Appendix 4E
For the year ended 31 December 2021
DroneShield Limited
ABN 26 608 915 859
1. Reporting period
The financial information contained in the attached consolidated financial report is for the year ended 31 December 2021.
The previous corresponding period was the year ended 31 December 2020.
Up/
Down
Up
Down
Down
Nil
%
Movement
2021
$
91%
9%
9%
Nil
to
to
to
10,598,124
(5,310,447)
(5,310,447)
Nil
Results for announcement to the market
Revenue from continuing activities
Loss from continuing activities after tax attributable to members
Net loss attributable to members
Dividends: No dividends are being proposed or have been paid
Additional information:
2. Commentary related to the above results
Refer to Directors Report in the attached Annual Report.
3. Net Tangible Assets/(Liabilities) per share:
31 December 2021: $0.04; 31 December 2020: $0.06
4. There was no change of control during the year
5. There were no payments of dividends during the year
6. There is no dividend reinvestment plan in operation
7. There are no associates or joint venture entities
8. This report is based on the consolidated financial report which has been audited by HLB Mann Judd Assurance
(NSW) Pty Ltd.
Further information regarding the company and its business activities can be obtained by visiting the company’s website
at www.droneshield.com
Annual Report
For the Year Ended
31 December 2021
Image: DroneShield DroneSentry-X TM C-UAS device
DroneShield Limited (ASX:DRO)
ASX Release
ABN 26 608 915 859
DroneShield Limited | 2021 Annual Report 1
Table of Contents
Corporate Information ......................................................................................................................................................... 2
Chairman’s Review ............................................................................................................................................................. 3
About DroneShield .............................................................................................................................................................. 4
Board of Directors and Executives ...................................................................................................................................... 7
Corporate Governance Statement ...................................................................................................................................... 9
Directors’ Report ............................................................................................................................................................... 20
Directors’ Report- Remuneration Report (audited) ............................................................................................................ 40
Auditor’s Independence Declaration ................................................................................................................................. 47
Consolidated Statement of Profit or Loss and Other Comprehensive Income .................................................................. 48
Consolidated Statement of Financial Position ................................................................................................................... 49
Consolidated Statement of Changes in Equity .................................................................................................................. 50
Consolidated Statement of Cash Flows ............................................................................................................................ 51
Summary of Significant Accounting Policies .......................................................................................................... 52
1.
Critical accounting judgements, estimates and assumptions ................................................................................. 58
2.
Revenue................................................................................................................................................................. 59
3.
Other income ......................................................................................................................................................... 59
4.
Corporate and support expense ............................................................................................................................. 60
5.
Corporate governance expense ............................................................................................................................. 60
6.
Income taxes relating to continuing operations ...................................................................................................... 60
7.
Options issued ....................................................................................................................................................... 61
8.
Cash and cash equivalents .................................................................................................................................... 63
9.
Trade and other receivables .................................................................................................................................. 63
10.
11.
Inventories ............................................................................................................................................................. 63
12. Other investments .................................................................................................................................................. 63
Plant, equipment and intangible assets ................................................................................................................. 64
13.
Right-of-use asset .................................................................................................................................................. 65
14.
15.
Provisions .............................................................................................................................................................. 65
16. Other liabilities ....................................................................................................................................................... 65
Lease liabilities ....................................................................................................................................................... 66
17.
Borrowings ............................................................................................................................................................. 66
18.
Contributed equity .................................................................................................................................................. 66
19.
Shares and options ................................................................................................................................................ 67
20.
Earnings (loss) per share ....................................................................................................................................... 67
21.
Key Management Personnel disclosures and related party transactions ............................................................... 68
22.
Parent entity financial information .......................................................................................................................... 68
23.
Financial risk management .................................................................................................................................... 69
24.
Contingent liabilities ............................................................................................................................................... 70
25.
Commitments ......................................................................................................................................................... 70
26.
Remuneration of auditor ........................................................................................................................................ 71
27.
Segment information .............................................................................................................................................. 71
28.
Reconciliation from loss after income tax to net cash outflow from operating activities ......................................... 73
29.
30.
Impact of COVID-19 ............................................................................................................................................... 73
Events after the reporting date ............................................................................................................................... 74
31.
Directors’ Declaration ........................................................................................................................................................ 75
Independent Auditor’s Report ............................................................................................................................................ 76
Shareholder Information .................................................................................................................................................... 80
2
DroneShield Limited | 2021 Annual Report
Corporate Information
Directors & Management
Solicitors
Peter James Independent Non-Executive Chairman
Jethro Marks Independent Non-Executive Director
Oleg Vornik CEO and Managing Director
Registered Office
Level 5, 126 Phillip St
Sydney, NSW 2000
Australia
Telephone: +61 2 9995 7280
Email: info@droneshield.com
Website: www.droneshield.com
Auditors
HLB Mann Judd Assurance (NSW) Pty Ltd
Level 19, 207 Kent Street
Sydney, NSW 2000
Australia
Bankers
Commonwealth Bank of Australia
309-315 George Street
Sydney NSW 2000
Australia
Westpac
275 Kent Street
Sydney NSW 2000
Australia
PNC Bank
1405 P Street, NW
Washington DC 20005
United States of America
Baker & McKenzie LLP
452 Fifth Avenue
New York NY 10018
United States of America
K&L Gates
1601 K Street, NW
Washington DC 20006
United States of America
MinterEllison
Level 11 Constitution Place
1 Constitution Avenue
Canberra City ACT 2601
Australia
Steinepreis Paganin
16 Milligan Street
Perth WA 6000
Australia
Share Registry
Automic Pty Ltd t/a Automic Registry Services
267 St Georges Terrace
Perth WA 6000
Australia
Enquiries (within Australia): 1300 288 664
Enquiries (outside Australia): +61 2 9698 5414
Stock Exchange Listing
DroneShield Limited (ASX code DRO) shares are quoted
on the Australian Securities Exchange.
DroneShield Limited | 2021 Annual Report
3
Chairman’s Review
Dear Fellow Shareholders,
2021 has seen DroneShield Ltd (“DroneShield” or the “Company”) produce another leap in
results, and the overall calibre of the business, despite the ongoing COVID-19 disruptions.
Highlights for 2021 included:
• Revenue of $10.5 million (in addition to R&D incentives and other grants). This is an
approximately 94% increase on 2020 revenues, and continues the trend of the Company
generating record revenues each year of its existence.
• $14.8 million of cash receipts, a 174% growth over 2020.
• Securing $3.8 million, 2-year AI contract with the Australian Department of Defence.
• A substantial majority of the sales were to blue chip customers such as defence and
government agencies in US and Australia, including repeat contracts.
• Strong sales pipeline with over $100 million1 in active project discussions for 2022
opportunities (risk unweighted).
• Substantial tailwinds for the defence industry with growing geopolitical tensions, with an
increase in Government spending in Australia and globally.
Peter James,
Independent Non-
Executive Chairman
During the year, the Company focussed on mass-scaling of its production processes, on-boarding its second outsourced
manufacturer based in Adelaide, as well as ramping up its own testing and production areas. In the current environment
of extended lead times for a range of high-tech circuitry, DroneShield has secured a significant amount of raw and finished
inventory, allowing for immediate or short-term fulfilment of customer orders, acting as a further competitive advantage.
The Australian Government continues to strongly encourage the growth of the domestic defence industry. The two Artificial
Intelligence (AI) R&D contracts, as well as achieving DISP (Secret Clearance) status with the Australian Department of
Defence, provide a string platform for further orders by Australian Government agency customers.
The U.S. Government and military market is expected to be the single largest opportunity for DroneShield, being the largest
counterdrone customer in the world. During 2021, DroneShield continued to position itself for that market, with additional
hires in its Virginia office, making multiple initial smaller sales, ensuring compatibility to standard US Government software
interfaces and conducting multi-agency product evaluations and deployments. The US business is led by a seasoned ex-
military veteran team, experienced in scaling US Government sales and the associated steps towards larger purchases.
Despite the COVID-19 slowdown, drones continued to present a rapidly growing threat, both across State-level warfare
(including the current Russia-Ukraine conflict), and non-State actors continuing to use drones for nefarious applications at
airports, prisons, critical infrastructure and other situations, such as Mexican
cartel, Houthi and Myanmar rebel attacks.
At the macro level, international tensions and greyzone warfare (which C-
UAS, Electronic Warfare (EW) and related areas are a key part of) continue
to rise, driving increases in security and national defence budgets. The
Company currently offers its products in over 100 countries and the diversity
of its pipeline is one of its key strengths.
DroneShield has continued to grow its relationships with key defence primes
in Australia and globally. This is expected to bring further cash receipts (in
the form of outright sales and paid R&D contracts) in 2022.
Image: Brazilian TV footage of Government
agency using DroneShield equipment
On behalf of the Board, I would like to thank our executive team for their significant contributions for the past year.
I would also like to thank our fellow shareholders for your support and look forward to continued growth of the Company.
Peter James
Independent Non-Executive Chairman
1 Necessarily, not all (and there can be no assurance that any) of the Company’s sales opportunities will result in sales.
4
DroneShield Limited | 2021 Annual Report
About DroneShield
DroneShield (ASX:DRO) provides Artificial Intelligence based platforms for protection against advanced threats such as
drones and autonomous systems. It offers customers bespoke counterdrone (or counter-UAS) and electronic warfare
solutions and off-the-shelf products designed to suit a variety of terrestrial, maritime or airborne platforms. The customers
include military, intelligence community, Government, law enforcement, critical infrastructure, and airports globally.
History of DroneShield
Founded on 10 January 2014, the DroneShield business began as DroneShield LLC in the U.S. On 4 November 2015,
DroneShield Limited was incorporated in Australia for the primary purpose of listing on the ASX and engaging in the
business of offering products manufactured by DroneShield globally, as well as managing and operating DroneShield’s
business.
DroneShield Limited listed on the ASX on 22 June 2016, raising $7 million on a $20 million valuation in an oversubscribed
initial public offer (‘IPO’). In August and September 2020, its last capital raise, DroneShield raised $17 million via a
placement and Share Purchase Plan.
DroneShield has grown from a small start-up to a global leader in C-UAS detection and mitigation.
Business Model and Products
Affordable consumer-grade drones (“UAS”) have become popular around the world, but they present unique and frequent
threats to privacy, physical security and public safety in a wide variety of environments. DroneShield offers products that
detect and defeat such drones to civil infrastructure operators, militaries, and other government and commercial users
globally. DroneShield’s distribution channels focus on third party distributors, as well as direct relationships with various
key customers. With offices in Australia and the United States, DroneShield has an experienced salesforce with distribution
partners across over 100 countries. The end-users of DroneShield’s products come from a diverse array of global sectors,
including the following:
Airports and other civil defence users.
- Defence and intelligence agencies.
-
- Utilities such as power plants, electricity grids and gas pipelines.
-
-
-
-
- Media production sites.
- Real estate owners including hotels, commercial offices and manufacturing plants.
-
Ports and other critical infrastructure asset owners.
Intelligence and national security agencies.
Prisons.
Stadiums and other public event venues and organisers.
Executive protection including ultra-high net worth individuals and government officials.
DroneShield offers a comprehensive solution to drone threats with a suite of detection and countermeasure products.
The main product range is as follows:
• Portable rifle shape drone disruptor, causing the drone (or swarm) to safely
land, or fly back to the starting point (potentially identifying the pilot)
• 7kg weight, no backpack
• Best-in-breed effective range
• Released in early 2018
• Sold across Middle East, Australia, South East Asia, South America, and
Europe
• Pistol shaped compact drone disruptor
• Best-in-breed effective range
• Released in mid-2019
• Only 2kg weight including battery
• Unique patented design
• Suitable for mobile deployments, patrols, law enforcement and special forces
• Sales include US Government agencies and DoD and Europe
DroneGun TacticalTM
DroneGun MKIIITM
DroneShield Limited | 2021 Annual Report
5
• Body-worn drone detection device
• Best-in-breed detection range
• Can be used with a directional accessory (DAUTM) to determine direction of the
threat as well as vehicle kit
• Completely passive (no RF emissions)
• MKII version launched in mid-2020
• Deployments include Australian and US military and intelligence customers
• Integrated detect-and-defeat system
• Best-in-breed detection and defeat range
• Includes radiofrequency direction finders, radars and cameras in a modular
manner, with an integrated DroneCannonTM drone disruptor
• Utilises DroneShield proprietary DroneSentry-C2TM counterdrone software
command-and-control engine
• The
camera
includes DroneOptIDTM, DroneShield proprietary AI
computervision software to detect and track drone targets
• Successfully deployed in multiple locations globally, in full or modular forms,
across military and Government customer base
• Integrated detect-and-defeat counterdrone solution
• Best-in-breed detection and defeat range
• Deployable on a vehicle, ship or fixed site platforms
• Customer trials commenced in late 2020, followed by initial sales through 2021
including US and South-East Asia
RfPatrol MKIITM
DroneSentryTM
DroneSentry-XTM
Underpinning all DroneShield’s detection products is the Company’s proprietary software engine RFAITM, with
quarterly software updates on a subscription basis.
The second subscription software product, DroneSentry-C2TM, is the Company’s Command-and-Control platform on
its DroneSentryTM multi-sensor system. It is an intuitive interface with a comprehensive reporting suite, which can
combine a number of customer sites deploying both DroneShield’s and third-party sensor hardware.
Image: DroneSentry-C2TM
Artificial Intelligence R&D Defence Contracts
During the year, DroneShield secured two R&D contracts with the Australian Department of Defence (DoD):
-
-
$3.8 million, 2-year contract in AI applied in Electronic Warfare domain (following on a $600,000, 6-month
contract in 2020),
$800,000 1-year contract in AI applied in computervision domain with Defence Innovation Hub.
Additional, and larger, contracts, are anticipated with the Australian DoD, as well as potentially the U.S. Department
of Defense.
6
DroneShield Limited | 2021 Annual Report
Revenue Model and Recurring Cashflows
DroneSentryTM, DroneSentry-XTM and RfPatrolTM products have a recurring revenue element charged for RFAITM
quarterly updates to the drone libraries of the products. Over time, DroneShield expects to build a robust recurring
revenue line as more products requiring library updates are sold.
DroneSentry-C2TM, the command-and-control software for DroneShield and third-party sensors, is offered on a
subscription basis (via on-prem or secure cloud solution).
Additionally, DroneShield offers lease options of its product range to its in-country partners and end customers (where
possession and use of a particular product is lawful for that customer according to local laws). The lease periods vary
from weekly, to multi-year. Leasing may be suitable for event-based requirements, product evaluations without a
commitment to purchase, or for customers who have a preference to lease vs outright purchase. The Company is
currently shortlisted for a large U.S. Government “Counterdrone as a service” project, expected to be structured as a
long-term lease of its equipment. The tender result is expected to be known this year.
The Company does not believe that leasing would cannibalise its sales, as leasing appeals to a different set of
customers and utilises different deployment opportunities. Further, the Company believes that leasing is
complementary to its sales efforts as it will promote customer awareness of DroneShield’s products and their
applications.
Finally, defence and Government agency markets are naturally of a recurring nature, with repeat contracts following
initial successful deployments. DroneShield has received repeat customer orders globally on that basis.
Board of Directors and Executives
DroneShield Limited | 2021 Annual Report
7
Peter James; Independent Non-Executive Chairman
Mr. James has over 30 years’ experience in the Technology, Telecommunications and Media
Industries, and has extensive experience as Chair, Non-Executive Director and Chief Executive
Officer across a range of publicly listed and private companies. He is currently Chair of ASX-
listed companies Macquarie Telecom, Ansarada, Nearmap and Halo Food Co.
Mr. James joined the Board of DroneShield on 1 April 2016, serving as Executive Chairman
from 2 December 2016 to 24 January 2017. Mr. James is an experienced business leader with
significant strategic and operational expertise. He is a Fellow of the Australian Institute of
Company Directors, a Fellow of the Australian Computer Society and holds a BA degree with
Majors in Computer Science and Business.
Oleg Vornik; CEO and Managing Director
Mr. Vornik is an experienced senior executive with previous roles at the Royal Bank of Canada,
Brookfield, Deutsche Bank and ABN AMRO.
Prior to becoming the CEO of DroneShield, Mr. Vornik was its Chief Financial Officer. His
previous experience includes the Sydney office of the Royal Bank of Canada as well as with
Brookfield Asset Management, Deutsche Bank and ABN AMRO in Australia and New Zealand.
Mr. Vornik holds a BSc (Mathematics) and BCom (Hons) from the University of Canterbury,
New Zealand and has completed a business program with Columbia University in New York.
After co-leading the Company in the role of the Chief Financial Officer for over a year, Mr. Vornik
was appointed as the CEO and Managing Director of DroneShield on 24 January 2017. Mr.
Vornik does not hold any other public company directorships.
Jethro Marks; Independent Non-Executive Director
Mr. Marks is a Sydney-based CEO and co-founder of the Mercury Retail Group, an eCommerce
retail, services, logistics and outsourcing business. Over 17 years Mr. Marks has led, and
continuously grown, the business at the forefront of digital commerce, marketing and
international logistics, while competing with the largest retailers globally. Mr. Marks brings to the
Board extensive commercial experience in successfully scaling a multinational business.
Mercury Retail Group’s global supply chain and award-winning logistics capability has extended
to most consumer goods categories in multiple countries, and today carries 32 million products.
