19 ('Coronavirus') has become widely
known, and begun to rapidly spread throughout the world, including Australia. The Company considers this to be a non-
adjusting event after the reporting date. Since the reporting date this has caused increasing disruption to populations, and
to business and economic activity. As this situation is rapidly developing, it is not yet practicable to estimate the potential
impact this may have on the Group.
No other matter or circumstance has arisen since 31 March 2020 that has significantly affected, or may significantly affect
the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
Likely developments and expected results of operations
The Group will continue to pursue opportunities to commercialise and market its patented security technology across
markets in a number of countries around the globe. Operating costs will continue to outpace revenue until sales from
current and future contracts commence to generate significant revenue streams.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
6
Cipherpoint Limited
(Formerly known as Covata Limited)
Directors' report
31 March 2020
Information on directors
Name:
Title:
Experience and expertise:
Edward Pretty
Executive Chairman
Edward is a widely recognised senior technology and telecommunications executive
with significant experience in complex networks, data hosting and security, as well
as a deep knowledge of emerging trends in security and information technology.
Joining Cipherpoint as Managing Director and Chief Executive Officer in January
2017, his responsibilities include driving revenue, developing the sales pipeline,
guiding new product development and exploring near-term growth opportunities.
Most recently, Edward was a senior adviser at Macquarie Group, supporting principal
investments in emerging companies, covering information governance, big data and
analytics, security and encryption. His career has included roles such as Group
Managing Director of Technology Innovation and Product at Telstra Group, Chairman
of Fujitsu Limited, Chairman of ASX-listed NEXTDC Limited and RP Data Limited,
Advisory Chairman of Tech Mahindra and Managing Director and Chief Executive
Officer of Hills Limited.
Other current directorships:
None
Former directorships (last 3 years): None
Interests in shares:
Interests in options:
Interests in rights:
443,149 ordinary shares
37,732 options over ordinary shares
1,401,540 ordinary shares issued pursuant to employee loan share plan
Name:
Title:
Experience and expertise:
Steven Bliim
Executive Director and Chief Operational Officer
Steven has been with Cipherpoint since 2012 and during this time has played a key
role in the group’s expansion into the US, UK and Europe along with the reverse
acquisition of Prime Minerals Limited, subsequent re-listing of Cipherpoint Limited on
the Australian Securities Exchange and the acquisition of CipherPoint Software Inc.
In addition to his role as director, and COO, Steven is also Joint Company Secretary.
Prior to joining Cipherpoint, Steven worked in business services and tax advisory for
over seven years, consulting primarily to small-to-medium enterprise and primary
production businesses.
Steven is a member of Chartered Accountants Australia & New Zealand, and holds
a Bachelor of Commerce – Accounting from the University of South Australia.
Other current directorships:
None
Former directorships (last 3 years): None
Interests in shares:
Interests in options:
Interests in rights:
8,022 ordinary shares
15,596 options over ordinary shares
326,781 ordinary shares issued pursuant to employee loan share plan
7
Cipherpoint Limited
(Formerly known as Covata Limited)
Directors' report
31 March 2020
Name:
Title:
Experience and expertise:
Graham Mirabito (appointed on 1 November 2019)
Non-Executive Director
Graham has over 35 years’ experience in the information technology industry
including 10 years in engineering and 25 years in sales, marketing, operations,
mergers, acquisitions and general management. Graham has held senior roles at
Telstra as MD Telstra Europe and EVP Telstra Asia.
Graham's previous role for 12 years was as CEO of RP Data which he took public
on the ASX in 2006 and was acquired by strategic shareholder CoreLogic in 2011.
His last executive role was as CEO of CoreLogic international and was responsible
for operations in Australia, Asia and UK.
Graham holds an Associate Diploma in Electrical Engineering from the Queensland
University of Technology.
Other current directorships:
None
Former directorships (last 3 years): None
Interests in shares:
Interests in options:
Interests in rights:
482,206 ordinary shares
14,881 options over ordinary shares
133,300 ordinary shares issued pursuant to employee loan share plan
Name:
Title:
Experience and expertise:
William McCluggage (resigned 31 October 2019)
Non-Executive Chairman
With over 15 years of experience working as an IT Director, Chief Technology
Officer and Chief Information Officer within central government and the private
sector, William plays a critical role for Covata in sales and contract deployment
within the UK and Northern Ireland government sector.
Currently Managing Director of Laganview Associates, a digital and technology
services consultancy, he is also Head of Information Security on the UK’s Open
Banking Programme in London, Entrepreneur-in-Residence at Catalyst (formerly
Northern Ireland Science Park), a member of the Board of Governors of the
Northern Regional College in Northern Ireland and Executive Chairman of
Community Mechanics.
Previously, William served as Chief Information Officer for the Irish Government,
leading the development and implementation of an Information and
Communications Technology ('ICT') strategy. He was also Chief Technologist of
Dell EMC’s public sector business, where he was a trusted adviser to the UK and
Ireland’s public sector customers, and the UK’s Deputy Government Chief
Information Officer at the UK Cabinet Office, responsible for ICT strategies and
policies.
William began his career as an engineering officer with the Royal Air Force, where
he worked for 24 years.
He held posts in the UK and USA and supported operations in Africa, Cyprus,
Norway, Canada and the Falkland Islands. He finished his career as the Technical
Director of a Defence Agency.
Other current directorships:
None
Former directorships (last 3 years): None
Interests in shares:
Interests in options:
66,700 ordinary shares at resignation
40,000 options over ordinary shares at resignation
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of
all other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and
excludes directorships of all other types of entities, unless otherwise stated.
8
Cipherpoint Limited
(Formerly known as Covata Limited)
Directors' report
31 March 2020
Company secretaries
Patrick Gowans - Joint Company Secretary
Patrick graduated from La Trobe University in 2006 with a Bachelor of Laws/Arts. He was admitted to practice as a lawyer
in March 2008. Patrick is currently a Partner of Quinert Rodda & Associates Lawyers.
Steven Bliim - Joint Company Secretary
Steven has held the role of Company Secretary since 2012. See 'Information on directors' above for further information.
Meetings of directors
The number of meetings of the Company's Board of Directors ('the Board') held during the year ended 31 March 2020,
and the number of meetings attended by each director were:
Edward Pretty
Steven Bliim
Graham Mirabito
William McCluggage
Held: represents the number of meetings held during the time the director held office.
Attended
Held
6
6
2
4
6
6
2
4
9
Cipherpoint Limited
(Formerly known as Covata Limited)
Directors' report
31 March 2020
Remuneration report (audited)
The remuneration report details the key management personnel remuneration ('KMP') arrangements for the Group, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
KMP are those persons having authority and responsibility for planning, directing and controlling the activities of the entity,
directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
●
●
●
●
●
●
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Consequences of performance on shareholders’ wealth
Additional disclosures relating to KMP
Principles used to determine the nature and amount of remuneration
The objective of the Group's executive reward framework is to ensure reward for performance is competitive and
appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives
and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of
reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good
reward governance practices:
●
●
●
●
competitiveness and reasonableness;
acceptability to shareholders;
performance linkage / alignment of executive compensation; and
transparency.
The performance of the Group depends on the quality of its directors and executives. The remuneration philosophy is to
attract, motivate and retain high performance and high-quality personnel.
In FY2020, it was the role of the Board to review and make recommendations in relation to the remuneration arrangements
for its directors and executives.
The reward framework is designed to align executive reward to shareholders' interests. The Board have considered that
it should seek to enhance shareholders' interests by:
●
●
having economic profit as a core component of plan design;
focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering
constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value; and
attracting and retaining high calibre executives.
●
Additionally, the reward framework should seek to enhance executives' interests by:
●
●
●
rewarding capability and experience;
reflecting competitive reward for contribution to growth in shareholder wealth; and
providing a clear structure for earning rewards.
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.
Non-executive directors' remuneration
Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, these
directors. The Board decides the total amount paid to each non-executive director as remuneration for their services as
a director.
As described in the Long-Term Incentive Plan, the Board may elect at their discretion to issue share options to non-
executive directors in order to attract individuals who bring the necessary leadership and strategic skills to the Group.
ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general
meeting. The most recent determination was at the Annual General Meeting held on 7 August 2019, where the
shareholders approved a maximum annual aggregate remuneration of $480,000.
10
Cipherpoint Limited
(Formerly known as Covata Limited)
Directors' report
31 March 2020
Executive remuneration
The Group aims to reward executives based on their position and responsibility, with a level and mix of remuneration
which has both fixed and variable components.
The executive remuneration and reward framework has four components:
●
●
●
●
base pay and non-monetary benefits;
short-term performance incentives;
long-term incentives; and
other remuneration such as superannuation and long service leave.
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the
Board based on individual and business unit performance, the overall performance of the Group and comparable market
remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the Group and provides additional value to the executive.
Equity instruments
(i) Loan funded share plan
In the loan funded share plan, shares are purchased by the participant and funded by a loan provided by the Company.
The shares are held by the participant until they vest (or are forfeited) and are eligible for dividends. Should the Company
pay dividends or make capital distributions in the future, any dividends paid or distributions made to the participant will be
applied to repay the loan and to meet the tax liability on those dividends or distributions.
The loan is for a period of 10 years from issue, is limited recourse and interest free. The loan is repayable in full on the
earlier of the termination date of the loan or when the shares are sold.
In the event that the vesting / performance conditions are not met and shares do not vest for any other reason, the shares
will be compulsorily acquired by the Company for the value of the outstanding loan.
The shares are forfeited in the event that the participant ceases employment prior to vesting. Where there is a change of
control event, the Board may at its discretion make a determination that some or all of a participant’s unvested shares
may vest.
For accounting purposes, the loan funded share plan is treated and valued as options.
(ii) Share options
Selected KMP and directors are made individual offers of specific numbers of share options at the discretion of the Board.
The Board may determine the number of share options, vesting conditions, vesting period, exercise price and expiry date.
Share options may be granted at any time, subject to the Corporations Act and ASX Listing Rules.
The grant of share options is designed to attract and provide appropriate incentives to directors and KMP who have
recently joined the Group and/or relocated. These share options are subject to time-based vesting. There are no specific
performance conditions attached to the vesting of those options as the early stage of the Group’s business does not
readily allow for the returns and results of the performance by executives to be measured quantitatively on a regular basis.
(iii) Ordinary share issues
The Board may offer KMP and selected directors’ incentives that are settled in ordinary shares of the Company from time
to time. This assists the Board in balancing the needs of the Company, while providing an appropriate mix of cash and
non-cash incentives to directors and KMP.
Short-term incentive plan ('STIP')
The Chief Executive Officer and the KMP are eligible to participate in the STIP in a manner determined by the Board from
time to time. Participants in the STIP have a target cash payment which is set as a percentage of their total fixed annual
remuneration, subject to a maximum target of 100% for the Chief Executive Officer, 75% for the Chief Technology Officer
and 15% for the Chief Financial Officer.
11
Cipherpoint Limited
(Formerly known as Covata Limited)
Directors' report
31 March 2020
Payments under the STIP in any given year depend on the achievement of a range of financial and non-financial key
performance indicators and objectives (‘KPIs’) for both the participant and the Group overall. Bonus awards granted to
KMP may be settled in either cash or equity instruments of the Company at the discretion of the Board.
Amounts awarded under the STIP to KMP during the year were in connection with the Company achieving revenue
targets; securing new customers and contracts; expanding the Company’s sales pipeline; delivering new products to
market; eliminating technical debt and achieving new product integrations.
Long-term incentive plan ('LTIP')
KMP, including non-executive directors, are eligible to participate in the LTIP as determined by the Board. The LTIP is
designed to align the long-term goals of the Group with those of the KMP. The LTIP comprises the share options and
loan funded shares.
Following the annual general meeting on 16 October 2018, shareholders approved the renewal of the Employee Share
Option Plan ('ESOP'). This plan, in addition to the existing Employee Loan Share Plan ('ELSP'), provides the Company
with the means to incentivise its KMP with instruments that have the purpose of aligning the medium to long-term goals
of the Board with the success of the Group.
Share options and loan funded share plan shares issued under the LTIP
The following grants were provided to the Executive Directors and Non-Executive Directors of the Group during the year
ended 31 March 2020:
●
Loan funded share plan shares granted to Graham Mirabito on 11 November 2019, with components as follows:
133,300 shares with a loan price of 30c, a term of 10 years and vest in the following tranches: 50% on 31 October
2020 and 6.25% to vest quarterly for the remaining 8 calendar quarters.
There were no grants provided to other KMP during the year ended 31 March 2020.