This capability has extended to provisioning international logistics support to multinational
brands and technology companies.
Mr. Marks graduated from the University of Auckland, with a Bachelor of Commerce (Honours).
Mr. Marks joined the Board on 16 January 2020. Mr. Marks does not hold any other public
company directorships.
Matt McCrann; CEO, DroneShield LLC (USA)
Mr McCrann is an experienced business development executive, having previously built and led
business units for enterprises delivering innovative technology to military, intelligence, public
safety, and law enforcement communities worldwide. Mr McCrann brings to DroneShield more
than 15 years of experience in the Defense and National Security sector with significant roles
spanning Sales, Operations, and Engineering.
Mr McCrann has industry certifications and specialised training in RF and wireless
communications and is a member of numerous industry and government organisations
including; National Defense Industrial Association (NDIA), Armed Forces Communications and
Electronics Association (AFCEA), Association of the United States Army (AUSA), and American
Correctional Association (ACA).
8
DroneShield Limited | 2021 Annual Report
Angus Bean; Chief Technology Officer
With a background in Industrial Design and Mechanical Engineering, Angus Bean brings a
wealth of knowledge in product development through to production management. Mr. Bean
merges the various fields of mechanical hardware, electronics, software, digital interface and
technology.
Mr. Bean joined DroneShield early in 2016, since then has been a driving force in DroneShield’s
technology team, working to build the team and the technology to deliver on key projects and
milestones. Previous to DroneShield, Mr. Bean was the Development Lead for Australia’s
largest and most prominent industrial design and engineering consultancy.
Over his career, Mr. Bean has adopted both a collaborative and leadership role on a number
of projects which have attracted multiple Australian and International Awards in Innovation,
Consumer Electronics, Defence and Cyber Security. Mr. Bean holds a BDesign in Industrial
Design (First Class Hon) from the University of Technology Sydney.
Carla Balanco; CFO and Company Secretary
Mrs. Balanco is a member of Chartered Accountants Australia & New Zealand (CA ANZ). She
holds an Honours in Accounting from the University of Johannesburg and an Honours in
Accounting Science from the University of South Africa.
Mrs. Balanco started her career working for Chartered firms Crowe Horwath and HLB Mann
Judd in the audit division. She moved on from Chartered to gain experience working in
Commercial and Business Development roles.
Since joining DroneShield in 2018, she has spearheaded improvements to critical systems and
internal controls and has been instrumental in scaling the Company’s financial management
systems. Today, as CFO and Company Secretary, Mrs. Balanco oversees statutory reporting,
management reporting, payroll, treasury, administration, and compliance for the global
DroneShield Group of companies.
Mrs. Balanco was selected as a finalist in the 2021 ADM’s Women in Defence Awards and 2020
Australian Defence Industry Awards.
Lyle Halliday; Chief Operating Officer
Mr Halliday joined DroneShield as an experienced Systems Engineer in 2020 with a background
in medical device product development. Since then, he has taken his experience in risk
management, cybersecurity, requirements management, quality assurance and regulatory
compliance and applied this to business operations.
Mr Halliday is responsible for implementation of processes to ensure customer expectations are
met with respect to product quality, delivery and continuous improvement. His engineering
experience spans electrical, mechanical, manufacturing and software engineering, allowing him
to work across all aspects of business operations.
Mr Halliday is a University Medallist of the Australian National University where he studied a
Bachelor of Systems Engineering (Research and Development).
Katherine Stapels; General Counsel
Ms. Stapels started her legal career in commercial litigation and moved to her first in-house role
in 2018. Ms. Stapels’s in-house experience has seen her work with varied businesses across
the technology industry, ranging from the supply and manufacture of radar technology to
Defence, to payroll technology and outsourcing on a global scale.
Ms. Stapels is nationally recognised for her work in the technology space as she was selected
as a finalist in the Lawyers’ Weekly Corporate Counsel Awards, in the category of Technology,
Media Telecommunications Lawyer of the Year for 2020.
Ms. Stapels has a Double Bachelor’s Degree in Law and Economics from the University of
Queensland and a Graduate Diploma in Legal Practice from the Australian National University.
Ms. Stapels currently holds a NSW Practising Certificate and is a registered practitioner of the
High Court of Australia.
DroneShield Limited | 2021 Annual Report
9
Corporate Governance Statement
The Board of the Company (“Board”) recognises the importance of establishing a comprehensive system of control and
accountability as the basis for the administration of corporate governance.
To the extent relevant and practical, the Company has adopted a corporate governance framework that is consistent with
The Corporate Governance Principles and Recommendations (4th Edition) as published by ASX Corporate Governance
Council (“Recommendations”).
The Board has adopted the following suite of corporate governance policies and procedures which are contained with the
Company’s Corporate Governance Plan, a copy of which
the Company’s website at
https://www.droneshield.com/investors .
is available on
•
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
Board Charter
Corporate Code of Conduct
Public Sector Code of Conduct
Audit and Risk Committee Charter
Remuneration Committee Charter
Nomination Committee Charter
Continuous Disclosure Policy
Risk Management and Compliance Policy
Remuneration Policy
Trading Policy
Diversity Policy
Shareholder Communications Strategy
Whistleblower Protection Policy
Anti-bribery and Anti-Corruption Policy
Performance Evaluation Procedures
Skills Matrix
The Board is committed to administering the policies and procedures with openness and integrity, pursuing the true spirit
of corporate governance commensurate with the Company's needs.
The Company is pleased to report that its practices are largely consistent with the Recommendations of the ASX Corporate
Governance Council and sets out below its compliance and departures from the Recommendations for the year ended 31
December 2021.
In the context of the Company’s nature, scale and operations, the Board considers that the current corporate governance
regime is an efficient, practical and cost-effective method of directing and managing the Company. As the Company’s
activities develop in size, nature and scope, the implementation of additional corporate governance policies and structures
will be reviewed and considered.
PRINCIPLES AND RECOMMENDATIONS
COMPLY
(YES/NO)
EXPLANATION
Principle 1: Lay solid foundations for management and oversight
Recommendation 1.1
A listed entity should have and disclose a board
charter setting out:
a)
the respective roles and responsibilities of
its board and management; and
those matters expressly reserved to the
board and those delegated to management.
b)
Yes
for
things,
the corporate
The Board
responsible
is
governance of the Company.
The Company has adopted a Board Charter which
the specific
sets out, amongst other
the Board,
responsibilities of
roles and
the
the Chairman, Board and
responsibilities of
management, as well as the matters expressly
reserved for the decision of the Board and those
delegated to management. A copy of the Company’s
Board Charter
its Corporate
Governance Plan which is available on the Company’s
website at: https://www.droneshield.com/investors
is contained
in
The Company is committed to the circulation of
relevant materials to Directors in a timely manner to
facilitate Directors’ participation in Board discussions
on a fully informed basis.
The Company intends to regularly review the balance
the Board and
of
responsibilities between
10
DroneShield Limited | 2021 Annual Report
PRINCIPLES AND RECOMMENDATIONS
COMPLY
(YES/NO)
EXPLANATION
Yes
Yes
Yes
Yes
No
N/A
N/A
Yes
management to ensure that the division of functions
remains appropriate to the needs of the Company.
The Company’s Corporate Governance Plan requires
the Board to undertake appropriate checks as to the
character, experience, education, criminal record and
bankruptcy history of the candidate before appointing
a person or putting forward to security holders a
candidate for election, as a Director.
All material information relevant to a decision on
whether to elect or re-elect a Director will be provided
to security holders in any notice of meeting pursuant
to which the resolution to elect or re-elect such
Director will be voted on.
Each Director and senior executive of the Company is
party to a written agreement with the Company which
sets out the terms and conditions of that Director’s or
senior executive’s appointment.
The Board Charter outlines the role, responsibility and
the Company Secretary. The
accountability of
Company Secretary is accountable directly to the
Board, through the Chair, on all matters relating to the
proper functioning of the Board. The Chairman and
the Company Secretary co-ordinate
the Board
agenda.
The Company has adopted a Diversity Policy which
identifies gender diversity as a key area of focus for
the Company. While the Company is committed to
gender diversity in its workplace, the Board believes
that the Company is not yet of a size where it is
appropriate
formal measurable
objectives for achieving gender diversity.
implement
to
Whilst the Board previously adopted a tiered approach
to the implementation, this approach has been
revisited given the stage of development that the
Company remains in. As the Company’s workforce
continues to grow, this will be re-assessed at the
appropriate times.
A copy of the Company’s Diversity Policy is contained
in its Corporate Governance Plan which is available
on
at:
https://www.droneshield.com/investors
Company’s
website
the
During the reporting period (i.e., the year ended 31
December 2021), the respective proportions of men
and women in the following roles were as follows:
Board
Men
100%
Senior executives
60%
Women
0%
40%
Across
organisation
the whole
78%
22%
Recommendation 1.2
A listed entity should:
(a)
undertake appropriate checks before
appointing a Director or senior executive,
or putting someone forward for election,
as a Director; and
provide security holders with all material
information relevant to a decision on
whether or not to elect or re-elect a
Director.
(b)
Recommendation 1.3
A listed entity should have a written agreement
with each Director and senior executive setting
out the terms of their appointment.
Recommendation 1.4
The company secretary of a listed entity should
be accountable directly to the board, through the
chair, on all matters to do with the proper
functioning of the board.
Recommendation 1.5
A listed entity should:
(a)
(b)
have and disclose a diversity policy;
through its board or a committee of the
board set measurable objectives for
achieving gender diversity in the
composition of its board, senior
executives and workforce generally; and
disclose in relation to each reporting
period:
a.
(c)
b.
c.
the measurable objectives set for
that period to achieve gender
diversity;
the entity’s progress towards
achieving those objectives; and
either:
(A) the respective proportions of
men and women on the board, in
senior executive positions and
across the whole workforce
(including how the entity has
defined “senior executive” for these
purposes); or
(B) if the entity is a “relevant
employer” under the Workplace
Gender Equality Act, the entity’s
most recent “Gender Equality
Indicators”, as defined in and
published under that Act.
If the entity was in the S&P / ASX 300 Index at
the commencement of the reporting period, the
measurable objective for achieving gender
diversity in the composition of its board should
be to have not less than 30% of its Directors of
each gender within a specified period.
PRINCIPLES AND RECOMMENDATIONS
Recommendation 1.6
A listed entity should:
(a)
(b)
have and disclose a process for
periodically evaluating the performance of
the board, its committees and individual
Directors; and
disclose for each reporting period,
whether a performance evaluation has
been undertaken in the reporting period in
accordance with that process during or in
respect of that period.
Recommendation 1.7
A listed entity should:
(a)
(b)
have and disclose a process for
periodically evaluating the performance of
its senior executives at least once every
reporting period; and
disclose in relation to each reporting
period, whether a performance evaluation
has been undertaken in the reporting
period in accordance with that process
during or in respect of that period.
DroneShield Limited | 2021 Annual Report
11
COMPLY
(YES/NO)
Yes
EXPLANATION
The performance of the Board as a group and of
individual Directors will be assessed each year for all
future years. The Remuneration Committee (the
function of which is currently performed by the full
Board) is responsible for evaluating the performance
of the Board and individual Directors on an annual
basis.
The process for this is set out in the Company’s
Performance Evaluation Procedures policy which is
contained in its Corporate Governance Plan which is
at:
available
https://www.droneshield.com/investors.
the Company’s website
on
The Board undertook an evaluation of Board and
individual Director performance for the 2021 financial
year.
Yes
The Managing Director of the Company is responsible
for evaluating the performance of senior executives on
an annual basis.
The process for this is set out in the Company’s
Performance Evaluation Procedures policy which is
contained in its Corporate Governance Plan which is
at:
available
https://www.droneshield.com/investors.
the Company’s website
on
A formal performance evaluation of senior executives
was undertaken during the 2021 financial year.
Principle 2: Structure the board to be effective and add value
Recommendation 2.1
The board of a listed entity should:
have a nomination committee which:
(i)
(ii)
has at least three members, a
majority of whom are independent
Directors; and
is chaired by an independent
Director,
and disclose:
(iii)
(iv)
(v)
the charter of the committee;
the members of the committee;
and
as at the end of each reporting
period, the number of times the
committee met throughout the
period and the individual
attendances of the members at
those meetings; or
if it does not have a nomination committee,
disclose that fact and the processes it employs to
address board succession issues and to ensure
that the board has the appropriate balance of
skills, experience, independence and knowledge
of the entity to enable it to discharge its duties
and responsibilities effectively.
No
Yes
N/A
N/A
Yes
the Nomination Committee
Due to its size, the Board has determined that the
is most
function of
efficiently carried out with full Board participation and
accordingly, the Board has elected not to establish a
separate Nomination Committee at this stage. As a
result, the duties that would ordinarily be assigned to
the Nomination Committee under the Nomination
Committee Charter are carried out by the full Board.
A copy of the Nomination Committee Charter is
contained in the Company’s Corporate Governance
Plan which is available on the Company’s website at:
https://www.droneshield.com/investors.
The Board devotes time at Board meetings on at least
an annual basis to discuss Board succession issues.
Where appropriate, all members of the Board are
involved in the Company’s nomination process, to the
maximum extent permitted under the Corporations Act
and ASX Listing Rules.
The Board also conducts an annual review of the
Company’s Board Skills Matrix (in accordance with
Recommendation 2.2) to ensure the Board maintains
an appropriate balance of skills, experience,
independence and knowledge to discharge its duties
and responsibilities effectively.
12
DroneShield Limited | 2021 Annual Report
PRINCIPLES AND RECOMMENDATIONS
Recommendation 2.2
A listed entity should have and disclose a board
skill matrix setting out the mix of skills and
diversity that the board currently has or is looking
to achieve in its membership.
COMPLY
(YES/NO)
Yes
EXPLANATION
The Board of the Company is comprised of Directors
with a broad range of technical, commercial, financial
and other skills, experience and knowledge relevant to
overseeing the business of a drone security company.
The Company had developed a Board Skills Matrix
which is used as a tool to assess the appropriate and
ideal balance of skills, experience, independence and
diversity necessary for the Board to discharge its
duties and responsibilities effectively.
A summary of the collective skills, experience,
independence and diversity of the Board is set in
Annexure C of the Company’s Corporate Governance
Plan which is available on the Company’s website at:
https://www.droneshield.com/investors.
Recommendation 2.3
A listed entity should disclose:
(a)
the names of the Directors considered by
the board to be independent Directors;
if a Director has an interest, position or
relationship of the type described in Box
2.3 but the board is of the opinion that it
does not compromise the independence
of the Director, the nature of the interest,
position or relationship in question and an
explanation of why the board is of that
opinion; and
the length of service of each Director
(b)
(c)
Yes
During the 2021 financial year, the Independent
Directors of the Company were:
- Mr. Peter James (Non-Executive
Chairman); and
- Mr. Jethro Marks (Non-Executive Director).
Mr. Oleg Vornik, the Managing Director, was not
considered to be independent during his tenure due to
his executive role as Managing Director of the
Company.
The Board has determined the independence of each
of the Company’s Directors in line with the guidance
set out by the ASX’s Corporate Governance Council
and have not formed an opinion contrary to those
guidelines.
The Directors who held office during and after the
2021 financial year have served continuously since
their
respective dates of appointment unless
otherwise noted below:
- Mr. Peter James: appointed 1 April 2016;
- Mr. Oleg Vornik: appointed 24 January
2017; and
- Mr. Jethro Marks: appointed 16 January
2020.
Recommendation 2.4
A majority of the board of a listed entity should
be independent directors.
Yes
The Board Charter requires that, where practical the
majority of the Board will be independent.
During the 2021 financial year, the following two of the
Company’s three Directors were considered to be
Independent Directors:
- Mr. Peter James (Non-Executive
Chairman); and
- Mr. Jethro Marks (Non-Executive Director).
The Chairman, Mr. Peter James is an Independent
Non-Executive Director and is not the same person as
the Managing Director of the Company.
Recommendation 2.5
The chair of the board of a listed entity should be
an independent Director and, in particular,
should not be the same person as the CEO of
the entity.
Yes
PRINCIPLES AND RECOMMENDATIONS
Recommendation 2.6
A listed entity should have a program for
inducting new Directors and for periodically
reviewing whether there is a need for existing
Directors to undertake professional development
to maintain the skills and knowledge needed to
perform their role as a Director effectively.
COMPLY
(YES/NO)
Yes
DroneShield Limited | 2021 Annual Report
13
EXPLANATION
The Company’s program for the induction of new
Directors is tailored for each new Director (depending
on their personal requirements, background skills,
qualifications and experience) and
the
provision of a formal letter of appointment and an
induction package containing sufficient information to
allow the new Director to gain an understanding of the
business of the Company, and the roles, duties and
responsibilities of Directors and the Executive team.
includes
All Directors are encouraged to undergo continual
to prior
professional development and, subject
approval by the Chairman, all Directors may have
access
resources and professional
development training to address any skills gaps.
to various
Principle 3: Instil a Culture of acting Lawfully, Ethically and Responsibly
Recommendation 3.1
A listed entity should articulate and disclose its
values.
Recommendation 3.2
A listed entity should:
(a)
have and disclose a code of conduct for
its Directors, senior executives and
employees; and
ensure that the board or a committee of
the board is informed of any material
breaches of that code.