Future grants
The Board may consider amending the vesting terms and the performance hurdles from time to time to ensure that they
are aligned to market practices and to ensure the best outcomes for the Group. The Board has the absolute discretion to
replace the LTIP in any one or more years with an equivalent LTIP or any other program.
Consolidated entity performance and link to remuneration
Any amount that may be awarded to the participants under the STIP is subject to the absolute discretion of the Board,
and will be subject to the approval of the Board, after taking into account performance against KPIs, and any other matters
determined by the Board to be relevant at its discretion including, without limitation, the participant’s conduct and the
financial performance and position of the Group.
Use of remuneration consultants
During the financial year ended 31 March 2020, the Group did not engage remuneration consultants, to review its existing
remuneration policies and provide recommendations on how to improve both the STI and LTI programs.
Voting and comments made at the Company's 2019 Annual General Meeting ('AGM')
At the 2019 AGM, 88% of the votes received supported the adoption of the remuneration report for the 9 months ended
31 March 2019. The Company did not receive any specific feedback at the AGM regarding its remuneration practices.
Details of remuneration
Details of the remuneration of the KMP of the Group are set out in the following tables. Remuneration paid in US dollars
is converted to Australian dollars using a weighted-average exchange rate determined each month during the year.
The options and rights on the following table include the fair-value expense recognition for the loan funded share plan
and share option plan.
Amounts of remuneration
Details of the remuneration of key management personnel of the Group are set out in the following tables.
12
Cipherpoint Limited
(Formerly known as Covata Limited)
Directors' report
31 March 2020
The key management personnel of the Group consisted of the following directors of Cipherpoint Limited:
Edward Pretty - Executive Chairman (Former Managing Director and Chief Executive Officer)
●
Steven Bliim - Executive Director, Chief Operating Officer and Joint Company Secretary (Former Chief Financial
●
Officer)
Graham Mirabito (appointed 1 November 2019) – Non-Executive Director
William McCluggage (resigned on 31 October 2019) - Former Non-Executive Chairman
●
●
And the following persons as KMP:
●
Hugh Stodart – Head of Product and Delivery (KMP from 1 April 2019)
Short-term benefits
Cash salary
and fees
Com-
mission
Cash
bonus (a)
Post-
employ-
ment
benefits
Super-
annuation /
401K
Long-term
benefits
Share-
based
payments
Employee
benefits
Equity-
settled (b)
Termination
Total
$
$
$
$
$
$
$
$
Year ended 31
Mar 2020
Non-Executive
Directors:
Graham Mirabito
William
McCluggage (c)
Executive
Directors:
Edward Pretty
Steven Bliim (d)
Other KMP:
Hugh Stodart
33,333
40,833
518,010
305,541
192,850
1,090,567
-
-
-
-
-
-
-
-
-
-
-
-
11,453
(2,425)
-
-
44,786
38,408
(270,600)
(17,200)
24,970
24,772
-
-
111,988
32,571
-
-
384,368
345,684
30,278
(257,522)
21,197
70,939
8,413
8,413
35,816
189,403
-
288,554
- 1,101,800
(a) Cash-settled award issued under the STIP were accrued for Edward Pretty and Steven Bliim in the nine months
ended 31 March 2019 and a portion reversed in the year ended 31 March 2020.
(b) Represents the fair value of vested share-based payments granted in prior years to William and represents the fair
value vesting of loan funded share plan shares issued to Graham, Edward, Steven and Hugh.
(c) Represents remuneration from 1 April 2019 to date of resignation 31 October 2019.
(d) Cash payments to Steven Bliim include a travel allowance and relocation costs totalling $35,256 in relation to his
relocation to Germany.
13
Cipherpoint Limited
(Formerly known as Covata Limited)
Directors' report
31 March 2020
Short-term benefits
Cash salary
and fees
Com-
mission
Cash
bonus (a)
Post-
employ-
ment
benefits
Super-
annuation /
401K
Long-term
benefits
Share-
based
payments
Employee
benefits
Equity-
settled (b)
Termination
Total
$
$
$
$
$
$
$
$
52,500
37,917
27,083
-
-
-
-
-
-
-
3,602
2,573
-
-
-
3,234
2,156
2,156
-
-
-
55,734
43,675
31,812
336,833
145,833
-
-
451,000
27,000
15,399
14,541
11,748
1,126
182,106
71,939
-
-
997,086
260,439
240,000
143,728
983,894
19,619
-
19,619
-
-
478,000
15,399
-
51,514
(4,363)
(7,291)
1,220
91,925
56,266
409,782
102,538
44,041
465,118
236,744
146,579 2,090,608
9 months ended
31 Mar 2019
Non-Executive
Directors:
William
McCluggage
Lindsay
Tanner (c)
David
Irvine (c)
Executive
Directors:
Edward Pretty
Steven Bliim
Other KMP:
Derek Brown
Woody Shea
(a) Cash-settled award issued under the STIP was accrued (and not paid) contingent on the dataglobal acquisition.
(b) Represents the fair value of vested share-based payments granted in prior years to William, Lindsay and David and
represents the fair value vesting of loan funded share plan shares issued to Edward, Steven, Derek and Woody.
(c) Represents remuneration from 1 July 2018 to date of resignation.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Graham Mirabito
William McCluggage
Executive Directors:
Edward Pretty
Steven Bliim
Other KMP:
Hugh Stodart
Derek Brown
Woody Shea
Fixed remuneration
At risk - STI
At risk - LTI
Year ended
31 Mar 2020
9 months
ended 31 Mar
2019
Year ended
31 Mar 2020
9 months
ended 31 Mar
2019
Year ended
31 Mar 2020
9 months
ended 31 Mar
2019
74%
106%
141%
96%
77%
-
-
-
94%
38%
64%
-
-
-
-
(70%)
(5%)
44%
10%
-
71%
72%
11%
-
-
-
5%
-
26%
(6%)
29%
9%
12%
-
-
-
6%
18%
26%
-
24%
28%
14
Cipherpoint Limited
(Formerly known as Covata Limited)
Directors' report
31 March 2020
Service agreements
Non-executive directors
Non-executive directors do not have fixed term contracts with the Company. On appointment to the Board, all non-
executive directors enter into a service agreement with the Company in the form of a letter of appointment. The letter
summarises the Board policies and terms, including compensation.
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Resignation
Term of agreement:
Details:
Graham Mirabito
Non-Executive Director
1 November 2019
No fixed duration
Fixed annual remuneration of $80,000
William (Bill) McCluggage
Non-Executive Chairman
21 October 2016
31 October 2019
No fixed duration
Fixed annual remuneration $70,000
Executive directors
Remuneration and other terms of employment for the executive directors are formalised in service agreements in the form
of employment agreements. Details of these agreements are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Edward (Ted) Pretty
Executive Chairman
Originally commenced on 23 January 2017, commenced as executive chairman on
1 January 2020
An initial term of 12 months
● Fixed consulting fee of $25,000 per month or annual remuneration of $300,000. In
February 2020, Mr. Pretty advised shareholders that he would be stepping down
from an Executive Director role to that of Non-Executive Chairman of the Group and
would consequently forgo his entitlement to further consulting fees effective from the
end of April.
● Fixed monthly director's fee $10,000
● Fixed monthly allowance $1,000
Ted or the Company may terminate the employment contract by giving either party
3 months written notice.
Steven Bliim
Executive Director, Chief Operating Officer and Joint Company Secretary
January 2019
No fixed term
● Fixed annual remuneration €156,000 (A$245,000) plus superannuation
● Entitled to participate in a STIP capped at a maximum of 30% of his fixed annual
remuneration based upon achievement of a range of financial and non-financial
objectives set in consultation with the Board.
● Entitled to Company provided health insurance
Steven or the Company may terminate the employment contract by giving either
party 1 months and 2 months written notice, respectively. Under specific
circumstances, employment may be terminated by the Company at any time with or
without notice (serious misconduct, failure to perform duties, or other specified
circumstances).
15
Cipherpoint Limited
(Formerly known as Covata Limited)
Directors' report
31 March 2020
Other key management personnel
Other key management personnel have employment contracts setting out the terms and conditions of their employment.
These contracts generally provide for:
●
●
●
A base salary denominated in either Australian or US Dollars and paid monthly
For US KMP, payment of health and dental insurance, eligible 401K
Eligibility to participate in the STIP, with target participation in the STIP individually capped at a maximum percentage
of total fixed annual remuneration up to 50%
A grant of share options over the ordinary shares of Cipherpoint Limited
●
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Details of these agreements are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Hugh Stodart
Head of Product and Delivery
1 July 2017
No fixed term
● Fixed annual remuneration of $193,800 plus superannuation
● Monthly phone allowance $50
● Entitled to participation in a STIP based upon achievement of a range of financial
and non-financial objectives set in consultation with the Chief Executive Officer
Share-based compensation
Employee Loan Share Plan
Details of ordinary shares issued to directors and other KMP under the Employee Loan Share Plan Agreement ('ELSP')
as part of compensation during the period ended 31 March 2020 are set out below:
Name
Issue date
ELSP shares
Loan amount
per share
Term in years
Fair value ($)
Graham Mirabito (a)
11/11/2019
133,300
0.300
10
34,971
(a) 50% at 30 Oct 2020; 6.25% to vest every calendar quarter thereafter for 8 calendar quarters
Options
No options were granted to directors and other KMP during the year ended 31 March 2020.
16
Cipherpoint Limited
(Formerly known as Covata Limited)
Directors' report
31 March 2020
Additional disclosures relating to KMP
Shareholding - Ordinary shares
The number of shares in the Company held during the financial year by each director and other members of key
management personnel of the Group, including their personally related parties, is set out below:
Ordinary shares
William McCluggage
Edward Pretty
Steven Bliim
Graham Mirabito
Hugh Stodart
*As at resignation date 31 October 2019
Balance at Received
the start of as part of
the year
remuneration Additions
Balance at
the end of
the year
Consolidation
1,334,148
36,893,751
6,696,036
9,644,113
7,520,136
62,088,184
-
-
-
133,300
-
133,300
-
(1,267,440)
- (35,049,062)
(6,361,233)
-
(9,161,907)
-
-
(7,144,128)
- (58,983,770)
66,708*
1,844,689
334,803
615,506
376,008
3,237,714
As at 31 March 2020, the number of ordinary shares above held by Edward Pretty, Steven Bliim, Graham Mirabito and
Hugh Stodart include shares issued under the Employee Loan Share Plan. The shares held by Edward Pretty, Steven
Bliim, Graham Mirabito and Hugh Stodart under the Employee Loan Share Plan are 1,401,540, 326,781, 133,300 and
354,190 respectively.
Graham Mirabito and Hugh Stodart became KMP in the year ended 31 March 2020. Derek Brown and Woody Shea are
no longer KMP during the year ended 31 March 2020.
Shareholding - share options
The number of options over ordinary shares in the Company held during the financial year by each director and other
members of key management personnel of the Group, including their personally related parties, is set out below:
Balance at
the start of Granted/
the year
(Exercised)
Expired/
forfeited/
other
Balance at
the end of
the year
Consolidation
Options over ordinary shares
William McCluggage
Steven Bliim
*As at resignation date 31 October 2019
1,000,000
300,000
1,300,000
-
-
-
(200,000)
-
(200,000)
(760,000)
(285,000)
(1,045,000)
40,000*
15,000
55,000
Loans to key management personnel and their related parties
During the period ended 31 March 2020 there were no loans granted to KMP and their related parties.
Consequences of performance on shareholders’ wealth
In considering the Group’s performance and benefits for shareholder’s wealth, the Remuneration Committee have regard
to the following financial and share price information in respect of the current financial year and the previous four financial
years.
The earnings of the Group for the five years to 31 March 2020 are summarised below:
2020
$
2019
$
2018
$
2017
$
2016
$
Loss attributable to owners of the Company
(673,045)
(8,333,570)
(7,443,469) (10,179,664) (14,116,627)
Change in share price
(0.01)
(0.01)
(0.02)
(0.20)
(0.10)
This concludes the remuneration report, which has been audited.
17
Cipherpoint Limited
(Formerly known as Covata Limited)
Directors' report
31 March 2020
Shares under option
Unissued ordinary shares of Cipherpoint Limited under option at the date of this report are as follows:
Pre-consolidation
Exercise Number
Exercise
Grant date
Expiry date
price
under option
price
31/07/2013
01/12/2013
01/08/2014
12/03/2015
30/10/2015
17/12/2015
21/07/2016
04/05/2017
22/06/2017
17/08/2017
21/08/2017
24/11/2017
07/09/2018
4,122,040
30/07/2018 $0.1467
5,000,000
30/11/2018 $0.2000
1,237,500
31/07/2019 $0.2000
231,400
11/03/2020 $0.3300
300,000
29/10/2020 $0.2850
490,669
16/12/2020 $0.1950
150,000
20/07/2021 $0.1950
2,466,680
03/05/2022 $0.2000
693,700
21/06/2022 $0.0500
4,055,220
16/08/2022 $0.0450
633,740
20/08/2022 $0.0500
23/11/2022 $0.0500
8,878,960
06/09/2023 $0.0280 17,375,720
$2.9340
$4.0000
$4.0000
$6.6000
$5.7000
$6.6000
$3.9000
$4.0000
$1.0000
$0.9000
$1.0000
$1.0000
$0.5600
After share consolidation
Balance
at start of
the year
206,102
250,000
61,875
11,570
15,000
24,535
7,500
123,334
34,685
202,761
31,687
443,948
868,786
Lapsed
(206,102)
(250,000)
(61,875)
(11,570)
-
-
-
(83,334)
(20,685)
(30,673)
(31,687)
(149,798)
(288,186)
Balance
at end of
the year
-
-
-
-
15,000
24,535
7,500
40,000
14,000
172,088
-
294,150
580,600
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of
the Company or of any other body corporate.
2,281,783
(1,133,910)
1,147,873
Shares under Employee loan share plan
Unissued ordinary shares of Cipherpoint Limited under performance rights at the date of this report are as follows:
Pre-consolidation
After share consolidation
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Exercise
price
Balance at
the start of the
year
Granted
Lapsed
Balance at
the end of the
year
02/12/2013 01/12/2023 $0.1470 7,526,900
443,848
20/08/2014 19/08/2024 $0.2000
933,333
11/03/2015 10/03/2025 $0.2850
136,925
12/03/2015 11/03/2025 $0.2850
132,167
08/12/2015 07/12/2025 $0.3300
27/01/2017 26/01/2027 $0.1200
175,000
04/05/2017 03/05/2027 $0.0290 4,000,000
04/05/2017 03/05/2027 $0.0270 6,000,000
23/06/2017 22/06/2027 $0.2000 5,762,694
24/11/2017 23/11/2027 $0.0550 28,934,367
06/03/2017 05/03/2027 $0.0500 3,941,141
07/09/2018 06/09/2028 $0.0280 30,581,674
19/10/2018 18/10/2028 $0.0280 7,678,500
-
01/11/2019 31/10/2029 $0.0000
$2.9400
$4.0000
$5.7000
$5.7000
$6.6000
$2.4000
$0.5800
$0.5400
$4.0000
$1.1000
$1.0000
$0.5600
$0.5600
$0.3000
376,345
22,193
46,667
6,847
6,609
8,750
200,000
300,000
288,135
1,446,719
197,058
1,529,084
383,925
-
-
-
-
-
-
-
-
-
-
-
-
-
-
133,300
-
-
-
-
-
-
-
-
(62,194)
(61,814)
(85,105)
(125,907)
-
-
376,345
22,193
46,667
6,847
6,609
8,750
200,000
300,000
225,941
1,384,905
111,953
1,403,177
383,925
133,300
96,246,640
4,812,332
133,300
(335,020)
4,610,612
No person entitled to exercise the performance rights had or has any right by virtue of the performance right to participate
in any share issue of the Company or of any other body corporate.
18
Cipherpoint Limited
(Formerly known as Covata Limited)
Directors' report
31 March 2020
Shares issued on the exercise of options
There were no ordinary shares of Cipherpoint Limited issued on the exercise of options during the year ended 31 March
2020 and up to the date of this report.
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a
director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of
the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the
Company or any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the
auditor are outlined in note 24 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 24 to the financial statements do not compromise
the external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
●
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the Company,
acting as advocate for the Company or jointly sharing economic risks and rewards.
●
Officers of the company who are former directors of Nexia Sydney Audit Pty Ltd
There are no officers of the Company who are former directors of Nexia Sydney Audit Pty Ltd.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this directors' report.
Auditor
Nexia Sydney Audit Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.
19
Cipherpoint Limited
(Formerly known as Covata Limited)
Directors' report
31 March 2020
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act
2001.
On behalf of the directors
___________________________
Ted Pretty
Chairman
26 May 2020
Sydney
20
Auditor’s Independence Declaration under section 307C of the Corporations Act 2001
As lead audit director for the audit of the financial statements of Cipherpoint Limited for the year ended 31
March 2020, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(a)
the auditor independence requirements of the Corporations Act 2001in relation to the audit; and
(b)
any applicable code of professional conduct in relation to the audit.
Yours sincerely
Nexia Sydney Audit Pty Ltd
Lester Wills
Director
Date: 26 May 2020
Sydney
21
Cipherpoint Limited
(Formerly known as Covata Limited)
Consolidated statement of profit or loss and other comprehensive income
For the year ended 31 March 2020
Revenue from continuing operations
Revenue - technology related products and services
Expenses
Employee benefit expense
Consultancy fees expense
Depreciation and amortisation expense
Impairment of assets
Recovery/(impairment) of receivables
Legal and professional fees expense
Marketing and promotion expense
Travel and accommodation expense
Office and administration expense
Other expenses
Total expenses
Results from operating activities
Finance income calculated using the effective interest method
Finance costs
Loss before income tax expense from continuing operations
Income tax expense
Consolidated
Year ended
31 Mar 2020
$
9 months
ended 31
Mar 2019
$
Note
5
6
6
12
6
7
673,478
217,040
(2,210,535)
(95,609)
(361,304)
(1,012,828)
8,039
(685,462)
(297,202)
(235,071)
(209,890)
(458,995)
(5,566,896)
(2,642,438)
(163,652)
(609,205)
(1,827,567)
(6,162)
(254,251)
(222,962)
(202,499)
(61,019)
(480,772)
(6,470,527)
(4,893,418)
(6,253,487)
47,029
(4,270)
9,204
(156,093)
(4,850,659)
(6,400,376)
-
-
Loss after income tax expense from continuing operations
(4,850,659)
(6,400,376)
Profit/(loss) after income tax expense from discontinued operations
8
4,177,614
(1,933,194)
Loss after income tax expense for the year attributable to the owners of
Cipherpoint Limited
(673,045)
(8,333,570)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the owners of
Cipherpoint Limited
Total comprehensive income for the year is attributable to:
Continuing operations
Discontinued operations
(173,598)
(25,357)
(173,598)
(25,357)
(846,643)
(8,358,927)
(5,024,257)
4,177,614
(6,425,733)
(1,933,194)
(846,643)
(8,358,927)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with
the accompanying notes
22
Cipherpoint Limited
(Formerly known as Covata Limited)
Consolidated statement of profit or loss and other comprehensive income
For the year ended 31 March 2020
Consolidated
Year ended
31 Mar 2020
$
9 months
ended 31
Mar 2019
$
Note
Cents
Cents
Earnings per share for loss from continuing operations attributable to the
owners of Cipherpoint Limited
Basic earnings per share
Diluted earnings per share
31
31
(14.16)
(14.16)
(18.77)
(18.77)
Earnings per share for profit/(loss) from discontinued operations
attributable to the owners of Cipherpoint Limited
Basic earnings per share
Diluted earnings per share
31
31
12.20
12.20
(5.67)
(5.67)
Earnings per share for loss attributable to the owners of Cipherpoint Limited
Basic earnings per share
Diluted earnings per share
31
31
(1.97)
(1.97)
(24.44)
(24.44)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with
the accompanying notes
23
Cipherpoint Limited
(Formerly known as Covata Limited)
Consolidated statement of financial position
As at 31 March 2020
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Assets of disposal group classified as held for sale
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Other non-current assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Contract liabilities
Derivative liability
Borrowings
Employee benefits
Liabilities directly associated with assets classified as held for sale
Total current liabilities
Non-current liabilities
Contract liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Consolidated
Note 31 Mar 2020 31 Mar 2019
$
$
9
10
11
12
13
14
15
16
16
17
18
920,935
83,709
41,204
1,045,848
-
1,045,848
1,605,067
739,137
46,119
2,390,323
203,517
2,593,840
24,086
-
88,949
113,035
11,745
1,287,680
95,752
1,395,177
1,158,883
3,989,017
409,051
188,990
-
-
31,136
629,177
-
629,177
1,477,487
163,882
253,433
1,031,466
56,162
2,982,430
341,966
3,324,396
28,532
28,532
18,549
18,549
657,709
3,342,945
501,174
646,072
19
20
93,120,766 93,120,766
8,758,203
(95,930,926) (101,232,897)
3,311,334
501,174
646,072
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
24
Cipherpoint Limited
(Formerly known as Covata Limited)
Consolidated statement of changes in equity
For the year ended 31 March 2020
Consolidated
Share
capital
$
Reserves
$
Accumulated
losses
$
Total equity
$
Balance at 1 July 2018
92,206,341
7,651,195 (94,344,633)
5,512,903
Adjustment for change in accounting policy
-
(377)
1,246,574
1,246,197
Balance at 1 July 2018 - restated
92,206,341
7,650,818 (93,098,059)
6,759,100
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 19)
Share based payments – share options
Share based payments – employee loan shares
Share options lapsed
Employee loan shares lapsed
Warrants issued (note 20)
-
-
-
-
(25,357)
(8,333,570)
-
(8,333,570)
(25,357)
(25,357)
(8,333,570)
(8,358,927)
914,425
-
-
-
-
-
-
259,404
804,051
(151,219)
(47,513)
268,019
-
-
-
151,219
47,513
-
914,425
259,404
804,051
-
-
268,019
Balance at 31 March 2019
93,120,766
8,758,203
(101,232,897)
646,072
Consolidated
Share
capital
$
Reserves
$
Accumulated
losses
$
Total equity
$
Balance at 1 April 2019
93,120,766
8,758,203
(101,232,897)
646,072
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Share based payments – share options
Share based payments – employee loan shares
Share options lapsed
Warrants issued (note 20)
Cancellation of Cisco warrants (note 20)
-
-
-
-
-
-
-
-
-
(173,598)
(673,045)
-
(673,045)
(173,598)
(173,598)
(673,045)
(846,643)
88,865
373,154
(1,367,766)
239,726
(4,607,250)
-
-
1,367,766
-
4,607,250
88,865
373,154
-
239,726
-
Balance at 31 March 2020
93,120,766
3,311,334 (95,930,926)
501,174
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
25
Cipherpoint Limited
(Formerly known as Covata Limited)
Consolidated statement of cash flows
For the year ended 31 March 2020
Cash flows from operating activities
Loss before income tax expense for the year
Adjustments for:
Depreciation and amortisation
Impairment of non-current assets
Net loss on disposal of property, plant and equipment
Share-based payments
Foreign exchange differences
Gain on disposal of business (note 8)
Change in operating assets and liabilities:
Decrease in trade and other receivables
Decrease/(increase) in prepayments
Increase/(decrease) in trade and other payables
Increase/(decrease) in contract liabilities including adjustments for adoption of AASB 15
Increase/(decrease) in employee benefits
Net finance costs
Net cash used in operating activities
Cash flows from investing activities
Refund of investments in term deposits
(Payment)/Refund of deposits
Payment for acquisition of intellectual property
Acquisition of controlled entity (net of cash received)
Payment for acquisition of property, plant and equipment
Proceeds from disposal of business
Net cash from/(used in) investing activities
Cash flows from financing activities
Proceeds from the issue of shares
Payment of share issue costs
Payment of convertible note issue costs
Proceeds from borrowings - convertible notes payable
Net cash from/(used in) financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
Consolidated
Year ended
31 Mar 2020
$
9 months
ended 31
Mar 2019
$
(673,045)
(8,333,570)
361,304
1,012,828
2,698
456,597
(173,598)
(5,240,593)
632,631
1,831,615
-
1,063,455
(25,734)
-
(4,253,809)
(4,831,603)
809,536
19,956
(670,888)
35,091
(55,267)
353,103
(32,860)
173,970
(15,277)
(23,381)
(4,115,381)
411,635
(4,376,048)
6,029
(3,703,746)
(4,370,019)
102,293
(24,960)
(485,010)
(6,032)
(32,005)
3,024,200
-
64,700
(553,875)
-
-
-
2,578,486
(489,175)
-
-
(71,446)
500,000
618,460
(22,500)
-
1,400,000
428,554
1,995,960
(696,706)
1,605,067
12,574
(2,863,234)
4,471,616
(3,315)
920,935
1,605,067
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
26
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 1. General information
The financial statements cover Cipherpoint Limited (the 'Company' or 'parent entity') as a consolidated entity consisting
of Cipherpoint Limited and the entities it controlled ('the Group') at the end of, or during, the year. The financial statements
are presented in Australian dollars, which is Cipherpoint Limited's functional and presentation currency.