(b)
Recommendation 3.3
A listed entity should:
(a)
have and disclose a whistleblower policy;
and
ensure that the board or a committee of
the board is informed of any material
incidents reported under that policy.
Recommendation 3.4
A listed entity should:
(a)
have and disclose an anti-bribery and
corruption policy; and
ensure that the board or committee of the
board is informed of any material
breaches of that policy.
(b)
(b)
Yes
Yes
Yes
Yes
The Company’s values are disclosed in the Corporate
Code of Conduct which is contained in the Company’s
Corporate Governance Plan and available on the
Company’s website at:
https://www.droneshield.com/investors.
The Company has adopted a Corporate Code of
Conduct which applies to Directors, employees and
contractors of the Company.
The Corporate Code of Conduct is contained in the
Company’s Corporate Governance Plan which is
at:
available
https://www.droneshield.com/investors.
the Company’s website
on
The Board is informed of any material breaches of the
Corporate Code of Conduct.
The Company has adopted a Whistleblower Policy
which is contained in the Company’s Corporate
Governance Plan which is available on the Company’s
website at: https://www.droneshield.com/investors.
Clause 7 of the Whistleblower Policy provides that the
board is informed of any material incidents reported.
The Company has adopted an anti-bribery and anti-
corruption (ABC) policy which applies to all officers,
employees, and contractors who represent
the
Company.
The ABC policy is contained in the Company’s
Corporate Governance Plan which is available on the
Company’s website at:
https://www.droneshield.com/investors.
Clause 8.2 of the ABC Policy provides that all material
breaches of the ABC Policy must be reported
immediately to the Board.
14
DroneShield Limited | 2021 Annual Report
PRINCIPLES AND RECOMMENDATIONS
COMPLY
(YES/NO)
EXPLANATION
Principle 4: Safeguard the integrity of corporate reports
Recommendation 4.1
The board of a listed entity should:
(a) have an audit committee which:
No
(i)
(ii)
has at least three members, all of
whom are non-executive Directors
and a majority of whom are
independent Directors; and
is chaired by an independent
Director, who is not the chair of the
board,
Yes
N/A
N/A
Yes
Yes
and disclose:
(iii)
(iv)
(v)
the charter of the committee;
the relevant qualifications and
experience of the members of the
committee; and
in relation to each reporting period,
the number of times the committee
met throughout the period and the
individual attendances of the
members at those meetings; or
(b) if it does not have an audit committee,
disclose that fact and the processes it
employs that independently verify and
safeguard the integrity of its financial
reporting, including the processes for
the appointment and removal of the
external auditor and the rotation of the
audit engagement partner.
Recommendation 4.2
The board of a listed entity should, before it
approves the entity’s financial statements for a
financial period, receive from its CEO and CFO a
declaration that the financial records of the entity
have been properly maintained and that the
financial statements comply with the appropriate
accounting standards and give a true and fair
view of the financial position and performance of
the entity and that the opinion has been formed
on the basis of a sound system of risk
management and internal control which is
operating effectively.
Due to the current size of the Company, the Board has
determined that the function of the Audit and Risk
Committee is most efficiently carried out with full
Board participation and accordingly, the Company has
elected not to establish a separate Audit and Risk
Committee at this stage. As a result, the duties that
would ordinarily be assigned to the Audit and Risk
Committee under the Audit and Risk Committee
Charter are carried out by the full board.
The Audit and Risk Committee Charter is contained
in the Company’s Corporate Governance Plan which
is available on the Company’s website at:
https://www.droneshield.com/investors.
The Board devotes time on at least an annual basis to
consider the robustness of the various internal control
systems it has in place to safeguard the integrity of the
Company’s financial reporting.
In addition, following the completion of each half year
review and annual audit review, the Company’s
external auditors confer with the Board on any matters
identified during the course of the audit that have the
potential to increase the Company’s exposure to risks
of material misstatements in its financial reports.
full Board also assumes responsibility
for
The
recommendations
the
appointment and removal of the external auditor. Audit
partner rotations will be enforced in accordance with
the relevant guidelines.
to security holders on
Prior to the execution of the financial statements of the
Company, the Company’s Managing Director and
Chief Financial Officer provide the Board with written
assurances that the financial records of the Company
have been properly maintained and that the financial
statements comply with the appropriate accounting
standards and give a true and fair view of the financial
position and performance of the Company and that the
opinion has been formed on the basis of a sound
system of risk management and internal control which
is operating effectively in all material aspects.
Recommendation 4.3
A listed entity should disclose its process to
verify the integrity of any periodic corporate
report it releases to the market that is not audited
or reviewed by an external auditor.
Yes
The Board ensures that any periodic corporate report
the Company releases to the market that has not been
subject to audit or review by an external auditor
discloses the process taken to verify the integrity of its
content.
PRINCIPLES AND RECOMMENDATIONS
COMPLY
(YES/NO)
EXPLANATION
DroneShield Limited | 2021 Annual Report
15
Principle 5: Make timely and balanced disclosure
Recommendation 5.1
A listed entity should have and disclose a written
policy for complying with its continuous
disclosure obligations under listing rule 3.1.
Yes
Recommendation 5.2
A listed entity should ensure that its board
receives copies of all material market
announcements promptly after they have been
made.
Recommendation 5.3
A listed entity that gives a new and substantive
investor or analyst presentation should release a
copy of the presentation materials on the ASX
Market Announcements Platform ahead of the
presentation.
Yes
Yes
Principle 6: Respect the rights of security holders
Recommendation 6.1
A listed entity should provide information about
itself and its governance to investors via its
website.
Yes
The Company has adopted a Continuous Disclosure
Policy which details the processes and procedures
which have been adopted by the Company to ensure
that
its continuous disclosure
obligations as required under the ASX Listing Rules
and other relevant legislation.
it complies with
The Company’s Continuous Disclosure Policy is
contained within
the Company’s Corporate
Governance Plan which is available on the Company’s
website at: https://www.droneshield.com/investors.
The Company Secretary ensures
is
provided with copies of all material market
announcements promptly after they have been made.
the Board
Pursuant to the Company’s Continuous Disclosure
Policy ahead of any new and substantive investor or
analyst presentation, a copy of the presentation
materials must be released to ASX (even if the
information in the presentation would not otherwise
require market disclosure).
The Company’s Continuous Disclosure Policy is
contained within
the Company’s Corporate
Governance Plan which is available on the Company’s
website at: https://www.droneshield.com/investors.
the
Shareholders can access
Company and
its
its governance
constitution and adopted corporate governance
policies)
website
https://www.droneshield.com/investors.
information about
(including
Company’s
from
the
The Company will regularly update the website and
contents therein as deemed necessary.
Recommendation 6.2
A listed entity should have an investor relations
program that facilitates effective two-way
communication with investors.
Yes
The Company has adopted a Shareholder
Communications Strategy which aims to promote and
facilitate effective
two-way communication with
investors.
is communicated
The Strategy outlines a range of ways in which
information
to Shareholders,
including via its website, through announcements
released to the ASX, its annual report and general
meetings. Shareholders are also welcome to contact
the Company or its registrar, Automic Registry
Services, via email or telephone.
The Company’s Shareholder Communications
Strategy is contained in the Company’s Corporate
Governance Plan which is available on the Company’s
website at: https://www.droneshield.com/investors.
16
DroneShield Limited | 2021 Annual Report
PRINCIPLES AND RECOMMENDATIONS
Recommendation 6.3
A listed entity should disclose how it facilitates
and encourages participation at meetings of
security holders.
COMPLY
(YES/NO)
Yes
EXPLANATION
in
on
the Company’s Shareholder
As noted above,
Communications Strategy
the
is contained
Company’s Corporate Governance Plan which is
available
at:
https://www.droneshield.com/investors. Shareholders
will be encouraged to participate at all general
meetings of the Company by written statement
to
contained
shareholders prior to each meeting.
in every Notice of Meeting sent
the Company’s website
The Company intends to accommodate shareholders
who are unable to attend general meetings in person
by accepting votes by proxy. Further, any material
presented to shareholders at the meeting will be
released
the
commencement of the meeting for the benefit of those
shareholders who are unable to attend in person. The
Company will also announce to the ASX the outcome
of each meeting immediately following its conclusion.
immediately prior
the ASX
to
to
Recommendation 6.4
A listed entity should ensure that all substantive
resolutions at a meeting of security holders are
decided by a poll rather than by a show of hands.
Recommendation 6.5
A listed entity should give security holders the
option to receive communications from, and send
communications to, the entity and its security
registry electronically.
Yes
Yes
At each general meeting, shareholders will be given
an opportunity to ask questions in relation to the
resolutions put to shareholders at that meeting, and in
respect of the Company’s business and operations
generally.
At each AGM, shareholders will also be invited by the
Chairman to ask questions of the Company’s external
auditor and the Board in relation to the annual financial
report of the Company and the conduct of the audit.
The Company’s Shareholder Communications
Strategy provides that all substantive resolutions at a
meeting of security holders will be decided by a poll
rather than a show of hands.
Shareholders have the option of electing to receive all
shareholder communications by e-mail and can
update their communication preferences with the
Company’s registrar, Automic Registry Services, at
any time.
Security holders can also register with the Company
at info@droneshield.com to receive email notifications
following the release of a material announcement to
the ASX.
PRINCIPLES AND RECOMMENDATIONS
COMPLY
(YES/NO)
EXPLANATION
DroneShield Limited | 2021 Annual Report
17
Principle 7: Recognise and manage risk
Recommendation 7.1
The board of a listed entity should:
(a) have a committee or committees to
No
oversee risk, each of which:
(i)
has at least three members, a majority
of whom are independent Directors;
and
is chaired by an independent Director,
the charter of the committee;
the members of the committee; and
(ii)
and disclose:
(iii)
(iv)
(v) as at the end of each reporting period,
the number of times the committee
met throughout the period and the
individual attendances of the
members at those meetings; or
(b) if it does not have a risk committee or
committees that satisfy (a) above,
disclose that fact and the process it
employs for overseeing the entity’s risk
management framework.
Yes
N/A
N/A
Yes
Recommendation 7.2
The board or a committee of the board should:
Yes
(a) review the entity’s risk management
framework at least annually to satisfy
itself that it continues to be sound and
that the entity is operating with due
regard to the risk appetite set by the
board; and
(b) disclose in relation to each reporting
period, whether such a review has
taken place.
Recommendation 7.3
A listed entity should disclose:
(a) if it has an internal audit function, how
the function is structured and what role
it performs; or
(b) if it does not have an internal audit
N/A
Yes
function, that fact and the processes it
employs for evaluating and continually
improving the effectiveness of its
governance, risk management and
internal control processes.
Due to its size, the Board has determined that the
function of the Audit and Risk Committee is most
efficiently carried out with full Board participation and
accordingly, the Company has elected not to establish
a separate Audit and Risk Committee at this stage.
As a result, the duties that would ordinarily be
assigned to the Audit and Risk Committee under the
Audit and Risk Committee Charter are carried out by
the full Board.
The Audit and Risk Committee Charter is contained in
the Company’s Corporate Governance Plan which is
website
Company’s
available
https://www.droneshield.com/investors.
the
on
The Board devotes time on at least an annual basis to
fulfil the roles and responsibilities associated with
overseeing risk and maintaining the Company’s risk
management
internal
compliance and control procedures.
framework and associated
During the 2021 financial year, the Board, in carrying
out the duties typically assigned to the Audit and Risk
Committee under the Audit and Risk Committee
Charter, undertook a review of the Company’s risk
management
its Risk
Management Policy.
framework
line with
in
Due to the current size of the Company and the
manageable scale of its operations, the Board, in
carrying out the duties typically assigned to the Audit
& Risk Committee under the Audit & Risk Committee
the Company’s
Charter, have determined
existing risk management processes and internal
controls are sufficiently robust and as such, no
internal audit committee is required at this stage.
that
18
DroneShield Limited | 2021 Annual Report
PRINCIPLES AND RECOMMENDATIONS
Recommendation 7.4
A listed entity should disclose whether it has any
material exposure to environmental or social
risks and, if it does, how it manages or intends to
manage those risks.
COMPLY
(YES/NO)
Yes
EXPLANATION
The Company’s Risk Management Policy details the
Company’s risk management systems which assist in
identifying and managing potential or apparent
business, economic, environmental and social
sustainability risks (where appropriate).
the 2021
During
undertook a
management
Management Policy.
review of
framework
financial year,
the Company’s
the Company
risk
its Risk
in
line with
Principle 8: Remunerate fairly and responsibly
Recommendation 8.1
The board of a listed entity should:
(a) have a remuneration committee which:
(i)
(ii)
has at least three members, a
majority of whom are independent
Directors; and
is chaired by an independent
Director,
and disclose:
(iii)
(iv)
(v) as at the end of each reporting
period, the number of times the
committee met throughout the
period and the individual
attendances of the members at
those meetings; or
the charter of the committee;
the members of the committee; and
All material risks are announced to the market, in
accordance with the requirements of the ASX listing
rules and otherwise.
Due to the size of the Board and the scale of the
Company’s operations, the Board have determined
that the function of the Remuneration Committee is
most efficiently carried out with full Board participation
(to the extent permitted under the Corporations Act
and ASX Listing Rules), and accordingly has elected
not to establish a separate Remuneration Committee
at this stage.
As a result, the duties that would ordinarily be
assigned to the Remuneration Committee under the
Remuneration Committee Charter are carried out by
the full Board.
No
Yes
N/A
N/A
The Remuneration Committee Charter is contained in
the Company’s Corporate Governance Plan which is
available
at:
https://www.droneshield.com/investors.
the Company’s website
on
(b) if it does not have a remuneration
Yes
committee, disclose that fact and the
processes it employs for setting the
level and composition of remuneration
for Directors and senior executives and
ensuring that such remuneration is
appropriate and not excessive.
The Board devotes time on at least an annual basis to
fulfil the roles and responsibilities associated with
setting the level and composition of remuneration for
Directors and senior executives and ensuring that
such remuneration is appropriate and not excessive.
Recommendation 8.2
A listed entity should separately disclose its
policies and practices regarding the
remuneration of non-executive Directors and the
remuneration of executive Directors and other
senior executives.
Yes
The Company’s general policies and practices
regarding the remuneration of Non-Executive and
Executive Directors and other senior employees are
set out in the Remuneration Policy which is contained
in the Company’s Corporate Governance Plan which
is available on
the Company’s website at:
https://www.droneshield.com/investors.
information
Further
the Company
practices of
Remuneration Report on pages 40 to 46.
regarding
is contained
the
remuneration
the
in
Recommendation 8.3
Yes
(the
The Company’s Remuneration Committee
function of which is currently performed by the full
PRINCIPLES AND RECOMMENDATIONS
COMPLY
(YES/NO)
EXPLANATION
DroneShield Limited | 2021 Annual Report
19
A listed entity which has an equity-based
remuneration scheme should:
(i) have a policy on whether participants
are permitted to enter into transactions
(whether through the use of
derivatives or otherwise) which limit
the economic risk of participating in
the scheme; and
(ii) disclose that policy or a summary of it.
Board) is responsible for the review and approval of
any equity-based remuneration schemes offered to
Directors and Employees of the Company.
in accordance with
Further,
the Remuneration
Committee Charter, the Remuneration Committee
(the function of which is currently performed by the full
Board) is also responsible for granting permission, on
a case-by-case basis, for scheme participants to enter
transactions (whether through the use of derivatives
or otherwise) which limit the economic risk of
participating in the scheme.
issue of securities
During the 2021 financial year, the Board of the
Company authorised
to
the
Directors and employees under
its shareholder
Incentive Option Plan. To date, no
approved
participant to the Incentive Option Plan has sought (or
been granted) approval to enter into transactions
(whether through the use of derivatives or otherwise)
which limit the economic risk of participating in the
scheme.
The Company’s policy in this regard is set out in the
Company’s Remuneration Committee Charter, a copy
of which is contained in the Company’s Corporate
Governance Plan which is available on the Company’s
website at: https://www.droneshield.com/investors.
The Company also has a Securities Trading Policy
that prohibits Directors, Officers and employees from
entering into transactions or arrangements which
limits the economic risk of participating in unvested
entitlements under any equity-based remuneration
scheme.
A copy of the Securities Trading Policy is contained in
the Company’s Corporate Governance Plan which is
available
at:
https://www.droneshield.com/investors.
the Company’s website
on
20
DroneShield Limited | 2021 Annual Report
Directors’ Report
Your Directors present their report for DroneShield Limited (the “Company”) and its controlled entities (“the Group”) for the
year ended 31 December 2021.
Directors
The names of the Company’s Directors in office during the year and until the date of this report are set out below. Directors
were in office for this entire period unless otherwise stated. Details of the current members of the Board, including their
experience, qualifications, special responsibilities and term of office are included on page 7 of the Annual Report.
Position
Effective date
Independent Non-Executive
Chairman
Appointed as Independent Non-Executive Chairman 1 April 2016.
Served as Executive Chairman from 2 December 2016.
Returned to Independent Non-Executive Chairman 24 January 2017.
Appointed as CEO and Managing Director 24 January 2017.
Oleg Vornik
Executive Director, CEO and
Managing Director
Name
Directors
Peter James
Jethro Marks
Independent Non-Executive Director
Appointed 16 January 2020.
Meetings of Directors
Name
Meetings eligible to attend
Meetings attended
Directors
Peter James
Oleg Vornik
Jethro Marks
12
12
12
12
12
12
DroneShield Limited | 2021 Annual Report
21
Review of Operations and Financial Results
The Company has reported approximately doubling of its sales revenue compared to 2020, to $10.5 million, and
approximately tripling of customer and grant cash receipts to $14.7 million. Customer and grant cash receipts for the
December 2021 quarter were approximately $2.7 million. The closing cash and term deposits balance as at 31 December
2021 was $9.5 million.
The United States Department of Defense and other U.S. government agencies
The United States government is the largest counterdrone customer globally. As a result of its commitment to its U.S.
customer base, DroneShield experienced many highlights throughout 2021 and looks to build upon this success in 2022
and beyond.
In January 2022, DroneShield promoted Matt McCrann, its U.S. Vice President of Sales, to CEO of its U.S. based,
DroneShield LLC. As a substantial amount of near term anticipated growth is expected to originate from the United States,
DroneShield continues to grow its team and footprint within the market.
DroneShield will continues to expand its U.S. operations, including doubling the size of its U.S. headquarters within
Warrenton, Virginia. The Company has also continued to expand its U.S. team, across sales, engineering and support
roles.
DroneShield has continued to participate in a number of invite-only U.S. Government led Test and Evaluation (T&E)
exercises, most notably the Joint Counter-sUAS Office (JCO) led evaluation at Yuma Proving Grounds (YPG). There are
many entry points and influencers within the C-UAS market in the US. Due to its market size and the wide-ranging
requirements for C-UAS, trials and evaluations like these, serve as key milestones towards subsequent purchases by each
primary agency.
DroneShield continues to increase its presence and visibility within the U.S. market, which now includes a customer base
that spans Department of Defense, Federal and State level government, Public Safety, and commercial organisations and
integrators. In 2021, DroneShield successfully delivered several orders across the U.S. Government to include Military,
Federal, and State level law enforcement agencies. Several of these were follow on orders and expansion projects with
existing customers, which is a testament to the quality of the products and solutions provided.
Image: U.S. Government agency DroneSentryTM trials
22
DroneShield Limited | 2021 Annual Report
Image: DroneSentryTM system deployed in the U.S.
DroneSentry-XTM successfully completed a demonstration exercise with the U.S. Navy. The system was deployed on the
Stiletto experimentation vessel for six weeks, successfully completing a range of performance and evaluation metrics.
DroneSentry-XTM is a high-performance detection and mitigation solution for a wide range of environments including ground
mobility operations, maritime security and fixed-site base requirements. DroneSentry-XTM is powered by RFAI,
DroneShield’s cutting-edge AI/ML signal detection and classification engine, providing unparalleled performance in the C-
UAS space. DroneSentry-XTM’s open architecture and interoperability allows users to easily integrate DroneSentry-XTM
with other solutions to further enhance existing mission systems or counter-UAS capabilities.
The system demonstrated overall detection capability, detection and defeat ranges, on-the-move operation in various sea
states, and effectiveness against drone swarms, involving a wide range of unmanned robotic threats.
Image: DroneSentry-XTM on the US Navy Stiletto vessel
The successful U.S. Navy demonstration validates other recent DroneSentry-XTM evaluations by the U.S. Department of
Defense, Department of Homeland Security, and both Federal and State Law Enforcement agencies.
The Company entered into a new Cooperative Research and Development Agreement (CRADA) with the U.S. Department
of Homeland Security Science and Technology Directorate (“DHS S&T”). The research will involve DroneShield’s multi-
sensor Unmanned Aerial System (“UAS”) detection and mitigation capabilities, with the primary focus on DroneSentryTM
and DroneSentry-C2TM solutions for fixed and semi-fixed site applications.
DroneShield Limited | 2021 Annual Report
23
Image: DroneShield’s DroneSentry-XTM system on a vehicle
In the Law Enforcement sector, the ease of use and cost-effectiveness of DroneShield’s solutions have led to multiple
orders from State and Local law enforcement and Homeland Security agencies.
In February 2022, State of Texas signed a 5 year framework agreement enabling streamlined purchasing of DroneShield
equipment by the State’s Government agencies. Also in February 2022, DroneShield announced a follow-up $750,000
contract with a major U.S. Government agency, as DroneShield works through milestones for a major purchase with that
customer.
Australian Department of Defence and other government agencies
Being an Australian sovereign industrial defence capability business, DroneShield is well positioned for work with the
Australian Department of Defence (“DoD”) and other Government agencies.
During the year, the Company successfully completed its first Artificial Intelligence contract with the Department of Defence.
DroneShield subsequently received a $3.8 million, 2-year R&D contract with the Department of Defence. The contract was
awarded to DroneShield on a sole source basis. Importantly, the contract was not in C-UAS, but Electronic Warfare and
Signals Intelligence, an adjacent area utilising an existing DroneShield skillset, but with much wider applications.
DoD has further awarded a third, 12-month $800,000 contract relating to Artificial Intelligence in multi-domain applications
including sensor fusion of these separate domains, such as computer vision and electronic warfare. The work relates to
both the counterdrone space as well as more general military/Government agency applications.
Additional, and larger, contracts are expected with the Department of Defence, as DroneShield builds up its capabilities in
the Electronic Warfare and Signals Intelligence arena.
As part of the engagement with the Department of Defence, as DroneShield is in the business of understanding, and
minimising, defence and Government customer vulnerabilities, secret clearances are important for closer and more
productive customer engagements as the Company scales its business. During the year, the Company was accordingly
approved for the Defence Industry Security Program (“DISP”) process and became eligible for a defence clearance.
Australian Army has recently released images of DroneShield’s equipment in their deployment, in a mobile configuration
on a vehicle. These can be viewed here.
In December 2021, the Australian Communications and Media Authority (ACMA), the Australian Federal Government
agency regulator of the communications spectrum nationally, granted DroneShield the first exemption permit of its kind to
both undertake advanced testing of the Company’s Electronic Warfare and counterdrone portfolio in Australia. The
exemption has appropriate safeguards in place to balance the need to develop and test advanced technologies in Australia,
while maintaining restrictions around impact on the broader community. This permit substantially accelerates the
development and optimisation of advanced Artificial Intelligence-powered electronic warfare and counter-terrorism
technologies here in Australia, and we are excited to rapidly move forward in undertaking the work, at DroneShield and
University of Technology Sydney (UTS) facilities.
24
DroneShield Limited | 2021 Annual Report
Image: DroneShield’s AI-powered body-worn RfPatrol sensor
Middle East
During the year, DroneShield received the remaining $2.3 million (in addition to the funds previously received by
DroneShield under this order) for a shipment of the remaining DroneGun TacticalTM units under a prior Middle Eastern
Ministry of Defence order. Receipt of the payment successfully concluded the contract.
Completion of the contract has been an important milestone, demonstrating DroneShield’s ability to successfully navigate
doing business in one of the most challenging yet most lucrative regions globally for Western companies, in terms of
successful management of stakeholders and achieving outcomes.
It also highlighted the global leadership positioning of DroneShield products, and its best-in-breed performance, as
confirmed by this customer who faces daily UAS threats on their home soil, like no other customer globally.
DroneShield also continues to pursue the $65 million to $75 million potential order (US$45-55 million), with a fully
completed form of contract awaiting execution by the sovereign customer.
The United Kingdom – Partnership with BT
DroneShield continues its partnership with BT, with UK Ministry of Defence (“UK MOD”) as the prime focus, along with law
enforcement and airport customers. DroneShield and BT have made substantial inroads with UK customers over the last
12 months, despite the COVID-19 slowdown.
Europe
During 2021, DroneShield completed multiple order deployments and trials throughout Europe.
DroneShield Limited | 2021 Annual Report
25
Image: DroneSentryTM deployments in Europe
Image: DroneShield system deployment (RfOneTM on the right) at a major European airport
Image: DroneSentryTM deployment in Europe
DroneShield has participated at a number of key European trials and exhibitions including Interpol’s Oslo Airport C-UAS
evaluation and the MILIPOL exhibition in France.
26
DroneShield Limited | 2021 Annual Report
Rest of the World
DroneShield has made high profile sales and is in active ongoing project discussions around the world, ranging across
Brazil, Mexico, Latin America, Indonesia, Japan, Malaysia, and many others. These markets are seeing extensive use of
drones for nefarious applications, and material budgets have been allocated, and continue to be allocated, to combat the
drone issue.
Product Development
DroneShield continues to position itself at the cutting edge of solutions for detection and response to a wide variety of
asymmetric multi-domain threats, as the greyzone conflict continues to rapidly rise, at both non-State actor level and State-
on-State warfare.
Image: DroneShield application software team meeting
Next Gen Artificial Intelligence Software Rollout
In February 2021, DroneShield announced the rollout of RFAITM, its Machine Learning/AI based detection and classification
software, to all its existing customer systems, with the April quarterly update continuing to build on this world leading
platform, with several break-through enhancements.
The subsequent quarterly updates have included an increase in ruggedness and versatility of the system and incorporated
a number of user-suggested features from the global deployment base of DroneShield’s body-worn, on-the-move and base
protection systems. The updates also included compatibility of the DroneSentry-C2TM command-and-control ecosystem
with additional partner sensor products.
DroneShield utilises its proprietary techniques in signal processing and Machine Learning/AI to do near-real time detection
and identification of unmanned robotic systems and, more broadly, other potential threats in the Electronic Warfare fields.
The result is a dramatic increase in detection responsiveness, lower false positives and a significant increase in the speed
at which new threats are detected, classified and tracked by the DroneShield systems.
One of the key achievements that sets DroneShield’s technology substantially ahead of the existing technologies globally,
is a very lightweight machine learning architecture designed to run on low power FPGA (Field-Programable Gate Array)
hardware. This enables the system to be deployed for long term periods in power scarce, air-gapped environments.
DroneShield Limited | 2021 Annual Report
27
Image: DroneShield RF embedded team undertaking software field testing
The software runs on all DroneShield platforms including RfPatrolTM, DroneSentryTM and DroneSentry-XTM.
Future device software updates will build on this system architecture and increase performance and the number of
detectable threats.
DroneShield customers receive regular software updates via enrolling in a Subscription-as-a-Service (SaaS) model at the
time of purchase of their systems. Importantly, the software also has capabilities for deployment outside of the C-UAS
space, on a hardware agnostic basis.
Image: DroneSentryTM system
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DroneShield Limited | 2021 Annual Report
Image: DroneSimTM, a lightweight and rapidly deployable UAS/drone simulator that is able to mimic common drone signals
Secure Software Portal
As DroneShield continues to place an increasing number of deployed devices with software subscriptions, it launched a
secure portal, providing an easy and secure way for its customers to access periodic software updates.
Image: DroneShield’s secure software portal
DroneShield Limited | 2021 Annual Report
29
Immediate Response Kit (IRK)
In June 2021, DroneShield announced the release of Immediate Response
Kit (IRKTM), a rapidly deployable C-UAS detection and defeat kit.
IRKTM consists of an RfPatrol MKIITM portable (1.2kg incl battery) detection
device and a DroneGun MKIIITM (2.1kg incl. battery) defeat device, in a single
rugged carry case.
Image: Immediate Response Kit (IRK)
DroneOptIDTM 2.0
In 2021, DroneShield
Intelligence/Machine Learning based software.
released DroneOptIDTM 2.0,
the second-generation version of
its optical Artificial
The original DroneOptIDTM system, developed in collaboration with the University of Technology Sydney (UTS) under a
grant from the Australian Government, is a sophisticated AI engine to detect, classify and track small, rapidly moving UAS,
as well as their payloads.
The updates include effectiveness in a wider range of environments including night-time via thermal sensors, improved
detection and classification of UAS payloads and cutting-edge technology estimating the target distance and altitude from
the sensor.
DroneShield utilises its proprietary techniques in signal processing and Machine Learning/AI to do near-real time detection
and identification of unmanned robotic systems (UAVs, UGVs and USVs). Its DroneOptIDTM the optical sensor stream
works in parallel with RFAI cutting edge software engine in the radiofrequency spectrum sensing space.
In addition to enabling camera-agnostic substantially enhanced capabilities of target tracking via a layer of software,
DroneOptIDTM also opens the door to a variety of sophisticated target tracking applications on battlefield, cluttered urban
and other complex environments, for a variety of threats, which is of interest to the Company’s existing and prospective
Government and military customer base.
Image: DroneOptIDTM module in thermal mode within the DroneSentry-C2TM system
Team and Operations
The DroneShield team is now at 60 staff (doubling from 30 staff 12 months ago) - substantially engineers, sales and field
support, and production technicians. The team is expected to remain at approximately the same size in the near term, to
optimise the cost structure. Operating monthly costs (before taking revenues and grants into account) is approximately
$1 million (excluding inventory investment).
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DroneShield Limited | 2021 Annual Report
Image: Gold Patrol (named after DroneShield RfPatrolTM) monthly ceremony, DroneShield’s Oscars where each team
competes for the award based on an achievement that month
DroneShield continues outsourcing of larger production runs to an experienced defence manufacturing contractor in
Adelaide (a fully Australian owned and operated medium size specialised electronics manufacturer). The manufacturer
has completed initial large production runs (50-100 units), successfully working through the scalability considerations (the
earlier production runs were of quantities of 10-20 units). Two outsourced manufacturers are now used in total.
DroneShield continues to do its own manufacturing of smaller batches of its products (co-located with its main R&D
premises in Sydney, enabling agile product refinement).
DroneShield Limited | 2021 Annual Report
31
Image: RfPatrol MKIITM units following final QC testing
Image: DroneSentry-XTM heatsinks during the manufacturing process
Having successfully undertaken production runs of 100-unit batches across multiple product lines, enables confidence in
scaling capabilities, at its own and its outsourced facilities.
The production processes have continued throughout 2021, in a COVID-compliant manner.
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DroneShield Limited | 2021 Annual Report
Image: RfOne MKIITM units undergoing final QC testing
Image: DroneSentry-XTM prepared for shipment by the DroneShield team
DroneShield Limited | 2021 Annual Report
33
ISO 9001 Certification
During 2021, DroneShield was awarded the international standard ISO9001:2015 Quality Management Systems
certification.
The certification was awarded by SAI Global, the internationally recognised certifying body.
ISO 9001 specifies global best practice in quality management systems, using a process-driven approach. It shows
organisations how to improve and maintain leadership, governance, communications and employee engagement to deliver
unique, high-quality customer and brand experiences.
Certification recognises that the processes and procedures implemented by DroneShield are aligned with global best
practices.
The certification covers DroneShield’s Quality Management System for the engineering design, software development,
manufacture and field services, including specifically for counter-drone technology.
Market Insights for Counterdrone
In December, DroneShield released an infographic highlighting the $10bn Counterdrone market, underscoring the large
opportunity:
While most trade shows continue to be postponed or held virtually due to COVID-19 during the year, DroneShield continued
to participate in key events, directly or via partners.
In Australia, these events included the Army Robotics Exposition (ARX) and Land Forces Expo, both in Brisbane, where
the Company exhibited both in its own stand and at the stands of its exhibiting partners.
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DroneShield Limited | 2021 Annual Report
Image: DroneShield CEO Oleg Vornik and Sales Director Red McClintock, with Hon Stuart Ayres, Minister for Jobs,
Investment, Tourism and Western Sydney of New South Wales, at Land Forces 2021
Image: DroneShield’s DroneSentry-XTM system on an Unmanned Ground Vehicle, and the DroneShield stand, at the
Australian Army’s Robotics Expo (ARX)
DroneShield was included, for another consecutive year, in the Australian Defence Sales catalogue, unveiled by Hon
Melissa Price, Australian Defence Industry Minister. The Catalogue is a key brief by the Australian Government for foreign
defence purchasers looking for Australian capability providers.
DroneShield's US events included West Virginia Mock Prison Riot, the National Sheriff's Association meeting in Phoenix
Arizona, and the 19th Law Enforcement Equipment and Technology Expo hosted by U.S. Customs and Border Patrol
(CBP). DroneShield also participated at the US Army’s AUSA Conference, Defense in Depth (DiDEX) and Maneuver and
Fires Integrated Experiment (MIFX) events, as well as Sea Air Space.
DroneShield Limited | 2021 Annual Report
35
Image: DroneSentry-X on ForcePro vehicle (DroneShield’s Netherlands partner)
Industry Recognition
DroneOptIDTM Artificial Intelligence/Machine Learning computer vision software won two awards at the 2021 NSW iAwards
- the Australian Information Industry Association’s awards program that celebrates excellence in Australian Innovation.
DroneOptIDTM was developed with the University of Technology Sydney (UTS) under the Defence Innovation Network
(DIN) grant scheme.
Image: DroneShield engineer Guillaume Jounel winning the 2021 iAwards, for the DroneOptIDTM computer vision AI
project, developed in conjunction with UTS under a defence grant
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DroneShield Limited | 2021 Annual Report
DroneShield was selected as the Advanced Technologies Award winner in the Premier’s NSW Export awards:
DroneShield won Defence Innovator of the Year and Engineer of the Year Awards at the DefenceConnect event in late
2021:
The Company also won the InnovationAus award in the Defence category:
DroneShield Limited | 2021 Annual Report
37
DroneShield launched a major website upgrade, enhancing its brand presence and enabling additional content, with an
increased amount of digital engagement since the start of COVID-19.