The Group changed its financial year from 30 June to 31 March. The financial statements have been prepared for the 12
months ended 31 March 2020. The comparative accounting period is for the 9 months ended 31 March 2019; therefore,
the results are not directly comparable.
Cipherpoint Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business is:
Suite 4, Level 8, 171 Clarence Street
Sydney, NSW 2000
A description of the nature of the Group's operations and its principal activities are included in the directors' report, which
is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 18 May 2020.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The following Accounting Standards and Interpretations are most relevant to the Group:
AASB 16 Leases
The Group has adopted AASB 16 from 1 April 2019. The standard replaces AASB 117 'Leases' and for lessees eliminates
the classifications of operating leases and finance leases. Except for short-term leases and leases of low-value assets,
right-of-use assets and corresponding lease liabilities are recognised in the statement of financial position. Straight-line
operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included in
operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). In the earlier
periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease
expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results
improve as the operating expense is now replaced by interest expense and depreciation in profit or loss. For classification
within the statement of cash flows, the interest portion is disclosed in operating activities and the principal portion of the
lease payments are separately disclosed in financing activities. For lessor accounting, the standard does not substantially
change how a lessor accounts for leases.
27
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 2. Significant accounting policies (continued)
Impact of adoption
AASB 16 was adopted using the modified retrospective approach and as such the comparatives have not been restated.
The impact of adoption on opening accumulated losses as at 1 April 2019 was nil as follows:
Operating lease commitments as at 1 April 2019 (AASB 117)
Short term leases not recognised as a right-of-use asset
Operating lease extinguished through divestment
Reduction on opening accumulated losses as at 1 April 2019
1 April
2019
$'000
202,881
(82,851)
(120,030)
-
In October 2019, the Group committed to another short-term lease of one year, that will continue to be accounted for as
an expense as incurred and not capitalised as a right-of use asset and corresponding lease liability.
Practical expedients applied
In adopting AASB 16, the Group has used the following practical expedients permitted by the standard:
●
●
●
●
applied a single discount rate to a portfolio of leases with reasonably similar characteristics;
accounted for operating leases with a remaining lease term of less than 12 months as at 1 April 2019 as short-term
leases;
excluded initial direct costs for the measurement of the right-of-use asset at the date of initial application; and
used hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
Interpretation 23 Uncertainty over Income Tax
The Group has adopted Interpretation 23 from 1 April 2019. The interpretation clarifies how to apply the recognition and
measurement requirements of AASB 112 ‘Income Taxes’ in circumstances where uncertain tax treatments exists. The
interpretation requires: the Group to determine whether each uncertain tax treatment should be treated separately or
together, based on which approach better predicts the resolution of the uncertainty; the Group to consider whether it is
probable that a taxation authority will accept an uncertain tax treatment; and if the Group concludes that it is not probable
that the taxation authority will accept an uncertain tax treatment, it shall reflect the effect of uncertainty in determining the
related taxable profit (tax loss), tax bases, unused tax losses, unused tax credits or tax rates, measuring the tax
uncertainty based on either the most likely amount or the expected value. In making the assessment it is assumed that a
taxation authority will examine amounts it has a right to examine and have full knowledge of all related information when
making those examinations. Interpretation 23 was adopted using the modified retrospective approach and as such
comparatives have not been restated. There was no impact of adoption on opening retained profits as at 1 April 2019.
Going concern
The financial statements of the Group have been prepared on a going concern basis, which contemplates the continuation
of normal business operations and the realisation of assets and settlement of liabilities in the normal course of business.
The Group is in the commercialisation stage of its data security technology. During the year ended 31 March 2020, the
Group incurred a loss after tax of $673,045 (2019: $8,333,570), current assets exceeded current liabilities by $416,671
and incurred net cash outflows from operating activities of $3,703,746 (2019: $4,370,019). At 31 March 2020, the Group
had cash and cash equivalents of $920,935 (2019: $1,605,067). The Group has prepared cashflow forecasts as at 31
March 2020 to determine the appropriateness of the going concern assumption.
The key assumptions underlying these forecasts are as follows:
●
Completion of a capital raising in the amount of $500,000 from existing shareholders by June 2020 and additional
capital raising when and as required;
The Company securing on-going renewals and licence fees from existing and new customers; and
Management continuing to maintain costs in line with available resources.
●
●
28
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 2. Significant accounting policies (continued)
The inability to complete the above key assumptions would have a material impact on the anticipated trading results and
cash flows, which gives rise to a material uncertainty that may cast significant doubt upon the Group’s ability to continue
as a going concern. In this event the Group may not be able to realise its assets and settle its liabilities in the normal
course of operation and at the amounts stated in the financial statements. The Directors are confident of realising these
objectives and accordingly they believe the going concern assumption is appropriate to the Group.
However, forecast events may not occur as expected as many external and internal factors impact on future events. In
the event that these objectives are not realised, directors have in place a strategy to restructure commitments and
expenditure in order to manage the Group’s cash flows so that it is able to continue as a going concern.
Basis of preparation
These general-purpose financial statements have been prepared in accordance with Australian Accounting Standards
and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as
appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention. Historical cost is generally based on
the fair values of the consideration given in exchange for goods and services.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements, are disclosed in note 3.
Change of financial year end
In 2019, the Group changed its financial year from 30 June to 31 March. The financial statements have been prepared
for the year ended 31 March 2020, while the comparative accounting period is for the 9 months ended 31 March 2019,
therefore the results are not directly comparable.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in note 28.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Cipherpoint Limited as at
31 March 2020 and the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted
by the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in
equity attributable to the parent.
29
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 2. Significant accounting policies (continued)
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-
controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group
recognises the fair value of the consideration received and the fair value of any investment retained together with any
gain or loss in profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same
basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for
the allocation of resources to operating segments and assessing their performance.
Foreign currency translation
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of
the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the
reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average
exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange
differences are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Revenue recognition
The Group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in
exchange for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the
contract with a customer; identifies the performance obligations in the contract; determines the transaction price which
takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the
separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to
be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the
transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as
discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events.
Such estimates are determined using either the 'expected value' or 'most likely amount' method. The measurement of
variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it
is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The
measurement constraint continues until the uncertainty associated with the variable consideration is subsequently
resolved. Amounts received that are subject to the constraining principle are initially recognised as deferred revenue in
the form of a separate refund liability.
Rendering of services
Revenue from a contract to provide services is recognised over time as the services are rendered based on either a fixed
price or an hourly rate.
30
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 2. Significant accounting policies (continued)
Technology related products and services are comprised of the following services:
(a) Software licence
For a sale of a software licence that the Group is not subject to significant integration services or continued maintenance
and support, control transfers at the point in time the customer takes undisputed delivery of the goods. When such items
are either customised or sold together with significant integration services, the goods and services represent a single
combined performance obligation over which control is considered to transfer over time. This is because the combined
product is unique to each customer (has no alternative use) and the Group has an enforceable right to payment for the
work completed to date. Revenue for these performance obligations is recognised over time as the Group continues to
support the license.
(b) Maintenance and support
The Group enters into maintenance and support contracts with its customers generally between one and three years in
length, which includes customer support, updates and upgrades. Customers generally pay in advance for each 12-month
service period and the relevant payment due dates are specified in each contract. Revenue is recognised over the life of
the contract.
Research and development tax concession
Research and development tax incentives are recognised in the profit or loss when there is reasonable assurance that
the Group will comply with the conditions attached to them.
Interest calculated using the effective interest method
Interest is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised
cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which
is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net
carrying amount of the financial asset.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable
to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when
the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted,
except for:
●
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in
a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting
nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and
the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the
foreseeable future.
●
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred
tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for
the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is
probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable
authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
31
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 2. Significant accounting policies (continued)
Cipherpoint Limited (the 'head entity') and its wholly owned Australian subsidiaries have formed an income tax
consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated group
continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate
taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of the tax
consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or
assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary
in the tax consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the
intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither
a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.
Discontinued operations
A discontinued operation is a component of the Group that has been disposed of or is classified as held for sale and that
represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to
dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The
results of discontinued operations are presented separately on the face of the statement of profit or loss and other
comprehensive income.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months
after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle
a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within
30 days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss
allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on
whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
32
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 2. Significant accounting policies (continued)
Derivatives are classified as current or non-current depending on the expected period of realisation.
Non-current assets or disposal groups classified as held for sale
Non-current assets and assets of disposal groups are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continued use. They are measured at the lower of their carrying
amount and fair value less costs of disposal. For non-current assets or assets of disposal groups to be classified as held
for sale, they must be available for immediate sale in their present condition and their sale must be highly probable.
An impairment loss is recognised for any initial or subsequent write down of the non-current assets and assets of disposal
groups to fair value less costs of disposal. A gain is recognised for any subsequent increases in fair value less costs of
disposal of non-current assets and assets of disposal groups, but not in excess of any cumulative impairment loss
previously recognised.
Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses
attributable to the liabilities of assets held for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of disposal groups classified as held for sale are presented
separately on the face of the statement of financial position, in current assets. The liabilities of disposal groups classified
as held for sale are presented separately on the face of the statement of financial position, in current liabilities.
Property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment
over their expected useful lives as follows:
Leasehold improvement
Plant and equipment
Over the lease term
1.5 - 5 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting
date.
Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the assets,
whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to
the Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Leases
The company has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with
terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or
loss as incurred.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value
at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss
arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and
the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed
annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the
amortisation method or period.
Intellectual property
Significant costs associated with intellectual property are deferred and amortised on a straight-line basis over the period
of their expected benefit, being their life of 4-5 years.
33
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 2. Significant accounting policies (continued)
Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together
to form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and
which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within 30 days of recognition.
Contract liabilities
Contract liabilities represent the Group's obligation to transfer goods or services to a customer and are recognised when
a customer pays consideration, or when the Group recognises a receivable to reflect its unconditional right to
consideration (whichever is earlier) before the Group has transferred the goods or services to the customer.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method.
Convertible notes
The convertible notes are classified as a liability in the statement of financial position, net of transaction costs due to the
conversion features within the notes being the obligation to deliver a variable number of shares on settlement.
On the issue of the convertible notes the fair value of the liability is recognised as cash received net of transaction costs
and this amount is carried as a non-current liability on the amortised cost basis until extinguished on conversion, maturity
or redemption. The interest on convertible notes is expensed to profit or loss using the effective interest method.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed
in the period in which they are incurred.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be
settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities
are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
measured at the present value of expected future payments to be made in respect of services provided by employees up
to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields at the reporting date on
high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future
cash outflows.
Share-based payments
Equity-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for
the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount
of cash is determined by reference to the share price.
34
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 2. Significant accounting policies (continued)
Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market
conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other
conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made.
An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair
value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as
a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting
period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is
forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and
new award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the
fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the
principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and
transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair
value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either
not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge
and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an
analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison,
where applicable, with external sources of data.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Cipherpoint Limited, excluding
any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part
of the expense.
35
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 2. Significant accounting policies (continued)
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of
GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the
statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the Group for the annual reporting period ended 31 March 2020. The Group's
assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the
Group, are set out below.
New Conceptual Framework for Financial Reporting
A revised Conceptual Framework for Financial Reporting has been issued by the AASB and is applicable for annual
reporting periods beginning on or after 1 January 2020. This release impacts for-profit private sector entities that have
public accountability that are required by legislation to comply with Australian Accounting Standards and other for-profit
entities that voluntarily elect to apply the Conceptual Framework. Phase 2 of the framework is yet to be released which
will impact for-profit private sector entities. The application of new definition and recognition criteria as well as new
guidance on measurement will result in amendments to several accounting standards. The issue of AASB 2019-1
Amendments to Australian Accounting Standards – References to the Conceptual Framework, also applicable from 1
January 2020, includes such amendments. Where the Group has relied on the conceptual framework in determining its
accounting policies for transactions, events or conditions that are not otherwise dealt with under Australian Accounting
Standards, the Group may need to revisit such policies. The Group will apply the revised conceptual framework from 1
April 2020 and is yet to assess its impact.