Image: enhanced DroneShield website (www.droneshield.com)
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DroneShield Limited | 2021 Annual Report
DroneShield CEO Oleg Vornik authored a number of opinion articles on greyzone/asymmetric and robotic warfare,
published in a range of mainstream and defence media channels, underscoring DroneShield’s thought leadership:
Carla Balanco, DroneShield’s CFO and Company Secretary, was recognised as a finalist in the ADM Women in Defence
Awards:
Image: DroneShield CFO Carla Balanco recognised as a finalist in ADM’s Women in Defence Awards during 2Q21
Principal Activities
The principal activity of the Company is the development, commercialisation and sales of hardware and software
technology for drone detection and security.
DroneShield Limited | 2021 Annual Report
39
Significant Changes in the State of Affairs
Other than discussed in the Review of Operations above, there have been no significant changes in the state of affairs of
the Company during the year ended 31 December 2021.
Significant Events after the Balance Date
Subsequent to 31 December 2021, the following occurred;
-
12 January 2022
•
•
•
14,650,000 unlisted and vested Class X options were issued to employees. Each are exercisable at
$0.25 per option and expire on 12 January 2024.
600,000 unlisted and vested Class Y options were issued to employees. Each are exercisable at $0.25
per option and expire on 12 January 2027.
100,000 unlisted and vested Class Z options were issued to an employee. Each are exercisable at $0.20
per option and expire on 12 April 2022.
-
21 January 2022
•
250,000 unlisted and vested Class Y options were issued to an employee. Each are exercisable at $0.25
per option and expire on 12 January 2027.
Likely developments and expected results of operations
Refer to the Chairman’s Review to shareholders, on page 3, for further information on likely developments and expected
results of the Group.
Environmental regulation
The Group’s operations are not subject to any significant environmental regulation under either Commonwealth or State
legislation. The Board considers that adequate systems are in place to manage the Group’s obligations and is not aware
of any breach of environmental requirements as they relate to the Group.
Dividends
No dividends were declared or paid to shareholders during the financial year (2020: $nil).
Insurance of officers
During or since the end of the financial year the Company has paid, or agreed to pay, premiums to insure persons who
are, or have been, an officer of the Company, or any past, present or future Director or officer of the Company. The
contracts prohibit disclosure of the amount of the premium paid. The liabilities insured include costs and expenses that
may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as
officers of entities of the Group.
Proceedings on behalf of the Company
No proceedings have been brought or intervened in on behalf of the Group with leave of the Court under section 237 of
the Corporations Act 2001.
Non-audit services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s
expertise and experience with the Company and/or the Group are important.
Details of the amounts paid or payable to the auditor (HLB Mann Judd Assurance (NSW) Pty Ltd) for audit and non-audit
services provided during the year are outlined in Note 27 of the financial statements.
The Board of Directors has considered the position and is satisfied that the provision of non-audit services is compatible
with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied
that the provision of non-audit services provided by the auditor did not compromise the auditor independence requirements
of the Corporations Act 2001 for the following reasons:
-
-
all non-audit services have been reviewed by the Board to ensure they do not impact the objectives and
impartiality of the auditor;
none of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants, including review or auditing the auditor’s own work, acting in a
management or decision-making capacity for the Group, acting as advocate for the Group or jointly sharing
economic risks and rewards.
Auditor’s Independence Declaration
A copy of the auditor’s independence declaration as required under the Section 307C of the Corporations Act 2001 is set
out on page 47.
40
DroneShield Limited | 2021 Annual Report
Directors’ Report- Remuneration Report (audited)
Executive remuneration governance
The Board reviews and approves the remuneration policy to enable the Company to attract and retain executives and
Directors who will create value for shareholders having consideration to the amount deemed to be commensurate for a
company of its size and level of activity as well as the relevant Directors’ time, commitment and responsibility. The Board
is also responsible for reviewing any employee incentive and equity-based plans including the appropriateness of
performance hurdles and total payments proposed.
Remuneration committee
Due to the size and nature of the existing Board and the magnitude of the Company’s operations, the Company does not
currently have a Remuneration Committee. In accordance with the Company’s Corporate Governance Plan, which is
available on the Company’s website https://www.droneshield.com/investors, the full Board currently carries out the duties
that would ordinarily be assigned to the Remuneration Committee under the written terms of reference for that committee.
The Board will devote time on an annual basis to fulfil the roles and responsibilities associated with setting the level and
composition of remuneration for Directors and senior executives and ensuring that such remuneration is appropriate and
not excessive. The Managing Director of the Company is responsible for evaluating the performance of senior executives
on an annual basis. The Board of Directors is responsible for overseeing the Managing Director’s performance evaluations.
This evaluation is based on specific criteria, including the business performance of the Company, whether strategic
objectives are being achieved and the development of management and personnel.
Directors’ remuneration
The remuneration of an Executive Director is decided by the Board, without the affected Executive Director participating in
that decision-making process.
The total maximum remuneration of Non-Executive Directors is initially set by the Board and subsequent variation is by
ordinary resolution of shareholders in general meeting in accordance with the Constitution, the Corporations Act 2001 and
the ASX Listing Rules, as applicable.
The determination of Non-Executive Directors’ remuneration within that maximum will be made by the Board having regard
to the inputs and value to the Company of the respective contributions by each Non-Executive Director. The current amount
has been set at an amount not to exceed $500,000 per annum.
In addition, a Director may be paid fees or other amounts (i.e. subject to any necessary shareholder approval, non-cash
performance incentives such as options) as the Directors determine where a Director performs special duties or otherwise
performs services outside the scope of the ordinary duties of a Director.
Directors are also entitled to be paid reasonable travelling, hotel and other expenses incurred by them respectively in or
about the performance of their duties as Directors.
The Group’s remuneration policy for Executive Directors (including the Managing Director) and senior management is
designed to promote superior performance and long-term commitment to the Group. Executives receive a base
remuneration which is market related and may also be entitled to performance-based remuneration at the ultimate
discretion of the Board.
Overall remuneration policies are subject to the discretion of the Board and can be changed to reflect competitive market
and business conditions where it is in the interests of the Group and the Company’s shareholders to do so.
Executive remuneration framework
The Group’s reward policy reflects the benefits of aligning executive remuneration with shareholders’ interests and to retain
appropriately qualified executive talent for the benefit of the Group. The main principles of the policy are:
(a)
(b)
(c)
remuneration is reasonable and fair, taking into account the Group’s obligations at law, the competitive market in
which the Group operates and the relative size and scale of the Group’s business;
individual reward should be linked to clearly specified performance targets which should be aligned to the Group’s
short term and long-term performance objectives; and
executives should be rewarded for both financial and non-financial performance.
DroneShield Limited | 2021 Annual Report
41
Directors’ Report- Remuneration Report continued
Executive remuneration framework continued
The total remuneration of Executive Directors (including the Managing Director) and other senior managers consist of the
following:
(a)
(b)
(c)
(d)
Salary - Executive Directors and senior managers may receive a fixed sum payable monthly in cash;
Short term incentive - Executive Directors and nominated senior managers are eligible to participate in a profit
participation plan if deemed appropriate. The Board may at its discretion award bonuses for exceptional
performance in relation to each person’s pre-agreed Key Performance Indicators;
Post-employment benefits – this refers to superannuation schemes; and
Long term incentives - Executive Directors may participate in share option schemes with the prior approval of
shareholders. Executives may also participate in employee share option schemes, with any option issues generally
being made in accordance with thresholds set in plans approved by shareholders. The Board, however, considers
it appropriate to retain the flexibility to issue options to executives outside of approved Employee Option Plans in
exceptional circumstances.
KMP remuneration disclosures in detail
The Directors and other Key Management Personnel (“KMP”) of the Company during or since the end of the financial year
were:
Name
Position
Effective date
Non-Executive Directors
Peter James
Independent Non-Executive Chairman
Appointed as Independent Non-Executive Chairman 1 April 2016.
Served as Executive Chairman from 2 December 2016.
Returned to Independent Non-Executive Chairman 24 January 2017.
Jethro Marks
Independent Non-Executive Director
Appointed 16 January 2020.
Executive Director
Oleg Vornik
Executive Director,
Managing Director and CEO
Appointed as CEO and Managing Director 24 January 2017.
42
DroneShield Limited | 2021 Annual Report
Directors’ Report- Remuneration Report continued
Shareholdings of KMP
The number of shares in the Company and subsidiary held during the financial year by each Director of DroneShield and
other KMP (of which there are none), including their personally related entities, are set out in the following table:
(a)
Received during the
year on exercise of
options
(Number)
(b)
Other changes
during the year
(Number)
Balance at
31 December
2021
(Number)
Opening balance
(Number)
3,452,522
83,333
6,600,000
500,000
-
-
10,052,522
583,333
4,370,022
12,400,000
57,000
16,827,022
7,905,877
19,500,000
57,000
27,462,877
31 December 2021
Non-Executive Directors
Peter James
Jethro Marks
Executive Director
Oleg Vornik
Total
Notes
(a) The options exercised by Jethro Marks during the year were exercised at $0.25 per share, using a limited
recourse loan provided by the Company. The loan is interest free and due for repayment by June 2026. The
loan is non-recourse except against the shares issued on exercise of the options and are held by Jethro Marks.
The options exercised by Peter James and Oleg Vornik were Zero Price (“Zepo”) options, which vested during
the year.
(b) Shares purchased during the year.
Opening balance
(Number)
Received during the
year on exercise of
options
(Number)
Other changes
during the year
(Number)
Balance at
31 December
2020
(Number)
3,170,435
-
745,435
132,500
83,333
-
149,587
3,452,522
-
-
83,333
(a)
3,970,435
250,000
149,587
4,370,022
7,886,305
465,833
299,174
7,905,877
31 December 2020
Non-Executive Directors
Peter James
Jethro Marks
Robert Clisdell
Executive Director
Oleg Vornik
Total
Notes
(a) Robert Clisdell resigned as a director on 16 January 2020 and therefore his share options holdings are no longer
shown in the table above as he no longer is a member of key management personnel.
DroneShield Limited | 2021 Annual Report
43
Directors’ Report- Remuneration Report continued
Share options held by KMP
Opening
balance
(Number)
Granted as
compensation
(Number)
Options
lapsed
(Number)
(a)
Options
exercised
(Number)
Balance at
31 December
2021
(Number)
Vested
Options
December
2021
(Number)
Unvested
Options
December
2021
(Number)
7,262,500
6,600,000
(6,600,000)
(6,600,000)
166,667
500,000
-
(500,000)
662,500
166,667
-
662,500
83,333
83,334
31 December
2021
Non-Executive
Directors
Peter James
Jethro Marks
Executive Director
Oleg Vornik
13,650,000
12,400,000
(12,400,000)
(12,400,000)
1,250,000
250,000
1,000,000
Total
21,079,167
19,500,000
(19,000,000)
(19,500,000)
2,079,167
333,333
1,745,834
Notes
(a) The options exercised by Jethro Marks during the year were exercised at $0.25 per share, using a limited
recourse loan provided by the Company. The loan is interest free and due for repayment by June 2026. The
loan is non-recourse except against the shares issued on exercise of the options and are held by Jethro Marks.
The options exercised by Peter James and Oleg Vornik were Zero Price (“Zepo”) options, which vested during
the year.
Opening
balance
(Number)
Granted as
compensation
(Number)
Options
lapsed
(Number)
(a)
Options
exercised
(Number)
Balance at
31 December
2020
(Number)
Vested
Options
December
2020
(Number)
Unvested
Options
December
2020
(Number)
7,395,000
-
-
250,000
-
-
-
(132,500)
7,262,500
(83,333)
166,667
-
-
-
-
-
7,262,500
166,667
(a)
31 December
2020
Non-Executive
Directors
Peter James
Jethro Marks
Robert Clisdell
1,795,000
-
Executive Director
Oleg Vornik
13,900,000
-
-
(250,000)
13,650,000
-
13,650,000
Total
23,090,000
250,000
-
(465,833)
21,079,167
-
21,079,167
Notes
(a) Robert Clisdell resigned as a director on 16 January 2020 and therefore his share options holdings are no longer
shown in the table above as he no longer is a member of key management personnel.
44
DroneShield Limited | 2021 Annual Report
Directors’ Report- Remuneration Report continued
Performance based remuneration granted and exercised during the year
31 December 2021
31 December 2020
(a)
Value granted
$
(b)
Value exercised
$
(a)
Value granted
$
(b)
Value exercised
$
1,122,000
33,179
1,122,000
33,179
-
7,287
86,125
54,166
2,232,000
2,232,000
-
162,500
3,387,179
3,387,179
7,287
302,791
Non-Executive
Directors
Peter James
Jethro Marks
Executive Directors
Oleg Vornik
Total
Notes
(a) The value at grant date is calculated using the Black Scholes Model.
(b) The value of the options exercised is calculated using the exercise price.
Terms and conditions of the share-based payment arrangements
The terms and conditions of each grant of options affecting remuneration in the current or a future reporting period are as
follows:
Class of
Options
issued
during 2021
Number of
Options
Grant date
Vesting date
Expiry date
Exercise
Price
Value per
option at
grant date $
Performance
achieved
% Vested
during 2021
ZEPO
12,400,000
26-May-21
16-Aug-21
31-Aug-24
ZEPO
6,600,000
27-May-21
16-Aug-21
31-Aug-24
-
-
U
500,000
26-May-21
27-May-21
27-May-24
0.25
0.22
0.22
0.07
Yes
Yes
Yes
100%
100%
100%
Class of
Options
issued
during 2020
Number of
Options
Grant date
Vesting date
Expiry date
Exercise
Price
Value per
option at
grant date $
Performance
achieved
% Vested
during 2020
Q
Q
Q
83,333
28-Aug-20
30-Nov-20
30-Jun-23
83,333
28-Aug-20
30-Nov-21
30-Jun-23
83,333
28-Aug-20
30-Nov-22
30-Jun-23
0.65
0.65
0.65
0.0291
0.0291
0.0291
Yes
to be
determined
to be
determined
100%
n/a
n/a
DroneShield Limited | 2021 Annual Report
45
Directors’ Report- Remuneration Report continued
Remuneration details of KMP
Salary and
fees
$
Movement in
employee
provisions
$
Cash
incentive
$
Post-
employment
benefits
$
Termination
payment
$
Share based
payments
(options)
$
Total
$
31 December 2021
Non-Executive Directors
Peter James
Jethro Marks
Executive Director
Oleg Vornik (a)
99,993
50,000
-
-
45,455
-
-
-
307,369
63,727
150,000
22,631
Total
457,362
63,727
195,455
22,631
-
-
-
-
210,440
36,022
355,888
86,022
419,107
962,834
665,569
1,404,744
Salary and
fees
$
Movement in
employee
provisions
$
Cash
incentive
$
Post-
employment
benefits
$
Termination
payment
$
Share based
payments
(options)
$
Total
$
31 December 2020
Non-Executive Directors
Peter James
Jethro Marks
Robert Clisdell (a)
Executive Director
Oleg Vornik
94,996
44,651
1,290
-
-
-
299,730
17,752
Total
440,667
17,752
-
-
-
-
-
-
-
-
21,348
21,348
-
-
-
-
-
431,681
3,459
207,821
526,677
48,110
209,111
849,193
1,188,023
1,492,154
1,971,921
Notes
(a) Robert Clisdell resigned as a director on 16 January 2020.
46
DroneShield Limited | 2021 Annual Report
Directors’ Report- Remuneration Report continued
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Fixed
2020
2021
Performance
2020
Non-Executive Directors
Peter James
Jethro Marks
Executive Director
Oleg Vornik
18%
n/a
29%
28%
58%
41%
82%
n/a
71%
2021
72%
42%
59%
The performance component of remuneration received by Directors relates to share options. The issue of share options to
Directors is subject to shareholder approval. Remuneration in the form of DroneShield share options is used as a tool to
align KMP remuneration with shareholder interests.
The employment agreement of the Executive Director during the year included the following key terms:
Name
Positions held during the year
Key terms of employment agreement
Oleg Vornik
CEO and Managing Director
-
-
-
-
-
Base remuneration of $330,000 p.a.
Eligible to participate in short term incentive program
Eligible to participate in long term incentive program
A notice period of 3 months, except in defined circumstances
No fixed term
Advisory Board remuneration
During the year, there was no Advisory Board.
31 December 2020
Hon. Jay M Cohen
Total
End of Remuneration Report.
Salary and Fees
$
-
-
Share based
payments
(options)
$
-
-
Total
$
-
-
This Directors’ Report is made in accordance with a resolution of Directors.
Peter James
Independent Non-Executive Chairman
Sydney, NSW
22 February 2022
DroneShield Limited | 2021 Annual Report
47
Auditor’s Independence Declaration
Auditor’s Independence Declaration
To the directors of DroneShield Limited:
As lead auditor for the audit of the consolidated financial report of DroneShield Limited for the year ended
31 December 2021, I declare that, to the best of my knowledge and belief, there have been no
contraventions of:
(a)
the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit;
and
(b) any applicable code of professional conduct in relation to the audit.
This declaration is in relation to DroneShield Limited and the entities it controlled during the period.
Sydney, NSW
22 February 2022
N J Guest
Director
48
DroneShield Limited | 2021 Annual Report
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Revenue
Other income
Cost of sales
Product development expense
Sales and customer service expense
Corporate and support expense
Corporate governance expense
Share based payment expense
Loss before income tax
Income tax benefit
Loss after income tax
Other comprehensive income:
Items that may be reclassified to profit or loss
Adjustments on translation of foreign controlled entity
31 December
2021
$
31 December
2020
$
Note
3
4
5
6
8
7
10,598,124
5,557,736
345,687
(2,849,001)
(5,569,604)
(2,832,455)
(4,253,768)
(669,222)
(1,168,041)
325,836
(1,826,864)
(3,287,028)
(1,778,252)
(2,626,681)
(590,627)
(2,524,702)
(6,398,280)
(6,750,582)
1,087,833
883,592
(5,310,447)
(5,866,990)
136,376
9,922
Total comprehensive loss for the period
(5,174,071)
(5,857,068)
Basic loss per share
Diluted loss per share
21
21
(0.01)
(0.01)
(0.02)
(0.02)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction
with the accompanying notes.
Consolidated Statement of Financial Position
DroneShield Limited | 2021 Annual Report
49
31 December
2021
$
31 December
2020
$
Note
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other investments
Total current assets
Non-current assets
Plant, equipment and intangible assets
Right-of-use assets
Other investments
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade payables
Provisions
Other liabilities
Lease liabilities
Borrowings
Total current liabilities
Non-current liabilities
Provisions
Lease liabilities
Borrowings
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Reserves
Accumulated losses
Total equity
9
10
11
12
13
14
12
15
16
17
18
15
17
18
19
9,419,235
859,131
6,915,939
75,000
7,858,738
3,710,494
2,018,279
8,430,034
17,269,305
22,017,545
1,028,471
-
42,900
874,115
236,973
-
1,071,371
1,111,088
18,340,676
23,128,633
478,382
408,631
1,566,894
152,985
884,363
184,007
1,994,265
135,461
56,584
107,043
2,663,476
3,305,139
54,995
38,802
-
-
191,108
42,953
93,797
234,061
2,757,273
3,539,200
15,583,403
19,589,433
36,983,156
5,299,211
(26,698,964)
37,283,293
7,765,812
(25,459,672)
15,583,403
19,589,433
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
50
DroneShield Limited | 2021 Annual Report
Consolidated Statement of Changes in Equity
Contributed
equity
$
Options
reserve
$
Foreign
currency
translation
reserve
$
Accumulated
losses
$
Total equity
$
Balance at 1 January 2020
21,012,607
6,157,367
(22,090)
(20,496,771)
6,651,113
Transfer from option reserve to accumulated
losses
Transactions with owners in their capacity as
owners:
Options issued
Contributions of equity, net of transaction costs
Repayment of management/ employee option
exercise loan
-
(904,089)
-
904,089
-
-
2,524,702
16,099,895
170,791
-
-
16,270,686
2,524,702
-
-
-
-
-
-
-
2,524,702
16,099,895
170,791
-
18,795,388
Exchange difference on translation of foreign
operations
Loss for the period
Total comprehensive loss for the period
-
-
-
-
-
-
9,922
-
9,922
-
(5,866,990)
(5,866,990)
9,922
(5,866,990)
(5,857,068)
Balance at 31 December 2020
37,283,293
7,777,980
(12,168)
(25,459,672)
19,589,433
Balance at 1 January 2021
37,283,293
7,777,980
(12,168)
(25,459,672)
19,589,433
Transfer from option reserve to accumulated
losses
Transactions with owners in their capacity as
owners:
Net share-based payments movement
Equity transaction costs
-
(3,771,018)
-
3,771,018
-
-
1,168,041
(300,137)
(300,137)
-
1,168,041
-
-
-
-
1,168,041
300,137
300,137
-
1,168,041
Exchange difference on translation of foreign
operations
Loss for the period
Total comprehensive loss for the period
-
-
-
-
-
-
136,376
-
136,376
-
(5,310,447)
(5,310,447)
136,376
(5,310,447)
(5,174,071)
Balance at 31 December 2021
36,983,156
5,175,003
124,208
(26,698,964)
15,583,403
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
DroneShield Limited | 2021 Annual Report
51
Consolidated Statement of Cash Flows
31 December
2021
$
31 December
2020
$
Note
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Other receipts
Research and Development Tax and other incentives received
13,444,547
(21,060,606)
79,200
1,227,121
3,660,494
(10,026,619)
1,706,555
Net cash flows used in operating activities
29
(6,309,738)
(4,659,570)
Cash flows from investing activities
Purchase of plant and equipment
(467,452)
(772,158)
Net cash flows used in investing activities
(467,452)
(772,158)
Cash flows from financing activities
Interest income on cash deposits
Proceeds from share and option issue
Proceeds from borrowings
Repayment of borrowings
Borrowings transaction costs
Payments for lease liabilities
Share issue transaction costs
Repayment of employee loans
35,827
-
-
-
-
(122,033)
-
-
23,657
16,967,000
750,368
(600,000)
(12,000)
(114,277)
(876,344)
170,791
Net cash flows (used in) from financing activities
(86,206)
16,309,195
Cash and cash equivalents at beginning of period
16,288,772
5,485,000
Net (decrease) increase in cash and cash equivalents
(6,863,396)
10,877,467
Exchange rate adjustments to balances held in foreign
currencies
111,759
(73,695)
Cash and term deposits at the end of the year
9 & 12
9,537,135
16,288,772
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
52
DroneShield Limited | 2021 Annual Report
Notes to the Financial Statements
Corporate Information
The consolidated financial report of DroneShield Limited (“the Company”) and its controlled entities (“DroneShield” or “the
Group”) for the year ended 31 December 2021 was authorised for issue in accordance with a resolution of the Directors
on 21 February 2022.
DroneShield Limited is a company incorporated in Australia, limited by shares which are publicly traded on the ASX.
The principal activity of the Company is the development, commercialisation and sales of hardware and software
technology for drone detection and security.
Statement of compliance
These consolidated financial statements are general purpose financial statements which have been prepared in
accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and comply with other requirements
of the law.
Accounting Standards are Australian Accounting Standards (“AAS”). Compliance with AAS ensures that the financial
statements and notes of the Group comply with International Financial Reporting Standards (”IFRS”).
The financial statements comprise the consolidated financial statements of the Group. For the purposes of preparing the
consolidated financial statements, the Group is a for-profit entity.
1. Summary of Significant Accounting Policies
Basis of preparation
The consolidated financial statements have been prepared on the basis of historical cost as explained in the accounting
policies below.
The consolidated financial statements are presented in Australian dollars (“AUD”), unless otherwise noted, which is also
the functional currency of the Company. The principal accounting policies are set out below.
Going Concern
This consolidated financial report has been prepared on the basis that the Group will continue to meet its commitments
and can therefore continue normal business activities and realise assets and settle liabilities in the ordinary course of
business.
For the year ended 31 December 2021, the Group incurred a loss after income tax of $5,310,447 and net cash outflows
from operating activities of $6,309,738, with cash on hand and term deposits at 31 December 2021 of $9,537,135. At 31
December 2021, the Group had net assets of $15,583,403 and an excess of current assets over current liabilities of
$14,605,829.
The Group’s ability to continue as a going concern beyond this period is dependent on the availability of existing cash
assets and term deposits as well as generating revenues from operations. A cash flow forecast for the next 12 months
prepared by management has indicated that the Group will have sufficient sales opportunities to be able to meet its debts
as and when they are due, and therefore the financial statements have been prepared on a going concern basis.
Principles of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the
Company (i.e. subsidiaries). Subsidiaries are all 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.
Intercompany transactions, balances and unrealised gains on transactions between Group companies (if any) are
eliminated. Accounting policies of all companies in the Group are consistent.
Notes to the Financial Statements continued
DroneShield Limited | 2021 Annual Report
53
Foreign currency translation
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the re-
measurement of monetary items at year end exchange rates are recognised in profit or loss.
On consolidation, assets and liabilities have been translated into AUD at the closing rate at the reporting date. Income and
expenses have been translated into AUD at the average rate over the reporting period. Exchange differences on
consolidation are charged or credited to other comprehensive income and recognised in the foreign currency translation
reserve in equity.
Revenue recognition
The Group recognises revenue from the following major sources:
o Sale of hardware
o Subscription services
o Services
Revenue is measured based on the consideration specified in a contract with a customer. The Group recognises revenue
when it transfers control of a product or service to a customer.
Sale of hardware
The Group sells hardware to distributors and directly to customers. Sales-related warranties associated with hardware can
be purchased separately and they serve as an assurance that the products sold comply with agreed-upon specifications.
Accordingly, the Group accounts for warranties in accordance with AASB 137 Provisions, Contingent Liabilities and
Contingent Assets.
For sales of hardware to distributors, revenue is recognised when control of the hardware has transferred, being when the
hardware has been shipped to the distributor’s specified location (delivery) and collected from Customs by the distributor.
Following delivery, the distributor has full discretion over the manner of distribution and price to sell the hardware, has the
primary responsibility when on-selling the goods and where there is a risk of obsolescence and loss in relation to the goods.
A receivable is recognised by the Group when the hardware is delivered to the distributor as this represents the point in
time at which the right to consideration becomes unconditional, as only the passage of time is required before payment is
due.
Contracts with customers have a variable sales element, dependent on volume sold. Currently, revenue from sales is fixed
with no variable consideration. Contracts do not include financing components.
For sales directly to customers, revenue is recognised when control of the hardware has transferred to the customer, being
at the point the hardware is delivered to the customer. Delivery occurs when the goods have been shipped to the customer’s
specified location. A receivable is recognised by the Group when the hardware is delivered to the customer as this
represents the point in time at which the right to consideration becomes unconditional, as only the passage of time is
required before payment is due.
As shipping income is directly related to the sale of hardware, it is not seen as a separate performance obligation and is
recognised as and when the related hardware sale is recognised.
When the customer or distributor initially places the order, the customer or distributor is invoiced and the transaction price
of the invoice at that point is recognised by the Group as deferred revenue, until control of the hardware has transferred to
the customer or distributor and revenue is recognised.
Outside of warranties, customers do not have the right to return hardware sold therefore no “right to returned goods asset”
is recognised.
Subscription services
The Group provides a subscription service for software updates. Such services are recognised as a performance obligation
satisfied over time.
The transaction price allocated to these services is recognised as deferred revenue at the time of the initial sales transaction
and is released on a straight-line basis over the period of service.
54
DroneShield Limited | 2021 Annual Report
Notes to the Financial Statements continued
Services
The Group provides services for research and training. Such services are recognised as a performance obligation satisfied
over time.
The transaction price allocated to these services is recognised as deferred revenue at the time of the initial sales transaction
and is released on a straight-line basis over the period of service.
Interest income
Interest income and expenses are reported on an accrual basis using the effective interest method.
Government grant income
Income from government grants is recognised at their fair value in profit and loss when there is reasonable assurance that
the grant will be received, and the Group will comply with attached conditions.
Income tax
The income tax expense/ (income) for the year comprises current income tax expense/ (income) and deferred tax expense/
(income).
Current tax and deferred tax are recognised as an expense/ (income) except to the extent that they relate to a business
combination or are recognised directly in equity or other comprehensive income. Current tax liabilities/ (assets) are
therefore measured at the amounts expected to be paid to/ (received from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax assets and deferred tax liability balances during the year
as well as unused tax losses.
Current and deferred income tax expense/ (income) is recognised in equity instead of profit or loss when the tax relates to
items that are credited or charged directly to equity.
Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability
where there is no effect on accounting or taxable profit or loss.
Deferred tax liabilities/ (assets) are calculated at the tax rates that are expected to apply to the period when the liability is
settled (asset is realised), and their measurement also reflects the manner in which management expects to settle the
carrying amount of the related liability/ (recover the assets).
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is
probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Deferred tax assets and liabilities are offset only when the Group has a right and intention to set off current tax assets and
liabilities from the same taxation authority.
The research and development tax incentive claim is recognised as income tax revenue in the period in which it is received.
Goods and services and other value-added taxes (“GST”)
Revenue, expenses and assets are recognised net of the amount of associated GST, except where the amount of GST
incurred is not recoverable from the taxation authority, in which case it is recognised as part of the acquisition cost of an
asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included as part of other receivables or payables in the statement
of financial position.
Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows arising from
investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating
cash flows.
Notes to the Financial Statements continued
DroneShield Limited | 2021 Annual Report
55
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits with terms of less than three months, together
with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are
subject to an insignificant risk of changes in value.
Trade and other receivables
Trade and other receivables are stated at their cost less an allowance for impairment of receivables. These receivables
are unsecured.
Payment for hardware sales and subscription services are due from the customer on the date the invoice is issued.
Contracts do not include financing components.
Individually significant receivables are considered for impairment when they are past due or when other objective evidence
is received that a specific counterparty will default.
The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped
based on shared credit risk characteristics and the days past due. The expected loss rates are based on the payment
profiles of sales over a period of 36 months before 31 December 2021 or 1 January 2022 respectively and the
corresponding historical credit losses experienced within this period.
Trade and other payables
Trade and other payables are liabilities for goods and services provided to the Group prior to the end of the financial period
which are unpaid. These amounts are unsecured and generally payable within 30 days of recognition.
Inventories
Inventories are stated at the lower of cost and net realisable value. Costs of ordinarily interchangeable items are assigned
using the average cost method. Net realisable value is the estimated selling price in the ordinary course of business less
any applicable selling expenses.
Leases
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is
initially measured at cost, and subsequently at cost less accumulated depreciation and impairment losses and adjusted for
certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s
incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
The lease liability is subsequently increased by the interest cost on the lease liability and decreased by the lease payment
made. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, a
change in the estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes
in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option
is reasonably certain not to be exercised.
The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that include
renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease
term, which significantly affects the amount of lease liabilities and right-of-use assets recognised.
For short‑term leases (lease term of 12 months or less) and leases of low‑value assets the Group will recognise a lease
expense on a straight‑line basis.
56
DroneShield Limited | 2021 Annual Report
Notes to the Financial Statements continued
Employee benefits
Wages, salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits expected to be settled within 12 months, are recognised
in other payables. Annual leave is recognised in provisions and is measured using the remuneration rate expected to apply
at the time of settlement.
Long service leave
The liability for long service leave is measured as the present value of expected future payments to be made in respect of
services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service. Expected future payments are discounted using interest rates
on national government bonds with terms to maturity that match, as closely as possible, the estimated future cash outflows.
Post-employment benefits
The Group makes fixed percentage contributions for all Australian resident employees to complying third party
superannuation funds and recognises the expense as they become payable.
Provisions, contingent liabilities and contingent assets
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is
more likely than not that an outflow of resources will be required to settle the obligation, and the amount can be reliably
estimated.
No liability is recognised if an outflow of economic resources as a result of present obligations is not probable. Such
situations are disclosed as contingent liabilities, unless the outflow of resources is remote, in which case no liability is
disclosed.
Contributed equity
Costs directly attributable to the issue of new shares are shown as a deduction from the equity proceeds net of any income
tax benefit.
Plant and equipment
Plant and equipment (including fittings and furniture) are initially recognised at acquisition cost.
Depreciation is recognised on a straight-line basis to write down the cost less estimated residual value of plant and
equipment. The following useful lives are applied:
Office equipment
Plant & Equipment
Demonstration equipment
Vehicles and Trailers
2 – 5 years
2 – 5 years
2 years
8 years
Depreciation will commence for self-constructed assets once the asset is available for use.
Material residual value estimates and estimates of useful life are updated as required, but at least annually.
Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the
disposal proceeds and the carrying amount of the assets and are recognised in profit or loss within other income or other
expenses.
Intangible assets
Intangible assets relate to purchased computer software. Amortisation is recognised on a straight-line basis over an
estimated useful economic life of 5 years. The estimated useful economic life is reviewed at the end of each reporting
period with the effect of any changes in estimate being accounted for on a prospective basis.
Notes to the Financial Statements continued
DroneShield Limited | 2021 Annual Report
57
Earnings per share
Basic earnings per share is computed by dividing net earnings by the weighted average number of ordinary shares
outstanding during each period.
Dilutive earnings per share is computed by dividing net earnings by the dilutive weighted average number of ordinary
shares assuming the conversion of all dilutive potential ordinary shares.
Research and development
Research is the original and planned investigation undertaken with the prospect of gaining new knowledge and
understanding. Development is the application of research findings to a plan or design for the production of new or
substantially improved processes or products prior to the commencement of commercial production. Research costs are
expensed as they are incurred.
Share-based payments
Share based compensation benefits are provided to employees via an Employee Option Plan. Information in relation to
this plan is set out in Note 8.
The fair value of options granted is recognised as an employee benefits expense with a corresponding increase in equity.
The total amount to be expensed is determined by reference to the fair value of the options granted, which includes any
market performance conditions and the impact of any non-vesting conditions but excludes the impact of any service and
non-market performance vesting conditions.
Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The
total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions
are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to
vest based on the non-market vesting conditions. It recognises the impact of the revision or original estimates, if any, in
profit or loss, with a corresponding adjustment to equity.
Impairment of assets
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not
be recoverable. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For
the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable
cash inflows which are largely dependent of the cash inflows from other assets or other groups of assets (cash generating
units).
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the
operating segments, is the CEO.