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates
in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates
and assumptions on historical experience and on other various factors, including expectations of future events,
management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates
will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the
next financial year are discussed below.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using either the Black-Scholes model
taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and
assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets
and liabilities within the next annual reporting period but may impact profit or loss and equity.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the
lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected
credit loss rate for each group. These assumptions include recent sales experience and historical collection rates.
36
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 3. Critical accounting judgements, estimates and assumptions (continued)
Goodwill
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill
has suffered any impairment, in accordance with the accounting policy stated in note 2. The recoverable amounts of cash-
generating units have been determined based on value-in-use calculations. These calculations require the use of
assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated
future cash flows.
Impairment of non-financial assets
The Group assesses impairment of non-financial assets at each reporting date by evaluating conditions specific to the
Group and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of
the asset is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a
number of key estimates and assumptions.
Income tax
The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in
determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary
course of business for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated
tax audit issues based on the Group's current understanding of the tax law. Where the final tax outcome of these matters
is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period
in which such determination is made.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
Note 4. Operating segments
Identification of reportable operating segments
The Group operates in one segment, based on the internal reports that are reviewed and used by the Board of Directors
(who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the
allocation of resources.
As a result, the operating segment information is as disclosed in the statements and notes to the financial statements
throughout the report.
No seasonality in the business segment has been identified that would have a significant impact on the results of the
Group.
Note 5. Revenue
Revenue from contracts with customers:
Revenue - technology related products and services
Consolidated
Year ended
31 Mar 2020
$
9 months
ended 31
Mar 2019
$
673,478
217,040
37
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 5. Revenue (continued)
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Major product lines
License
Maintenance and Support
Services
Geographical regions
Australasia
United States of America
United Kingdom
Germany
Singapore
Timing of revenue recognition
Goods transferred at a point in time
Services transferred over time
Consolidated
Year ended
31 Mar 2020
$
9 months
ended 31
Mar 2019
$
328,468
66,034
278,976
28,558
167,392
21,090
673,478
217,040
48,408
239,596
10,820
351,772
22,882
10,442
164,687
6,557
25,479
9,875
673,478
217,040
394,502
278,976
49,648
167,392
673,478
217,040
38
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 6. Expenses
Loss before income tax from continuing operations includes the following specific
expenses:
Depreciation
Plant and equipment
Amortisation
Intellectual property
Total depreciation and amortisation
Impairment of assets
Goodwill
Intellectual property
Total impairment of assets
Employee benefit expense
Wages and salaries
Non-executive director fees
Recruitment and sourcing
Other employee related expenses
Payroll taxes
Defined contribution superannuation expense
Bonus - cash component
Equity settled share-based payments
Commissions
Total employee benefits
Finance costs
Interest and finance charges paid/payable on borrowings
Interest charges payable in relation to Convertible notes
Finance costs expensed
Consolidated
Year ended
31 Mar 2020
$
9 months
ended 31
Mar 2019
$
16,452
2,588
344,852
606,617
361,304
609,205
-
1,012,828
894,713
932,854
1,012,828
1,827,567
1,512,693
74,166
31,536
118,998
77,777
113,324
(85,384)
291,973
75,453
1,044,475
139,167
-
33,428
57,945
64,915
226,858
1,057,430
18,220
2,210,535
2,642,438
4,270
-
3,175
152,918
4,270
156,093
39
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 7. Income tax
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense from continuing operations
Profit/(loss) before income tax expense from discontinued operations
Tax at the statutory tax rate of 27.5%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Permanent differences
Effect of tax losses and temporary differences not taken to account
Current year losses not recognised
Income tax expense
Deferred tax assets not recognised
Deferred tax assets not recognised comprises temporary differences attributable to:
Temporary differences
Tax losses
Total deferred tax assets not recognised
Consolidated
Year ended
31 Mar 2020
$
9 months
ended 31
Mar 2019
$
(4,850,659)
4,177,614
(6,400,376)
(1,933,194)
(673,045)
(8,333,570)
(185,087)
(2,291,732)
528,751
(42,078)
(301,586)
1,108,955
(161,023)
1,343,800
-
-
Consolidated
31 Mar 2020 31 Mar 2019
$
$
471,610
780,094
8,051,316 10,161,659
8,522,926 10,941,753
Deferred tax assets have not been recognised in respect of tax losses and temporary differences. Deferred tax assets
will be recognised when it becomes probable that future taxable profits will be earned by the Group against which the
Group can utilise the benefits therefrom.
Note 8. Discontinued operations
Divestment of SafeShare
The Company completed the disposal of the SafeShare business in July 2019 for $5,000,000 in respect of the Cocoon
sale which was discharged as follows:
●
●
●
$2,000,000 through the extinguishment of the Company’s obligations under convertible notes;
$2,000,000 in cash at completion of the Cocoon sale; and
$1,000,000 in the form of a vendor terms loan from Cipherpoint (on terms which would be customary for unsecured
loans obtained from any major Australian bank, such as a business overdraft account, or such other terms as agreed
between Cybr5 and Cipherpoint).
The sale is subject to a global, perpetual, royalty-free licence of the IP and platforms developed by Cocoon and Covata
Australia Pty Limited (‘CVA’) back to Cipherpoint for use in its ongoing businesses, other than to be used for a
development of a product not connected to the Company’s core product range. Cipherpoint and Cybr5 have also entered
into a mutual collaboration and reselling relationship.
Excluded from the sale are all assets in and shares of CipherPoint Software, Inc. and all customers of its Eclipse
(cp.Protect) product, the rights to the dataglobal GmbH classification IP, all IP to Cipherpoint’s data security console, and
all other IP and/or associated technical support and architecture materials which are held outside of Cocoon or CVA.
40
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 8. Discontinued operations (continued)
The sale has freed up resources to allow management to focus on the Eclipse (cp.Protect) and cp.Discover products
along with the continued partnership with dataglobal.
Financial performance information
Revenue - technology related products and services
Research and development tax concession
Total revenue
Employee benefit expense
Consultancy fees expense
Depreciation and amortisation expense
Impairment of receivables
Legal and professional fees expense
Marketing and promotion expense
Travel and accommodation expense
Office and administration expense
Other expenses
Finance costs
Total expenses
Loss before income tax expense
Gain on disposal before income tax expense
Income tax expense
Consolidated
Year ended
31 Mar 2020
$
9 months
ended 31
Mar 2019
$
316,718
104,788
421,506
663,856
709,295
1,373,151
(648,617)
(151,451)
-
(16,934)
(51,653)
(14,371)
(10,488)
(97,447)
(38,697)
(454,827)
(1,484,485)
(2,236,483)
(104,797)
(23,426)
(4,386)
(39,393)
(57,887)
(86,785)
(373,366)
(379,822)
-
(3,306,345)
(1,062,979)
5,240,593
-
(1,933,194)
-
-
Profit/(loss) after income tax expense from discontinued operations
4,177,614
(1,933,194)
Cash flow information
Net cash used in operating activities
Net cash from investing activities
Net cash used in financing activities
Consolidated
Year ended
31 Mar 2020
$
9 months
ended 31
Mar 2019
$
(1,062,979)
3,024,200
-
(2,646,872)
-
-
Net increase in cash and cash equivalents from discontinued operations
1,961,221
(2,646,872)
Cash flows from investing activities relate solely to the proceeds from the disposal of the SafeShare business.
41
Consolidated
Year ended
31 Mar 2020
$
9 months
ended 31
Mar 2019
$
4,147
19,460
28,237
51,844
-
303,017
-
-
69,420
372,437
152,552
15,041
35,924
203,517
87,459
111,717
102,196
40,594
-
341,966
(320,593)
(138,449)
Consolidated
Year ended
31 Mar 2020
$
320,593
2,000,000
2,000,000
1,000,000
(150,000)
5,170,593
70,000
5,240,593
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 8. Discontinued operations (continued)
Carrying amounts of assets and liabilities disposed
Trade and other receivables
Prepayments
Property, plant and equipment
Total assets
Trade and other payables
Contract liabilities - current
Employee benefits
Contract liabilities - non-current
Provisions
Total liabilities
Net liabilities
Details of the disposal
Carrying amount of net liabilities disposed
Cash
Assumption of convertible notes including interest
Vendor terms loan
Less working capital adjustment
Sub-total
Intangible license received ($7,000 per license for up to 10 users)
Gain on disposal before income tax
42
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 9. Current assets - trade and other receivables
Trade receivables
Less: Allowance for expected credit losses
Research and development tax concession receivable
GST/ VAT receivables
Consolidated
31 Mar 2020 31 Mar 2019
$
$
57,702
(2,509)
55,193
40,476
(6,162)
34,314
-
704,823
28,516
-
83,709
739,137
Allowance for expected credit losses
The Group has recognised a net gain of $3,653 (2019: loss of $6,162) in profit or loss in respect of the expected credit
losses for the year ended 31 March 2020.
The method used to calculate the expected credit loss rate was based on revenue type and categorisation for each
customer based on their life cycle. The following rates were applied:
●
●
●
3% for continuing SaaS customers
5% for new customers on a term license
15% for maintenance and support renewals
Movements in the allowance for expected credit losses are as follows:
Opening balance
Additional provisions recognised
Unused amounts reversed
Closing balance
Note 10. Current assets - assets of disposal group classified as held for sale
Refer for further details in Note 8 - Discontinued operations.
Trade receivables
GST / VAT receivables
Prepayments
Property, plant and equipment
Consolidated
31 Mar 2020 31 Mar 2019
$
$
6,162
4,386
(8,039)
-
6,162
-
2,509
6,162
Consolidated
31 Mar 2020 31 Mar 2019
$
$
-
-
-
-
-
129,625
22,927
15,042
35,923
203,517
43
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 11. Non-current assets - property, plant and equipment
Plant and equipment - at cost
Less: Accumulated depreciation
Consolidated
31 Mar 2020 31 Mar 2019
$
$
47,578
(23,492)
42,651
(30,906)
24,086
11,745
The lease held by the Group at Level 4, 81 York Street, Sydney was transferred to Cybr5 Pty Ltd upon the completion of
the divestment of SafeShare.
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2018
Additions
Classified as held for sale
Depreciation expense
Balance at 31 March 2019
Additions
Disposals
Depreciation expense
Balance at 31 March 2020
Note 12. Non-current assets - intangibles
Intellectual property - at cost
Less: Accumulated amortisation
Less: Impairment
Leasehold Plant and
improvement equipment
$
$
Total
$
40,099
-
(25,663)
(14,436)
-
-
-
-
-
33,293
290
(10,260)
(11,578)
11,745
32,005
(3,212)
(16,452)
73,392
290
(35,923)
(26,014)
11,745
32,005
(3,212)
(16,452)
24,086
24,086
Consolidated
31 Mar 2020 31 Mar 2019
$
$
3,300,713
(1,581,000)
(1,719,713)
3,230,713
(1,010,179)
(932,854)
-
1,287,680
44
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 12. Non-current assets - intangibles (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2018
Effects of movements in exchange rate
Impairment of assets
Amortisation expense
Balance at 31 March 2019
Additions
Impairment of assets
Amortisation expense
Balance at 31 March 2020
Goodwill
$
Intellectual
property
$
Total
$
886,434
8,279
(894,713)
-
2,820,224
6,927
(932,854)
(606,617)
3,706,658
15,206
(1,827,567)
(606,617)
-
-
-
-
-
1,287,680
70,000
(1,012,828)
(344,852)
1,287,680
70,000
(1,012,828)
(344,852)
-
-
Goodwill was recognised upon the acquisition of CipherPoint Software, Inc (CipherPoint) in connection with the acquired
IP, technology, staff, customers and processes of the business. During the period ended 31 March 2019, the Company
announced a major transformational acquisition and further capital raising. As a consequence of these changes and
uncertainty around the availability of resources to further utilise the existing CipherPoint business, management
determined that it was prudent to recognise an impairment of the acquired goodwill of $894,713.
For the period ended 31 March 2019, the Group also assessed internal impairment indicators in relation to the intellectual
property of Eclipse and the carrying amount was greater than the value in use therefore an impairment loss of $932,854
was recognised in profit or loss at 31 March 2019.
For the year ended 31 March 2020, the Group has assessed internal and external impairment indicators in relation to the
intellectual property of the acquired dataglobal IP. However, the value in use calculations were speculative as the Group
has one year’s history of sales and cannot accurately predict future growth. Consequently, an impairment loss of
$959,385 (2019: $0) was recognised in profit or loss at 31 March 2020.