Comparative disclosures
Where appropriate, comparative disclosures have been reclassified/amended to be consistent with the current year’s
presentation.
New accounting standards and interpretations
DroneShield has adopted all of the new, revised or amended Accounting Standards and interpretations issued by the
Australian Accounting Standards Board (AASB) that are mandatory for the current reporting period. There has been no
material impact on the Group on the adoption of these new standards.
There are no new Accounting Standards or interpretations that have been published, but not yet mandatory, that are
expected to have a material impact on the Group.
58
DroneShield Limited | 2021 Annual Report
Notes to the Financial Statements continued
2. Critical accounting judgements, estimates and assumptions
In the application of the Group’s accounting policies, which are described in Note 1, the Directors are required to make
judgements, estimates and assumptions in the preparation of the financial statements about matters that are not readily
available from other sources. The estimates and associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to items (refer to
the respective notes) within the next financial year are discussed below.
Licence and patent expenses
There is a degree of judgement required in respect of the capitalisation of patent costs and the future commercial
application thereof. The Directors have adopted a prudent approach and all patent costs incurred have been expensed.
Share based payments
The Group measures the cost of equity settled transactions by reference to the fair value of the equity instruments at the
date they are granted. The accounting estimates and assumptions relating to equity-settled share-based payments would
have no impact on the carrying amounts of assets and liability within the next annual reporting period but may impact profit
or loss and equity. Details of the key assumptions used are set out in Note 8.
Inventories
Management estimates the net realisable values of inventories, taking into account the most reliable evidence available at
each reporting date. The future realisation of these inventories may be affected by future technology or other market-driven
changes that may reduce future selling prices.
Demonstration Units
Management reviews its estimate of the useful lives of demonstration assets at each reporting date, based on the expected
utility of these assets. Uncertainties in these estimates relate to technical obsolescence that may change the utility of
certain items.
Leases
Management estimates the Group’s incremental borrowing rate which is used as the discount rate to calculate the present
value of the lease payments that are not paid at the commencement date.
Judgement is also applied by management to determine the lease term for some lease contracts, in which it is a lessee,
that include renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts
the lease term, which significantly affects the amount of lease liabilities and right-of-use assets recognised.
Notes to the Financial Statements continued
DroneShield Limited | 2021 Annual Report
59
3. Revenue
Demonstration revenue
Hardware sales
Services revenue
Shipping revenue
Subscription revenue
Warranty revenue
Total revenue from sales
31 December
2021
$
31 December
2020
$
-
7,208,348
2,833,003
231,672
189,081
4,193
10,466,297
16,455
4,710,275
134,084
148,281
16,782
-
5,025,877
The Group derives its revenue from the transfer of goods and services over time and at a point in time. This is consistent
with the revenue information that is disclosed for each reportable segment (see Note 28).
Timing of revenue recognition
At a point in time
Hardware sales including shipping income
direct sales
distributors
Demonstration revenue
distributors
Over time
Subscription services
direct sales
distributors
Services revenue
direct sales
distributors
Warranty Revenue
distributors
Total revenue from sales
Other revenue
Interest revenue
Revenue for achieving customer performance targets
Other revenue
Sublease revenue
Total other revenue
Total revenue
4. Other income
Awards and incentives revenue (Note a)
Net foreign exchange gains (losses)
Total other gains
3,854,433
3,585,587
928,138
3,930,418
-
16,455
88,170
100,911
2,767,231
65,772
4,193
10,466,297
35,827
-
-
96,000
131,827
15,000
1,782
134,084
-
-
5,025,877
23,660
383,148
125,051
-
531,859
10,598,124
5,557,736
269,170
76,517
823,348
(497,512)
345,687
325,836
Note a: Awards and incentives revenue comprises of government and industry assistance including the JobKeeper scheme.
60
DroneShield Limited | 2021 Annual Report
Notes to the Financial Statements continued
5.
Corporate and support expense
Legal
Office costs and communication
Other
Payroll
Professional expenses
Travel and entertainment
31 December
2021
$
31 December
2020
$
344,091
1,019,318
424,964
1,529,157
908,625
27,613
151,411
443,885
420,912
985,527
610,298
14,648
Total corporate and support expense
4,253,768
2,626,681
6.
Corporate governance expense
ASX fees
Audit
Board and Advisory Board expenses
Insurance
Other
Professional expenses
94,746
84,916
195,449
163,893
56,850
73,368
105,771
71,879
141,909
133,718
81,941
55,409
Total corporate governance expense
669,222
590,627
7.
Income taxes relating to continuing operations
The components of tax recognised in profit or loss include:
Current tax
Deferred tax
Research and Development Tax Incentive
-
-
-
-
(1,087,833)
(883,592)
Total tax benefit
(1,087,833)
(883,592)
The income tax for the year can be reconciled to the accounting profit as follows:
Income tax benefit calculated at 27.5%
Tax effect of amounts which are not deductible
Research and Development Tax Incentive
Effect of unused tax losses not recognised as deferred tax assets
(1,759,527)
(1,856,410)
321,211
(1,087,833)
1,438,316
694,293
(883,592)
1,162,117
Income tax benefit recognised in profit or loss (relating to continuing operations)
(1,087,833)
(883,592)
The tax rate used for the 2021 and 2020 reconciliations above is the corporate tax rate of 27.5% payable by DroneShield
Limited on taxable profits under Australian tax law.
The Company has unused tax losses of $10,517,697 (2020: $9,079,381). The benefit of these losses will only be recognised
where it is probable that future taxable profit will be available against which the benefit of the deferred tax asset can be
utilised. The deferred tax asset not recognised in relation to these tax losses is $2,892,367 (2020: $4,143,170).
DroneShield Limited | 2021 Annual Report
61
Notes to the Financial Statements continued
8. Options issued
During the year ended 31 December 2021, a number of options were issued to Directors, management and other employees of the Group as well as to brokers participating in the Share Placement
that occurred in August 2020. In addition to this, a number of options did not meet the vesting conditions during the period. Using the Black Scholes Model, the fair value of each option is as set out
below and based on the following criteria/assumptions. The options below were issued at various dates between January and December 2021.
Options Issued
31 December 2021
No of new options
Expiry (years)
Exercise price ($)
Average vesting period (years)
Underlying volatility
Average risk-free interest rate
Average calculated fair value of each option ($)
Total expense recorded for the period ended 31
December 2021 ($)
Class T
Options
3,570,000
0.35
0.20
0.00
70.0%
0.05%
0.0204
65,125
Class U
Options
500,000
3.01
0.25
0.00
70.0%
0.14%
0.0664
33,179
Class V1
Options
5,000,000
3.00
0.25
0.00
70.0%
0.10%
0.0600
-
Class W
Options
450,000
3.00
0.20
0.00
70.0%
0.14%
0.0651
29,213
Zero Price2
Options
Other
Options3
Total option
expense for
the year4
21,459,384
3.37
0
0.33
n/a
n/a
0.1780
3,354,000
(2,313,476)
1,168,041
1 Class V options were issued to brokers as part of the August 2020 capital raise and included as part of share transaction costs which is treated as a deduction from equity of $300,137 (see Note 19).
2 19,000,000 of the Zero Price Options (“ZEPOs”) was issued to Directors. The vesting conditions were satisfied and the options were exercised into shares on 16 August 2021. 2,459,384 of the ZEPOs was
issued to management and employees. These options automatically lapsed, during the year, as the vesting conditions attached to Tranche 1 ZEPOs, issued in 2018, were satisfied.
3 $2,313,476 comprises of a credit for Tranche 1 ZEPOs (issued in 2018) and a vesting expense for Tranche 2 ZEPOs and Class Q options (issued in 2019 and 2020). The expense recognised in prior periods
for Tranche 1 ZEPOs was credited due to the vesting conditions not being met within 36 months from the date of issue of the Tranche 1 ZEPOS. Refer to 2020 Annual Report for details of options issued in prior
periods.
4 During the year, limited-recourse loans were issued to certain employees and directors, where the company provided interest free loans for conversion of options previously issued by the company. In total,
6,886,666 options were converted into ordinary shares, at various exercise prices. The loans are due for repayment within 5 years from the date of inception. The loans are non-recourse except against the
shares issued on exercise of the options and are held by the participant to which the loan relates. Non-recourse loans issued are treated as a modification of the option under the Accounting Standards. No
additional expense has been recognised in relation to these modifications.
62
DroneShield Limited | 2021 Annual Report
Notes to the Financial Statements continued
Options issued (continued)
During the year ended 31 December 2020, a number of options were issued to Directors, management and other employees of the Group. Using the Black Scholes Model, the fair value of each
option is as set out below and based on the following criteria/assumptions. The options below were issued at various dates between January and December 2020.
Options Issued
31 December 2020
No of new options
Expiry (years)
Exercise price ($)
Average vesting period (years)
Underlying volatility
Average risk-free interest rate
Average calculated fair value of each option ($)
Total expense recorded for the period ended 31
December 2020 ($)
Class F
Options
1,150,000
0.79
0.30
0
87.7%
0.21%
0.0241
27,626
Class Q
Options
750,000
3.45
0.65
1.87
87.7%
0.76%
0.0876
30,344
Class S
Options
2,200,000
3.01
0.25
0.00
87.7%
0.11%
0.0794
174,597
Zero Price
Options1
Other
Options2
Total option
expense for
the year3
500,000
2.87
0
2.87
n/a
n/a
0.2350
38,979
2,253,156
2,524,702
1 Zero Price (“Zepo”) options are subject to the following vesting conditions being satisfied: DroneShield achieving $20,000,000 of revenue or customer cash receipts (excluding any revenue or customer cash
receipts which are applied towards satisfaction of the vesting condition attaching to the Tranche 1 Zepos) or automatic vesting in the event that DroneShield is subject to a takeover or other change of control
transaction. As there is no exercise price and no near-term expectations of dividends for DroneShield, the value of the option (excluding the impact of vesting conditions) determined using Black Scholes is
equivalent to the price of a DroneShield share. The value of the Options is based on the spot price of a DroneShield share on the date at which the options were issued. Based on the sales pipeline and existing
orders, management estimate that the options will vest within the expiry period. At this stage, the vesting period is assumed to be three years, which will be reviewed against updated pipeline and forecasts each
six months.
2 $2,253,156 relates to the vesting expense from options issued in prior periods, comprising option expense for Tranche 2 Zepos, Classes N, P and Q (issued in 2019), Tranche 1 Zepos (issued in 2018). Refer
to 2018 and 2019 Annual Report for details of options issued in prior periods.
3 During the year, limited-recourse loans were issued to certain employees and directors, where the company provided interest free loans for conversion of options previously issued by the company. In total,
1,682,500 options were converted into ordinary shares, at various exercise prices. The loans are due for repayment by December 2025. The loans are non-recourse except against the shares issued on exercise
of the options and are held by the participant to which the loan relates. Non-recourse loans issued are treated as a modification of the option under the Accounting Standards. No additional expense has been
recognised in relation to these modifications.
Notes to the Financial Statements continued
DroneShield Limited | 2021 Annual Report
63
9.
Cash and cash equivalents
Cash at bank and in hand
Short-term deposits
31 December
2021
$
31 December
2020
$
5,660,677
3,758,558
4,158,819
3,699,919
Total cash and cash equivalents
9,419,235
7,858,738
10. Trade and other receivables
Trade receivables
Deferred revenue (see Note 16)
Prepayments
389,085
131,278
338,768
2,669,714
816,438
224,342
Total trade and other receivables
859,131
3,710,494
Age of receivables that are past due but not impaired.
>120 days
-
2,363,746
Payment for hardware sales and subscription services are due from the customer as per the terms specified in the
contract.
11.
Inventories
Raw materials
Finished goods
Work in progress
Total Inventory
12. Other investments
Current
-
Term Deposits
Non-current
-
Term Deposits
Total Other investments
1,188,047
935,381
4,792,511
-
736,238
1,282,041
6,915,939
2,018,279
75,000
8,430,034
42,900
-
117,900
8,430,034
64
DroneShield Limited | 2021 Annual Report
Notes to the Financial Statements continued
13. Plant, equipment and intangible assets
Development
equipment
$
Demonstration
equipment
$
Office
equipment
$
Plant &
equipment
$
Vehicles
and
Trailers
$
Intangible
Assets
(software)
$
Total
$
Balance at 1 Jan 20
217,637
428,364
123,109
351,900
-
37,632 1,158,642
Additions
Disposals
Transfers from (to) other
fixed asset categories
Transfer from (to)
inventory
Depreciation/amortisation
Exchange differences
225,749
-
(128,426)
42,325
(23,780)
128,426
80,302
(6,943)
-
4,531
-
-
153,656
-
-
13,392
-
-
519,955
(30,723)
-
(185,246)
(76,028)
-
-
-
-
(261,274)
-
-
(317,994)
(6,066)
(80,355)
(810)
(81,775)
-
(3,239)
(11,428)
(10,818)
-
(494,181)
(18,304)
Balance at 31 Dec 20
129,714
175,247
115,303
274,656
138,989
40,206
874,115
Additions
Disposals
Transfer from (to)
inventory
Depreciation/amortisation
Exchange differences
142,005
-
(174,356)
62,084
25,774
229,898
122,471
8,164
-
114,051
-
-
49,706
-
-
14,785
(2,159)
-
505,102
31,779
55,542
-
-
(174,087)
(27,039)
(96,089)
(13,675)
(96,908)
-
(21,805)
6,146
(14,610)
-
(403,499)
(403,499)
(34,568)
Balance at 31 Dec 21
97,363
291,877
136,174
291,799
173,036
38,222 1,028,471
Development equipment
Demonstration equipment
Office equipment
Plant & equipment
Vehicles and trailers
Intangible assets (software)
Cost
$
Accumulated
Depreciation
$
Carrying Value
$
97,363
917,027
319,859
520,183
198,434
75,655
-
(625,150)
(183,685)
(228,384)
(25,398)
(37,433)
97,363
291,877
136,174
291,799
173,036
38,222
Balance at 31 December 2021
2,128,521
(1,100,050)
1,028,471
Development equipment
Demonstration equipment
Office equipment
Plant & equipment
Vehicles and trailers
Intangible assets (software)
129,714
762,499
272,707
399,612
141,952
63,344
-
(587,252)
(157,404)
(124,956)
(2,963)
(23,138)
129,714
175,247
115,303
274,656
138,989
40,206
Balance at 31 December 2020
1,769,828
(895,713)
874,115
Notes to the Financial Statements continued
DroneShield Limited | 2021 Annual Report
65
14. Right-of-use asset
Balance at 1 January 2021
Depreciation
Impairment
31 December
2021
$
31 December
2020
$
236,973
427,579
(105,322)
(131,651)
(135,140)
(55,466)
Balance at 31 December 2021
-
236,973
The Group leases various assets including offices and storage units. The contractual lease terms range from 1 to 3 years.
The total cash outflow for leases, including short-term leases was $625,298. (2020: $278,725).
The maturity analysis of lease liabilities is presented in Note 17.
Amounts recognised in profit and loss
Depreciation expense on right-of-use assets
Expense relating to short-term leases
Impairment expense on right-of-use assets
Interest expense on lease liabilities
15. Provisions
Current
-
Annual leave
Non-current
-
Long-service leave
Total provisions
16. Other liabilities
Accrued expenses
Deferred Revenue
-
Hardware sales
Subscription services
-
Services
-
-
Shipping
- Other revenue
105,322
440,499
131,651
10,441
135,140
147,989
55,466
35,324
408,631
184,007
54,995
-
463,626
184,007
310,511
132,299
571,293
398,333
282,579
4,178
-
1,646,614
212,851
-
-
2,501
Total other liabilities
1,566,894
1,994,265
66
DroneShield Limited | 2021 Annual Report
Notes to the Financial Statements continued
17. Lease liabilities
Amounts due for settlement within 12 months
Amounts due for settlement after 12 months
Total lease liabilities
31 December
2021
$
31 December
2020
$
152,985
38,802
135,461
191,108
191,787
326,569
These liabilities were measured at the present value of the remaining lease payments, discounted using the weighted
average incremental borrowing rate of 9%.
18. Borrowings
Unsecured borrowing at amortised cost
Insurance Premium Finance
Paycheck Protection Program Term Note
Total borrowings
Amount due for settlement within 12 months
Amount due for settlement after 12 months
19. Contributed equity
56,584
-
21,136
128,860
56,584
149,996
56,584
-
107,043
42,953
No. of shares
(Note a)
$
Balance at beginning of period (1 January 2021)
389,880,102
37,283,293
Shares issued following options exercised during period (Note b)
Transaction costs in relation to Shares issued from Share Placement (Note c)
28,346,050
-
-
(300,137)
Balance at end of period (31 December 2021)
418,226,152
36,983,156
Note a: The number of shares disclosed is the number of shares in DroneShield Limited.
Note b: During the year, 6,886,666 options were exercised using limited-recourse loans, where the company provided
interest free loans for conversion of options previously issued by the company into shares. The loans are due for
repayment within 5 years from the date of inception. The loans are nonrecourse except against the shares issued
on exercise of the options and are held by the participant to which the loan relates. 21,459,384 Zero Price options
were exercised into shares during the year.
Included within transaction costs is the value of options issued to brokers of $300,137. The assumptions used in
valuing these options has been set out in Note 8.