The divestment of SafeShare included a global, perpetual, royalty-free licence of the IP and platforms developed by
Cocoon and Covata Australia Pty Limited (‘CVA’) back to Cipherpoint for use in its ongoing businesses, other than to be
used for a development of a product not connected to the Group’s core product range. The Group recognised a fair value
of $70,000 at 16 July 2019 and fully impaired the written down value of $53,443 during the year ended 31 March 2020.
Note 13. Non-current assets - other non-current assets
Consolidated
31 Mar 2020 31 Mar 2019
$
$
-
73,740
15,209
36,009
44,534
15,209
88,949
95,752
Rental bonds
Security deposits
Domain names
45
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 14. Current liabilities - trade and other payables
Trade payables
Other payables and accrued expenses
Refer to note 22 for further information on financial instruments.
Note 15. Current liabilities - contract liabilities
Contract liabilities
Reconciliation
Reconciliation of the written down values at the beginning and end of the current and
previous financial period are set out below:
Opening balance
Payments received in advance
Transfer on transition to AASB 15 on 1 July 2018
Contract liabilities held for sale
Contract liabilities disposed
Transfer to revenue - performance obligations satisfied
Closing balance
Consolidated
31 Mar 2020 31 Mar 2019
$
$
108,117
300,934
37,384
1,440,103
409,051
1,477,487
Consolidated
31 Mar 2020 31 Mar 2019
$
$
188,990
163,882
163,882
571,025
-
-
(178,176)
(367,741)
559,003
197,910
(204,748)
(111,717)
(276,566)
188,990
163,882
Unsatisfied performance obligations (current and non-current)
The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied at the end of
the reporting period was $217,522 as at 31 March 2020 ($182,431 as at 31 March 2019) and is expected to be recognised
as revenue in future periods as follows:
Within 6 months
6 to 12 months
12 to 18 months
18 to 24 months
More than 24 months
The unsatisfied performance obligations include the non-current balance.
Consolidated
31 Mar 2020 31 Mar 2019
$
$
124,112
60,198
10,445
8,696
14,071
93,051
70,888
18,492
-
-
217,522
182,431
46
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 16. Current liabilities - borrowings
Derivative liability
Convertible notes payable
Refer to note 22 for further information on financial instruments.
Consolidated
31 Mar 2020 31 Mar 2019
$
$
-
253,433
Consolidated
31 Mar 2020 31 Mar 2019
$
$
-
1,031,466
The Company issued 77,777,781 convertible notes at a price of $0.018 per note with 58,620,689 attaching warrants
exercisable at $0.028 and with a term of 18 months from 22 February 2019.
The total face value of the convertible note was $1,400,000. This liability comprised of three components, being the host
debt liability ($878,548), the embedded derivative liability ($253,433) for the conversion feature and the cost of the warrant
issue ($268,019). The interest expense on the host liability component up to 31 March 2019 amounted to $152,918.
There was no movement in the fair value of the derivative liability at 31 March 2019. Due to the 6 month expiry of the
convertible notes, the derivative liability was classified as current.
The cost of the warrants is disclosed in note 20.
The Company’s obligations under the convertible notes was extinguished when the Cocoon sale was settled. Refer to
note 8 for further information.
Note 17. Current liabilities - employee benefits
Annual leave
Long service leave
Consolidated
31 Mar 2020 31 Mar 2019
$
$
31,136
-
45,977
10,185
31,136
56,162
Note 18. Current liabilities - liabilities directly associated with assets classified as held for sale
Refer to note 8 for further details on discontinued operations.
Trade and other payables
Contract liabilities
Employee benefits
47
Consolidated
31 Mar 2020 31 Mar 2019
$
$
-
-
-
-
87,460
152,310
102,196
341,966
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 19. Equity - issued capital
Consolidated
31 Mar 2020 31 Mar 2019 31 Mar 2020 31 Mar 2019
Shares
Shares
$
$
Ordinary shares - fully paid
34,244,326 34,244,326 93,120,766 93,120,766
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
Balance
Issue of rights (a)
CipherPoint Milestone Two shares (b)
Share purchase plan (c)
Less: share issue costs (d)
1 July 2018
12 July 2018
20 July 2018
18 February 2019
646,717,745
16,513,792
12,977,400
8,666,647
-
$0.0280
$0.0245
$0.0180
$0.0000
92,206,341
462,387
318,465
156,073
(22,500)
Balance
Share consolidation at 20:1 (e)
31 March 2019
15 August 2019
684,875,584
(650,631,258)
$0.0000
93,120,766
-
Balance
31 March 2020
34,244,326
93,120,766
During the period ended 31 March 2019, the Group completed the following transactions in respect of the issue of ordinary
shares:
(a) The Group issued 16,513,792 ordinary shares in the Company totalling $462,387 as part of the rights issue.
(b) The Group issued 12,977,400 ordinary shares in the Company totalling $318,465 as part of the acquisition of
CipherPoint – representing Milestone Two payment.
(c) The Group issued 8,666,647 ordinary shares in the Company totalling $156,073 as part of the share purchase plan.
(d) The Group paid $22,500 in brokerage fees relating to (c).
(e) The Group consolidated its shareholding by 20 shares to 1 share.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and
the Company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Share consolidation
On 7 August 2019, the shareholders at the annual general meeting approved the 20:1 share consolidation. The
consolidation occurred on 15 August 2019.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can
provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to
reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated
as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
48
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 19. Equity - issued capital (continued)
The Group would look to raise capital when an opportunity to invest in a business or company was seen as value adding
relative to the current Company's share price at the time of the investment. The Group is actively pursuing additional
investments in the short term.
The capital risk management policy remains unchanged from the 31 March 2019 Annual Report.
Note 20. Equity - reserves
Foreign currency reserve
Share-based payments reserve
Warrants reserve
Consolidated
31 Mar 2020 31 Mar 2019
$
$
(456,753)
3,260,342
507,745
(283,155)
4,166,089
4,875,269
3,311,334
8,758,203
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars.
Share-based payments reserve and warrants reserve
These reserves are used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2018
Foreign currency translation
Share-based payments - share options
Share-based payments - employee loan shares
Share options lapsed
Employee loan shares lapsed
Warrants issued
Balance at 31 March 2019
Foreign currency translation
Share-based payments - share options
Share-based payments - employee loan shares
Share options lapsed
Warrants issued
Cancellation of Cisco warrants *
Foreign
currency
$
Share-based
payments
Warrants
$
$
Total
$
(257,421)
(25,734)
-
-
-
-
-
(283,155)
(173,598)
-
-
-
-
-
3,301,366
-
259,404
804,051
(151,219)
(47,513)
-
4,607,250
-
-
-
-
-
268,019
7,651,195
(25,734)
259,404
804,051
(151,219)
(47,513)
268,019
4,166,089
-
88,865
373,154
(1,367,766)
-
-
4,875,269
-
-
-
-
239,726
(4,607,250)
8,758,203
(173,598)
88,865
373,154
(1,367,766)
239,726
(4,607,250)
Balance at 31 March 2020
(456,753)
3,260,342
507,745
3,311,334
*
During the year, the Company cancelled the Cisco warrants following the termination of a Software License
Agreement effective 16 March 2015.
49
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 21. Equity - dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 22. Financial instruments
Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and
interest rate risk), credit risk and liquidity risk. The Group's overall risk management program seeks to minimise potential
adverse effects on the financial performance of the Group.
The Group's policy is not to trade in or use financial instruments to hedge its risks.
Risk management is carried out by the Board of Directors ('the Board'). The Board uses different methods to measure
different types of risks to which the Group is exposed. These methods include ageing analysis for credit risk and sensitivity
analysis in the case of interest rate risk.
Market risk
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk
through foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities
denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and
cash flow forecasting.
The Group is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales,
purchases and borrowings are denominated and the respective functional currencies of Group companies. The currencies
in which transactions are denominated are primarily US dollars (USD), Australian dollars (AUD), British pounds (GBP)
and Euros (EUR), whilst cash and cash equivalents and term deposits are predominantly denominated in Australian
dollars.
The carrying amount of the Group's foreign currency denominated financial assets and financial liabilities at the reporting
date were as follows:
Consolidated
USD
EUR
GBP
Assets
Liabilities
31 Mar 2020 31 Mar 2019 31 Mar 2020 31 Mar 2019
$
$
$
$
84,454
177,027
18,267
184,287
36,687
47,874
(207,925)
(49,739)
-
(67,621)
(473,190)
(5,740)
279,748
268,848
(257,664)
(546,551)
A strengthening/(weakening) of the AUD against the GBP, USD or EUR by 10 percent at the reporting date would have
decreased/(increased) equity and profit/(loss) for the year by the amounts shown. This analysis assumes that all other
variables, in particular interest rates, remain constant.
50
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 22. Financial instruments (continued)
Consolidated - 31 Mar 2020
% change
Effect on
profit before
tax
Effect on
equity
% change
AUD strengthened
AUD weakened
Effect on
profit before
tax
Effect on
equity
USD
EUR
GBP
10%
10%
10%
12,347
12,729
1,827
12,347
12,729
1,827
10%
10%
10%
(12,347)
(12,729)
(1,827)
(12,347)
(12,729)
(1,827)
26,903
26,903
(26,903)
(26,903)
Consolidated - 31 Mar 2019
% change
Effect on
profit before
tax
Effect on
equity
% change
AUD strengthened
AUD weakened
Effect on
profit before
tax
Effect on
equity
USD
EUR
GBP
10%
10%
10%
11,667
43,650
4,213
11,667
43,650
4,213
10%
10%
10%
(11,667)
(43,650)
(4,213)
(11,667)
(43,650)
(4,213)
59,530
59,530
(59,530)
(59,530)
Price risk
The Group is not exposed to any significant price risk.
Interest rate risk
At the reporting date, the Group had no variable rate borrowings. Cash at bank earns interest at floating rates based on
daily bank deposit rates.
As at the reporting date, the Group had the following exposure to interest rate risk:
Consolidated
Cash and cash equivalents
Term deposits and rental bonds
Convertible notes payable
Net exposure to cash flow interest rate risk
31 Mar 2020
31 Mar 2019
Weighted
average
interest rate
%
Weighted
average
interest rate
%
$
$
0.004%
0.001%
-
920,935
73,740
-
994,675
0.004%
0.001%
11.000%
1,503,373
44,534
(1,031,466)
516,441
Sensitivity analysis
A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) equity and
profit/(loss) for the period by the amounts shown below. This analysis assumes that all other variables remain constant.
The analysis is performed on the same basis for the comparative period.
Impact on profit/(loss) for the period
51
Consolidated
31 Mar 2020 31 Mar 2019
$
$
9,947
5,164
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 22. Financial instruments (continued)
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group has a strict code of credit, including obtaining agency credit information, confirming references and
setting appropriate credit limits. The Group obtains guarantees where appropriate to mitigate credit risk. The maximum
exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions
for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements.
The Group does not hold any collateral.
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables
through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered
representative across all customers of the Group based on recent sales experience, historical collection rates and forward-
looking information that is available.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include
the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual
payments for a period greater than 1 year.
Liquidity risk
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.
The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by
continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables
have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the
financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining
contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Consolidated - 31 Mar 2020
Weighted
average
interest rate
%
6 months or
less
$
Between 6
months and
1 year
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5
years
$
Remaining
contractual
maturities
$
Non-derivatives
Non-interest bearing
Trade and other payables
Total non-derivatives
-
242,805
242,805
-
-
-
-
-
-
-
-
242,805
242,805
Consolidated - 31 Mar 2019
Weighted
average
interest rate
%
6 months or
less
$
Between 6
months and
1 year
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5
years
$
Remaining
contractual
maturities
$
Non-derivatives
Non-interest bearing
Trade and other payables *
Interest-bearing
Convertible notes payable
Total non-derivatives
-
-
475,754 1,001,732
1,400,000
-
1,875,754 1,001,732
-
-
-
-
-
-
- 1,477,486
- 1,400,000
- 2,877,486
*
The total trade and other payables includes $473,190 (€300,000) payable that may be settled as part of the
dataglobal acquisition.
52
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 22. Financial instruments (continued)
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Note 23. Fair value measurement
Fair value hierarchy
The following tables detail the Group's assets and liabilities, measured or disclosed at fair value, using a three-level
hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly
Level 3: Unobservable inputs for the asset or liability
Consolidated - 31 Mar 2020
There were no assets or liabilities measured at fair value as at 31 March 2020.
Consolidated - 31 Mar 2019
Liabilities
Derivative liability on convertible note
Total liabilities
Level 1
$
Level 2
$
Level 3
$
Total
$
-
-
253,433
253,433
-
-
253,433
253,433
Assets and liabilities held for sale are measured at fair value on a non-recurring basis.
There were no transfers between levels during the financial year.
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair
values due to their short-term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market
interest rate that is available for similar financial liabilities.
Valuation techniques for fair value measurements categorised within level 2 and level 3
Unquoted investments have been valued using a discounted cash flow model.
Derivative financial instruments have been valued using quoted market rates. This valuation technique maximises the
use of observable market data where it is available and relies as little as possible on entity specific estimates.
53
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 24. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Nexia Sydney Audit Pty Ltd, the
auditor of the Company:
Audit services - Nexia Sydney Audit Pty Ltd
Audit or review of the financial statements
Other services - Nexia Sydney Partnership
In relation to other assurance, taxation and due diligence services
Consolidated
Year ended
31 Mar 2020
$
9 months
ended 31
Mar 2019
$
72,032
67,500
130,662
11,140
202,694
78,640
Note 25. Contingent liabilities
The Group had no contingent liabilities as at 31 March 2020 and 31 March 2019.
Note 26. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set
out below:
Consolidated
Year ended
31 Mar 2020
$
9 months
ended 31
Mar 2019
$
833,045
70,939
8,413
-
189,403
1,481,513
51,514
1,220
146,579
409,782
1,101,800
2,090,608
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Share-based payments
Note 27. Related party transactions
Parent entity
Cipherpoint Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 29.
Key management personnel
Disclosures relating to key management personnel are set out in note 26 and the remuneration report included in the
directors' report.
54
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 27. Related party transactions (continued)
Transactions with related parties
There were no transactions with related parties during the current and previous financial year.
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Note 28. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit/(loss) after income tax
Other comprehensive income for the year, net of tax
Total comprehensive income
Statement of financial position
Total current assets
Total non-current assets
Total assets
Total current liabilities
Total non-current liabilities
Total liabilities
Net assets/(liabilities)
Equity
Issued capital
Foreign currency reserve
Share-based payments reserve
Warrants reserve
Accumulated losses
Total equity/(deficiency)
55
Parent
Year ended
31 Mar 2020
$
9 months
ended 31
Mar 2019
$
4,309,686
(2,456,324)
-
-
4,309,686
(2,456,324)
Parent
31 Mar 2020 31 Mar 2019
$
$
734,201
22,598
48,637
1,287,679
782,838
1,310,277
374,344
425,457
25,986
1,031,466
400,330
1,456,923
382,508
(146,646)
93,120,766
(456,753)
3,260,342
507,745
93,120,766
(299,713)
4,182,646
4,875,269
(96,049,592) (102,025,614)
382,508
(146,646)
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 28. Parent entity information (continued)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 31 March 2020 and 31 March 2019.
Contingent liabilities
The parent entity had no contingent liabilities as at 31 March 2020 and 31 March 2019.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 31 March 2020 and 31 March 2019.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the
following:
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Note 29. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 2:
Name
Cocoon Data Holdings Limited *
CipherPoint Software, Inc.
Cocoon Data Pty Limited *
Covata Australia Pty Limited *
Covata USA, Inc. *
Covata UK Limited *
Cipherpoint Australia Pty Limited **
Cipherpoint GmbH ***
divested in July 2019
incorporated in April 2019
*
**
*** shelf company acquired in November 2019
Principal place of business /
Country of incorporation
Ownership interest
31 Mar 2020 31 Mar 2019
%
%
Australia
United States of America
Australia
Australia
United States of America
United Kingdom
Australia
Germany
-
100%
-
-
-
-
100%
100%
100%
100%
100%
100%
100%
100%
-
-
Note 30. Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2018
Net cash from financing activities
Balance at 31 March 2019
Net cash from financing activities
Capitalised interest
Settlement of convertible notes through divestment
Balance at 31 March 2020
56
Borrowings-
convertible
notes
$
-
1,400,000
1,400,000
500,000
100,000
(2,000,000)
-
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 31. Earnings per share
Earnings per share for loss from continuing operations
Loss after income tax attributable to the owners of Cipherpoint Limited
Consolidated
Year ended
31 Mar 2020
$
9 months
ended 31
Mar 2019
$
(4,850,659)
(6,400,376)
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per
share
34,244,326
34,095,272
Weighted average number of ordinary shares used in calculating diluted earnings per
share
34,244,326
34,095,272
Basic earnings per share
Diluted earnings per share
Earnings per share for profit/(loss) from discontinued operations
Profit/(loss) after income tax attributable to the owners of Cipherpoint Limited
Cents
Cents
(14.16)
(14.16)
(18.77)
(18.77)
Consolidated
Year ended
31 Mar 2020
$
9 months
ended 31
Mar 2019
$
4,177,614
(1,933,194)
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per share 34,244,326 34,095,272
Weighted average number of ordinary shares used in calculating diluted earnings per
share
34,244,326
34,095,272
Basic earnings per share
Diluted earnings per share
Earnings per share for loss
Loss after income tax attributable to the owners of Cipherpoint Limited
57
Cents
Cents
12.20
12.20
(5.67)
(5.67)
Consolidated
Year ended
31 Mar 2020
$
9 months
ended 31
Mar 2019
$
(673,045)
(8,333,570)
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 31. Earnings per share (continued)
Weighted average number of ordinary shares used in calculating basic earnings per share 34,244,326 34,095,272
Weighted average number of ordinary shares used in calculating diluted earnings per
share
34,244,326
34,095,272
Number
Number
Basic earnings per share
Diluted earnings per share
Cents
Cents
(1.97)
(1.97)
(24.44)
(24.44)
14,749,844 post-consolidation options, employees loan shares and warrants at 31 March 2020 were excluded from the
weighted average number of ordinary shares used in calculating diluted earnings per share as they were anti-dilutive.
The weighted average number of ordinary shares for 2019 has been restated for the effect of the 20:1 consolidation
completed in August 2019, in accordance with AASB 133 'Earnings per share'.
Number
Weighted average number of ordinary shares used in calculating basic earnings per share (before
restatement)
Adjustment required by AASB 133 'Earnings per share'
681,905,430
(647,810,158)
Weighted average number of ordinary shares used in calculating basic earnings per share (after
restatement)
34,095,272
15,845,018 post-consolidation options, employees loan shares, warrants and convertible notes at 31 March 2019 were
excluded from the weighted average number of ordinary shares used in calculating diluted earnings per share as they
were anti-dilutive.
Note 32. Share-based payments
Share option programme
The Group has a share option programme that entitles non-Australian based directors, employees and contractors to
purchase shares in the Company. In accordance with this programme, holders of vested options are entitled to purchase
share at a price per share as detailed below.
58
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 32. Share-based payments (continued)
Set out below are summaries of options granted under the plan:
Employee Share Option Plan
31 Mar 2020
Pre-consolidation
After share consolidation
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Exercise
price
Balance at
the start of
the year
Granted
Lapsed
Balance at
the end of
the year
31/10/2014 30/10/2019
12/03/2015 11/03/2020
30/10/2015 29/10/2020
17/12/2015 16/12/2020
21/07/2016 20/07/2021
04/05/2017 03/05/2022
22/06/2017 21/06/2022
17/08/2017 16/08/2022
21/08/2017 20/08/2022
24/11/2017 23/11/2022
07/09/2018 06/09/2023
$0.2220 10,384,825
231,400
$0.3300
300,000
$0.2850
490,669
$0.1950
124,715
$0.1950
2,466,670
$0.2000
693,700
$0.0450
4,055,214
$0.0500
633,738
$0.0500
$0.0500
8,878,957
$0.0280 17,375,719
$4.4410
$6.6000
$5.7000
$6.6000
$3.9000
$4.0000
$1.0000
$0.9000
$1.0000
$1.0000
$0.5600
519,242
11,570
15,000
24,535
7,500
123,334
34,685
202,761
31,687
443,948
868,786
-
-
-
-
-
-
-
-
-
-
-
(519,242)
(11,570)
-
-
-
(83,334)
(20,685)
(30,673)
(31,687)
(149,798)
(288,186)
-
-
15,000
24,535
7,500
40,000
14,000
172,088
-
294,150
580,600
45,635,607
2,281,783
- (1,135,175) 1,147,873
Weighted average exercise price
$0.0937
$1.8984
$2.7399
$1.0671
The balance of options at the start of the year has been adjusted based on the share consolidation of 20 shares to 1
share during the year.
31 Mar 2019
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Balance at
the end of
the year
Lapsed
31/10/2014
12/03/2015
30/10/2015
17/12/2015
21/07/2016
08/12/2016
04/05/2017
22/06/2017
17/08/2017
21/08/2017
24/11/2017
07/09/2018
30/10/2019
11/03/2020
29/10/2020
16/12/2020
20/07/2021
07/12/2021
03/05/2022
21/06/2022
16/08/2022
20/08/2022
23/11/2022
06/09/2023
$0.2220 10,384,825
231,400
$0.3300
300,000
$0.2850
490,669
$0.1950
124,715
$0.1950
250,000
$0.2000
3,000,000
$0.0500
693,700
$0.0450
5,569,583
$0.0500
1,000,000
$0.0500
$0.0500
9,971,479
$0.0280
-
-
-
-
-
-
-
-
-
-
-
- 19,523,000
32,016,371 19,523,000
- 10,384,825
231,400
-
300,000
-
490,669
-
124,715
-
-
(250,000)
2,466,670
(533,330)
693,700
-
4,055,214
(1,514,369)
633,738
(366,262)
(1,092,522)
8,878,957
(2,147,281) 17,375,719
(5,903,764) 45,635,607
Weighted average exercise price
$0.1279
$0.0280
$0.0619
$0.0937
The weighted average remaining contractual life of options outstanding at the end of the financial period was 5 years
(2019: 5 years).
59
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 32. Share-based payments (continued)
Employee Loan Share Plan
31 Mar 2020
Pre-consolidation
After share consolidation
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Exercise
price
Balance at
the start of the
year
Granted
Lapsed
Balance at
the end of the
year
02/12/2013 01/12/2023 $0.1470 7,526,900
443,848
20/08/2014 19/08/2024 $0.2000
933,333
11/03/2015 10/03/2025 $0.2850
136,925
12/03/2015 11/03/2025 $0.2850
132,167
08/12/2015 07/12/2025 $0.3300
27/01/2017 26/01/2027 $0.1200
175,000
04/05/2017 03/05/2027 $0.0290 4,000,000
04/05/2017 03/05/2027 $0.0270 6,000,000
23/06/2017 22/06/2027 $0.2000 5,762,694
24/11/2017 23/11/2027 $0.0550 28,934,367
06/03/2017 05/03/2027 $0.0500 3,941,141
07/09/2018 06/09/2028 $0.0280 30,581,674
19/10/2018 18/10/2028 $0.0280 7,678,500
-
01/11/2019 31/10/2029 $0.0000
$2.9400
$4.0000
$5.7000
$5.7000
$6.6000
$2.4000
$0.5800
$0.5400
$4.0000
$1.1000
$1.0000
$0.5600
$0.5600
$0.3000
376,345
22,193
46,667
6,847
6,609
8,750
200,000
300,000
288,135
1,446,719
197,058
1,529,084
383,925
-
-
-
-
-
-
-
-
-
-
-
-
-
-
133,300
-
-
-
-
-
-
-
-
(62,194)
(61,814)
(85,105)
(125,907)
-
-
376,345
22,193
46,667
6,847
6,609
8,750
200,000
300,000
225,941
1,384,905
111,953
1,403,177
383,925
133,300
96,246,549
4,812,332
133,300
(335,020)
4,610,612
Weighted average exercise price
$0.0608
$1.2167
$0.3000
$1.4100
$1.1761
The balance at the start of the year has been adjusted based on the share consolidation of 20 shares to 1 share during
the year.
31 Mar 2019
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Balance at
the end of
the year
Lapsed
02/12/2013
20/08/2014
11/03/2015
12/03/2015
08/12/2015
27/01/2017
04/05/2017
04/05/2017
23/06/2017
24/11/2017
06/03/2017
07/09/2018
19/10/2018
01/12/2023
19/08/2024
10/03/2025
11/03/2025
07/12/2025
26/01/2027
03/05/2027
03/05/2027
22/06/2027
23/11/2027
05/03/2027
06/09/2028
18/10/2028
7,526,900
$0.1470
443,848
$0.2000
933,333
$0.2850
136,925
$0.2850
132,167
$0.3300
175,000
$0.1200
4,000,000
$0.0290
6,000,000
$0.0270
$0.2000
5,806,412
$0.0550 29,305,173
$0.0500
4,085,000
$0.0280
$0.0280
-
-
-
-
-
-
-
-
-
-
-
- 32,392,800
7,678,500
-
58,544,758 40,071,300
-
-
-
-
-
-
-
-
(43,718)
7,526,900
443,848
933,333
136,925
132,167
175,000
4,000,000
6,000,000
5,762,694
(370,806) 28,934,367
3,941,141
(143,859)
(1,811,126) 30,581,674
7,678,500
(2,369,509) 96,246,640
-
Weighted average exercise price
$0.0823
$0.0280
$0.0367
$0.0608
The weighted average remaining contractual life of Employee Loan Shares outstanding at the end of the financial period
was 8 years (2019: 9 years).
60
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 32. Share-based payments (continued)
Employee loan share plan
During the year ended 31 March 2020, 133,300 ordinary shares in the Company were granted under the ELSP to
employees as bonus remuneration (period ended 31 March 2019: 2,003,565 ordinary shares after adjusting for the share
consolidation of 20 shares to 1 share).
Grant date
Vesting conditions
Granted
Exercise
price
$
01/11/2019
50% at 30 October 2020, remainder to vest
equally over 8 calendar quarters on the last
day of each quarter commencing 31
December 2020
133,300
$0.300
Grant date
Vesting conditions
Granted
Exercise
price
$
07/09/2018
19/10/2018
31.25% at 30 September 2018, remainder to
vest equally over 11 calendar quarters on the
last day of each quarter commencing 31
December 2018
31.25% at 30 December 2018, remainder to
vest equally over 11 calendar quarters on the
last day of each quarter commencing 31
March 2019
32,392,800
$0.028
7,678,500
$0.028
40,071,300
For the ELSP granted during the current financial period, the valuation model inputs used to determine the fair value at
the grant date, are as follows:
Grant date
Expiry date
Share price Exercise
at grant date
price
Expected
volatility
Dividend
yield
Risk-free
interest rate at grant date
Fair value
01/11/2019
31/10/2029
$0.3000
$0.3000
95%
0.00%
1.016%
$0.262
Share-based payment expense recognised in profit or loss
Options granted
Employee loan share plan shares granted
Total recognised as employee benefits expense
Consolidated
Year ended
31 Mar 2020
9 months
ended 31
Mar 2019
83,443
373,154
259,404
804,645
456,597
1,064,049
61
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 32. Share-based payments (continued)
Warrants
During the year ended 31 March 2020, 7,392,230 (post-consolidation) warrants to purchase 1 ordinary share in the
Company were granted (period ended 31 March 2019: 2,931,034 ordinary shares after adjusting for the share
consolidation of 20 shares to 1 share).
Grant date
Expiry date
Granted
Exercise
price
$
12/08/2019
12/08/2019
12/08/2019
12/08/2019
10/12/2019
08/02/2020
11/02/2021
11/02/2021
1,250,000
1,250,000
3,632,232
1,260,000
7,392,230
$0.300
$0.300
$0.300
$0.560
During the year ended 31 March 2020, the Company cancelled the Cisco warrants totalling $4,607,250 following the
termination of a Software License Agreement effective 16 March 2015.
Grant date
Expiry date
Granted
Exercise
price
$
25/02/2019
24/08/2020
2,931,037
$0.560
Note 33. Events after the reporting period
The following events have arisen since 31 March 2020 which may affect the Group's operations, the results of those
operations, or the Group's state of affairs in future financial years.
Asset recovery
As shareholders may be aware the Company was subject to a backdoor listing of its data security business in 2014. At
that time, the Company traded as Prime Minerals Limited and held various mining tenements directly and through its
subsidiaries.
A review of ASX records, annual reports and agreements created at or around that time (copies of which we have now
recently obtained) have revealed that in 2008 the Company sold its interests in certain mining exploration tenements in
an area known as the Barrambie project in Western Australia. The sale to Neometals Limited (then called Reed Resources
Limited) included an entitlement to a Net Smelter Royalty (NSR) of 2% over output from a defined tenement area. The
Company is presently seeking advice with respect to the NSR. At this time, the Company has not formed a view on the
potential value of the NSR, if any.
Capital raising
The Company released its Share Placement Plan (‘SPP’) Prospectus on 27 April 2020 to raise up to $500,000.
Shareholders each will be entitled to subscribe for up to $30,000 of shares at a price of 1.3c per share.
Shareholders will note that the ASX has waived SPP requirements for the number of shares issued to be limited to 30%
of the issued capital and the issue price to be at least 80% of the VWAP. The SPP issue price is a matter for reasonable
determination by the Board. These temporary measures will expire on 31 July 2020 unless ASX decides to remove or
extend them.
The decision of the Board on the terms of the SPP has been made after assessing the alternatives in the context of the
Coronavirus Economic Response Package Omnibus Act 2020, the concessions made by the ASX on capital raisings
during the Covid-19 crisis and also reviewing comparable market discounts.
62
Cipherpoint Limited
(Formerly known as Covata Limited)
Notes to the consolidated financial statements
31 March 2020
Note 33. Events after the reporting period (continued)
Investment and Co-Venture discussions
The Company has been meeting with potential equity investors in Europe given the focus of the business in that market.
All discussions have been conducted under suitable Non-Disclosure Agreements and are preliminary and non-binding in
nature. One structure that has been discussed is creating a joint venture entity into which the business of the Company
will be transferred with new European investors injecting capital into that vehicle. The Company has taken preliminary
advice that, subject to the final terms of any arrangement, this would not be a disposal of its main undertaking as its main
undertaking before the transfer will be the same as after any such transfer (i.e. software services). Any such arrangement
may require consultation with ASX and potentially shareholder approval. The potential investor is presently conducting
due diligence on the business and has spoken with the Company’s largest customer. There is no guarantee that these
discussions will result in any venture or investment.
COVID-19
Subsequent to the reporting date, the existence of the infectious disease COVID-19 ('Coronavirus') has become widely
known, and begun to rapidly spread throughout the world, including Australia. The Company considers this to be a non-
adjusting event after the reporting date. Since the reporting date this has caused increasing disruption to populations, and
to business and economic activity. As this situation is rapidly developing, it is not yet practicable to estimate the potential
impact this may have on the Group.
No other matter or circumstance has arisen since 31 March 2020 that has significantly affected, or may significantly affect
the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
63
Cipherpoint Limited
(Formerly known as Covata Limited)
Directors' declaration
31 March 2020
In the directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 31 March
2020 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
In accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Ted Pretty
Chairman
26 May 2020
Sydney
64
Independent Auditor’s Report to the Members of Cipherpoint Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Cipherpoint Limited (the Company and its subsidiaries (the
Group)), which comprises the consolidated statement of financial position as at 31 March 2020, 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, and notes to the
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:
i) giving a true and fair view of the Group’s financial position as at 31 March 2020 and of its
financial performance for the year then ended; and
ii) 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 Corporations Act 2001 and the
ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of
Ethics for Professional Accountants (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 confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the time
of this auditor’s report.
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 the Going Concern disclosure in Note 2 in the financial report, which indicates that
the Group incurred a net loss of $673,045 and net cash outflows from operating activities of $3,703,746
during the year ended 31 March 2020. As stated in Note 2, these events or conditions, along with other
matters as set forth in the note, indicate that a material uncertainty exists that may cast significant doubt
on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this
matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current period. These matters were addressed in the context of our
audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
65
Key audit matter
How our audit addressed the key audit
matter
Impairment of intangible assets
Refer to Note 12
Intangible assets include intellectual property in
respect of perpetual licences to the Dataglobal IP
and SafeShare. The carrying value of these assets
before impairment was $1,012,828. After
adjustments for impairment, their carrying value
was reduced to nil.
Impairment assessment of these intangibles is
considered to be a key audit matter due to the
quantum of the asset; the degree of management
judgement and assumptions applied in measuring
the carrying value of the asset; and assessing the
presence of impairment of an intangible asset.
Our audit procedures in the impairment assessment
included, amongst others:
We checked management's assessment of
indicators of impairment to ensure it is
performed in accordance with AASB 136:
Impairment of Assets;
We tested management’s assumptions and
estimates used to determine the recoverable
value of its intangible assets, including those
relating to forecast revenue, expenditure and
discount rates by testing the key market related
assumptions to external data and by reference
to our understanding of the business;
We challenged the assumption and estimates
used by management and also compared the
market value of the Group based on the quoted
share price to its net asset value to assess
whether the carrying value of the intangible
assets exceeded their recoverable amount.
Other information
The directors are responsible for the other information. The other information comprises the information
in Cipherpoint Limited’s annual report for the year ended 31 March 2020, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of the other
information we are required to report that fact. We have nothing to report in this regard.
Directors’ responsibility 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 related to going concern and using the going
66
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 responsibility for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at The Australian
Auditing and Assurance Standards Board website at: www.auasb.gov.au/auditors_files/ar2.pdf. This
description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 10 to 17 of the directors’ Report for the year
ended 31 March 2020.
In our opinion, the Remuneration Report of Cipherpoint Limited for the year ended 31 March 2020,
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.
Nexia Sydney Audit Pty Ltd
Lester Wills
Director
Dated: 26 May 2020
Sydney
67
Cipherpoint Limited
(Formerly known as Covata Limited)
Shareholder information
31 March 2020
The shareholder information set out below was applicable as at 30 April 2020.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Equity security holders
Twenty largest security holders
The names of the twenty largest security holders are listed below:
Name
Number
of holders
of options
and
scheme
shares
over
Number
of holders
of ordinary ordinary
shares
shares
1,218
701
225
370
57
2,571
2,410
179
32
24
40
23
298
264
Ordinary shares
% of total
shares
issued
Number held
TPG TELECOM LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ILWELLA PTY LTD
RAVEN CAPITAL NOMINEES PTY LTD (RAVEN TECHNOLOGY FUND 1 A/C)
GAFFWICK PTY LTD (THE DUNCAN FAMILY A/C)
EXCALIBUR PARTNERS XVI LP
MR PETER HOWELLS
RAVEN VENTURES (AUSTRALIA) PTY LTD (THE GATEWAY VENTURE FUND A/C)
HUMAN TECHNOLOGY PTY LIMITED (GRAHAM MIRABITO FAMILY A/C)
MR GERARD O'BRIEN & MRS HELEN O'BRIEN (O'BRIEN SUPER A/C)
MS CHERYL I-WEN LEE (CHI WEN A/C)
VAGANA PTY LTD (PRETTY SUPER FUND A/C)
JACK BURSTON (THE BURSTON FAMILY A/C)
ESS SEE PTY LTD (ESS SEE SUPERFUND A/C)
EUROPLAY CAPITAL ADVISORS LLC
DRP CARTONS (NSW) PTY LIMITED (DRP CARTONS NSW P/L S/F A/C)
COVELANE PTY LTD
J & J STUART PTY LTD (STUART FAMILY SUPER A/C)
MR ROBERT DAVID NAPIER NICHOLLS
BNP PARIBAS NOMINEES PTY LTD (IB AU NOMS RETAILCLIENT DRP)
3,802,175
3,706,808
1,189,717
1,174,727
1,083,334
719,057
587,354
540,496
437,563
408,874
357,143
354,343
349,071
322,921
311,723
300,421
293,034
291,667
280,000
274,775
11.10
10.82
3.47
3.43
3.16
2.10
1.72
1.58
1.28
1.19
1.04
1.03
1.02
0.94
0.91
0.88
0.86
0.85
0.82
0.80
16,785,203
49.00
68
Cipherpoint Limited
(Formerly known as Covata Limited)
Shareholder information
31 March 2020
Unquoted equity securities
Options over ordinary shares issued
Employee share loan plan shares over ordinary shares issued
Substantial holders
Substantial holders in the Company are set out below:
Name
TPG TELECOM LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
Number
on issue
Number
of holders
2,315,963
4,610,612
277
51
Ordinary shares
% of total
shares
issued
Number held
3,802,175
3,706,808
11.10
10.82
Voting rights
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
There are no other classes of equity securities.
Warrants
Details
Warrants issued at $0.56
Warrants issued at $0.30
Warrants issued at $0.56
Expiry date
22 August 2020
8 February 2021
8 February 2021
Number
of warrants
2,931,037
3,632,232
1,260,000
7,823,269
Securities subject to voluntary escrow
12,977,400 shares were released from escrow during the year ended 31 March 2020. These represent 648,870 fully paid
ordinary shares on a post-consolidated basis.
69