Note c:
Notes to the Financial Statements continued
DroneShield Limited | 2021 Annual Report
67
20. Shares and options
Opening balances at 1 January 2021
Options exercised during the period
Options lapsed
Options issued to brokers
Options issued to Directors, Management and Employees
Number of Shares
Number of Unlisted
Options
389,880,102
28,346,050
-
-
-
48,712,950
(28,346,050)
(27,280,450)
5,000,000
26,029,384
Closing balance at 31 December 2021
418,226,152
24,115,834
Unlisted Options
26,029,384 Unlisted Options were issued to Directors, Management and employees during the year to 31 December 2021.
These Options are subject to various vesting conditions relating to length of employment with the Company and
performance of the Company. See Note 8 for further details.
5,000,000 Class V Options were issued to Peloton Capital Pty Ltd (or its nominee) as part of their compensation for
acting as Lead Manager for the Share Placement that occurred in August 2020. These options have an exercise price
of $0.25 and expire on 27 May 2024.
21. Earnings (loss) per share
(a) Basic earnings (loss) per share
Total basic earnings (loss) per share attributable to the ordinary equity
holders of the company
(b) Dilutive earnings per share
Dilutive earnings (loss) per share attributable to the ordinary equity
holders of the company
(c) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator
in calculating basic and diluted earnings per share
Options
31 December
2021
$
31 December
2020
$
(0.01)
(0.02)
(0.01)
(0.02)
397,919,239
299,102,204
Unlisted Options on issue (refer to Note 20) are not included in the calculation of diluted earnings per share because they
are considered to be antidilutive for the period ended 31 December 2021. These options and shares could potentially dilute
basic earnings per share in future periods.
68
DroneShield Limited | 2021 Annual Report
Notes to the Financial Statements continued
22. Key Management Personnel disclosures and related party transactions
(a) KMP Compensation
Cash incentive
Movement in employee provisions
Post-employment benefits
Salaries and fees
Share-based payments
31 December
2021
$
31 December
2020
$
195,455
63,727
22,631
457,362
665,569
-
17,752
21,348
440,667
1,492,154
Total KMP compensation
1,404,744
1,971,921
Detailed remuneration disclosures are provided in the Remuneration Report on pages 40-46.
(b) Other transactions with related parties
During the financial year, the Group engaged the services of the following related parties on normal commercial terms and
conditions no more favourable than those available to other parties:
Sort Hub Pty Ltd, of which Jethro Marks is a Director, received payments totalling $231,250, of which $152,208 were invoiced
in the prior year. During the year, Sort Hub Pty Ltd invoiced the Company $79,042 for shipping of inventory globally.
23. Parent entity financial information
The individual financial statements for the accounting parent entity, DroneShield Limited, show the following aggregate
amounts:
Statement of financial Position
Current assets
Non-current Assets
Total assets
Current liabilities
Non-Current Liabilities
Total liabilities
Net assets
Share Capital
Reserves
Accumulated losses
Total Equity
Loss for the year
Other comprehensive loss
Total comprehensive loss
10,383,461
897,987
11,281,448
1,179,366
93,797
1,273,163
23,593,483
958,614
24,552,097
2,061,681
191,108
2,252,789
10,008,285
22,299,308
35,660,609
5,175,003
(30,827,327)
10,008,285
35,960,746
7,777,980
(21,439,418)
22,299,308
(13,456,268)
(7,282,426)
-
-
(13,456,268)
(7,282,426)
DroneShield LLC, DroneShield Corporation Pty Ltd and DroneShield UK Limited are all legal subsidiaries of DroneShield
Limited and are 100% owned by DroneShield Limited.
Notes to the Financial Statements continued
DroneShield Limited | 2021 Annual Report
69
24. Financial risk management
The Group’s financial instruments consist mainly of deposits with banks, accounts receivable and payable and inter-entity
loans.
The Directors’ overall risk management strategy seeks to assist the Group in meeting its financial targets whilst minimising
potential adverse effects on financial performance.
Credit risk
With respect to credit risk arising from other financial assets, which comprise cash and cash equivalents, trade and other
receivables and other investments, the Company’s exposure to credit risk arises in the form of default of the counter party,
with a maximum exposure equal to the carrying amount of these instruments. Management has considered impairment, with
none noted at 31 December 2021.
Since the Company trades only with recognised parties, there is no requirement for collateral security.
The maximum exposure to credit risk at the balance date is as follows:
Cash and cash equivalents
Other investments
Trade and other receivables
Liquidity risk
31 December
2021
$
31 December
2020
$
9,419,235
117,900
520,363
7,858,738
8,430,034
3,486,152
The Company’s policy is to maintain a comfortable level of liquidity through the continual monitoring of actual and forecast
cash flows and the maturity profile of term deposits, and the raising of additional capital as required.
Foreign exchange risk
The Company operates from Australia, UK and the U.S., and accordingly transactions currently occur in a mix of AUD, GBP
and USD. Cash and cash equivalents used to fund working capital are held in USD and AUD bank accounts.
Transactional currency exposures arise from sales or purchases in currencies other than the Company’s functional currency.
For example, the Company is exposed to transactional exposure in respect of non-functional currencies on foreign currency
denominated sales contracts entered into by DroneShield Limited in Australia.
Additionally, the Company is exposed to foreign currency exchange risk when capital is raised in AUD and transferred to the
U.S. entity. The Company closely monitors foreign currency movements at such times but does not use hedging instruments
to manage such risk.
Foreign currency denominated financial assets and liabilities which expose the Company to currency risk are disclosed below.
The amounts shown are translated into AUD at the closing rate.
Cash
Trade and other receivables
Total Financial assets
Borrowings
Other liabilities
Provisions
Trade and other payables
Total Financial liabilities
31 December
2021
$
31 December
2020
$
2,410,035
332,726
2,742,761
-
(24,939)
(33,066)
(353,239)
(411,244)
904,325
2,389,702
3,294,027
(128,860)
(6,895)
(16,162)
(450,146)
(602,063)
70
DroneShield Limited | 2021 Annual Report
Notes to the Financial Statements continued
Foreign exchange risk
The following table, expressed in AUD, indicates DroneShield’s sensitivity to movements in exchange rates on the profit or
loss, based on the AUD strengthening/ weakening against the USD by 10%:
+ 10%
- 10%
31 December
2021
$
31 December
2020
$
(193,520)
136,452
(244,596)
299,264
Exposure to foreign currency varies during the year depending on the volume of transactions. Nonetheless, the analysis above
is considered to be representative of the Group’s exposure to currency risk.
Financial instrument composition and maturity analysis
The table below reflects the undiscounted contractual settlement terms for financial liabilities.
Contractual maturities of
financial liabilities
As at 31 December 2020
Trade and other payables
Borrowings
Lease Liabilities
Accrued Expenses
Less than 6
months
$
6-12
Months
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Total
contractual
cash flows
$
Carrying amount
(assets)/
liabilities
$
884,363
59,900
65,643
132,299
-
47,143
69,818
-
-
42,953
152,985
-
-
-
38,123
-
884,363
149,996
326,569
132,299
884,363
149,996
326,569
132,299
Total
1,142,205
116,961
195,938
38,123
1,493,227
1,493,227
As at 31 December 2021
Trade and other payables
Borrowings
Lease Liabilities
Accrued Expenses
478,382
47,973
74,192
310,511
-
8,611
78,793
-
-
-
38,802
-
-
-
-
-
478,382
56,584
191,787
310,511
478,382
56,584
191,787
310,511
Total
911,058
87,404
38,802
-
1,037,264
1,037,264
25. Contingent liabilities
As at 31 December 2021 there were no contingent liabilities.
26. Commitments
At 31 December 2021, contractual agreements existed to pay suppliers $1,210,769 for the manufacturing of inventory to
deliver on orders received (2020: $1,577,947).
Notes to the Financial Statements continued
DroneShield Limited | 2021 Annual Report
71
27. Remuneration of auditor
During the year, the following fees were paid or payable for services provided by the auditor, HLB Mann Judd Assurance
(NSW) Pty Limited and its related practices:
Audit and assurance services
Taxation and other services
Total Auditor’s remuneration
28. Segment information
31 December
2021
$
31 December
2020
$
112,348
39,489
71,879
10,624
151,837
82,503
The Group operates in one operating segment, being the development and commercialisation of hardware and software
technology for drone detection and security.
This operating segment is monitored by the Group’s chief operating decision maker and strategic decisions are made on the
basis of adjusted segment operating results. The chief operating decision maker of the Group is the CEO.
The following tables present certain information regarding geographical segments for the years ended 31 December 2021 and
31 December 2020.
Segment performance
31 December 2021
USA
$
UK
$
Australia
$
Elimination
$
Total
$
Hardware sales including shipping income
-
-
direct sales
distributors
Subscription services
-
-
direct sales
distributors
Services Revenue
-
-
direct sales
distributors
Warranty Revenue
-
distributors
Total revenue from sales
Other revenue
Total revenue
Depreciation
Loss after income tax expense
Assets and liabilities
Segment assets
Segment liabilities
2,858,605
1,273,927
7,078
28,881
84,454
36,872
-
4,289,817
-
4,289,817
(50,152)
2,083,416
-
-
-
-
-
-
-
-
-
-
995,828
2,311,660
81,092
72,030
2,682,777
28,900
4,193
6,176,480
131,827
6,308,307
(2,648)
299,475
(455,139)
(7,693,338)
-
-
-
-
-
-
-
-
-
-
-
-
3,854,433
3,585,587
88,170
100,911
2,767,231
65,772
4,193
10,466,297
131,827
10,598,124
(507,939)
(5,310,447)
563,594
-
21,809,715
(4,032,633)
18,340,676
(4,314,724)
(3,176)
(2,472,006)
4,032,633
2,757,273
72
DroneShield Limited | 2021 Annual Report
Notes to the Financial Statements continued
28. Segment information (continued)
Segment performance
31 December 2020
USA
$
UK
$
Australia
$
Elimination
$
Total
$
Hardware sales including
shipping income
-
-
direct sales
distributors
Subscription services
-
direct sales
-
distributors
Services Revenue
direct sales
distributors
-
-
Total revenue from sales
Other revenue
Total revenue
Depreciation
Loss after income tax
expense
Assets and liabilities
Segment assets
Segment liabilities
538,950
-
-
1,782
19,204
-
559,936
21,891
581,827
(75,282)
-
-
-
-
-
-
-
-
-
(1,447)
389,188
3,930,418
15,000
-
114,880
16,455
4,465,941
509,968
4,975,909
(546,079)
(1,058,304)
(173,784)
(4,634,902)
-
-
-
-
-
-
-
-
-
-
-
928,138
3,930,418
15,000
1,782
134,084
16,455
5,025,877
531,859
5,557,736
(622,808)
(5,866,990)
316,363
(6,287,972)
4,753
(309,516)
30,652,468
(4,786,663)
(7,844,951)
7,844,951
23,128,633
(3,539,200)
Information about major customers
The following chart presents certain information regarding customers/distributors who contributed 10 per cent or more to the
Group’s revenue for the years ended 31 December 2021 and 31 December 2020.
2021
Revenue
25%
20%
55%
2020
Revenue
30%
10%
25%
35%
Australian Government Department of Defence
Australian Government Department of Defence
U.S. Department of State
Other
Middle Eastern Ministry of Defence
European Ministry of Defence
Other
Notes to the Financial Statements continued
DroneShield Limited | 2021 Annual Report
73
29. Reconciliation from loss after income tax to net cash outflow from operating activities
Operating loss for the year after tax
Awards and incentives revenue - Paycheck Protection Program (“PPP”)
Bad debts
Depreciation
Effects of foreign currency translation
Interest income on cash deposits
Inventory impairment expense
Loss on disposal of fixed asset
Provisions
Right-of-use asset impairment
Share option expense
Transaction costs related to loans and borrowings
Change in operating assets and liabilities
Decrease/(Increase) in trade and other receivables
(Increase) in inventory
(Decrease)/increase in trade and other payables
(Decrease)/increase in other liabilities
31 December
2021
$
31 December
2020
$
(5,310,447)
(129,883)
8,218
507,939
13,105
(35,827)
211,945
25,051
277,876
131,651
1,168,041
-
2,166,203
(4,897,660)
(405,981)
(39,969)
(5,866,990)
-
-
622,808
509,168
(23,657)
20,606
30,723
1,424
55,466
2,524,702
12,000
(2,066,772)
(1,292,359)
486,371
326,940
Net cash flows from (used in) operating activities
(6,309,738)
(4,659,570)
30.
Impact of COVID-19
During March 2020, COVID-19 was declared a pandemic by the World Health Organisation and has had a significant
impact on domestic and global markets and economies. The impact of the COVID-19 pandemic, which continues to evolve
on a daily basis, has significantly affected market volatility, exchange rates, supply chains, consumer demand, liquidity and
credit conditions and unemployment rates and in a bid to curtail the spread of COVID-19, travel, trade and social restrictive
measures have been imposed by the Australian Government.
The majority of the Group’s customers are Military and Government agencies which have remained substantially unaffected
by COVID-19, thereby reducing the project pipeline exposure of DroneShield. Whilst there were delays in some customer
procurement processes, there were no cancellations of any customer orders for DroneShield’s products, nor did any
potential customer decline to purchase the Company’s products.
While there were some delays in the supply chain process, these delays were substantially resolved, resulting in no
material impact on the manufacturing process.
The Directors are managing and monitoring the Group’s operations closely in response to COVID-19 which continues to
evolve on a daily basis.
74
DroneShield Limited | 2021 Annual Report
Notes to the Financial Statements continued
31. Events after the reporting date
Subsequent to 31 December 2021, the following occurred;
-
12 January 2022
•
•
•
14,650,000 unlisted and vested Class X options were issued to employees. Each are exercisable at
$0.25 per option and expire on 12 January 2024.
600,000 unlisted and vested Class Y options were issued to employees. Each are exercisable at $0.25
per option and expire on 12 January 2027.
100,000 unlisted and vested Class Z options were issued to an employee. Each are exercisable at $0.20
per option and expire on 12 April 2022.
-
21 January 2022
•
250,000 unlisted and vested Class Y options were issued to an employee. Each are exercisable at $0.25
per option and expire on 12 January 2027.
DroneShield Limited | 2021 Annual Report
75
Directors’ Declaration
1.
In the opinion of the Directors:
(a)
the consolidated financial statements and notes set out on pages 48 to 74 are in accordance with the
Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the Group’s financial position as at 31 December 2021 and of its
performance for the financial year ended on that date; and
complying with Australian Accounting Standards, the Corporations Regulations 2001 and other
mandatory professional reporting requirements; and
(b)
there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable.
2. The notes to the consolidated financial statements include a statement of compliance with International Financial
Reporting Standards.
3. The Directors have been given the declarations by the Chief Executive Officer and the Chief Financial Officer for the
year ended 31 December 2021 required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Peter James
Independent Non-Executive Chairman
Sydney, NSW
22 February 2022
76
DroneShield Limited | 2021 Annual Report
Independent Auditor’s Report
Independent Auditor’s Report to the Members of DroneShield Limited
Opinion
We have audited the financial report of DroneShield Limited (“the Company”) and its controlled entities (“the
Group”), which comprises the consolidated statement of financial position as at 31 December 2021, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, 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:
(a)
giving a true and fair view of the Group’s financial position as at 31 December 2021 and of its financial
performance for the year then ended; and
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Group in accordance with the auditor independence requirements
of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant to
our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
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. We have determined the matters described below to be the key audit matters to be
communicated in our report.
Key Audit Matter
How our audit addressed the key audit matter
Revenue recognition (Note 3)
The Group recognised total revenue from
sales of $10,466,297 during the year ended
31 December 2021 (2020: $5,025,877).
We focussed on this area as a key audit
matter due to the judgements involved in
applying AASB 15 Revenue from Contracts
with Customers.
We reviewed management’s revenue recognition accounting
policy to assess whether it complied with AASB 15.
We reviewed a sample of revenue items recorded during the
year and reviewed contracts and other documentation in
relation to these to assess whether revenue recognised was
in accordance with the requirements of AASB 15.
We also reviewed disclosures in the financial statements to
assess whether they are in
accordance with AASB 15.
DroneShield Limited | 2021 Annual Report
77
Key Audit Matter
How our audit addressed the key audit matter
Existence and Valuation of inventory (Note 11)
At 31 December 2021, the Group held
inventory with a carrying value of $6,915,939
(2020: $2,018,279).
We focussed on this area as a key audit
matter due to the material value of this asset.
We attended the year-end stocktake and observed the count
procedures and controls.
We agreed the physical inventory count records to the
accounting inventory listing at year-end.
We tested a sample of inventory items to assess if they were
valued at the lower of cost or net recoverable value in
accordance with AASB 102 Inventories.
We reviewed and tested management’s assessment of
inventory obsolescence.
We reviewed the accounting policies adopted by the Group
for inventory, and the disclosures in the financial report to
ensure they meet the requirements of the accounting
standards.
We reviewed
the
methodology used. We also reviewed the key assumptions in
the valuation.
the options, and
the valuation of
We assessed whether the Group’s disclosures met the
requirements of accounting standards.
Valuation of share options (Note 8)
The Company has historically issued a
number of share options to directors and
management.
The fair value of the options at grant date
was
determined by management, and used to
account for the options.
The key assumptions used in determining
the fair value of the options are set out in
Note 8 to the financial statements.
We focused on this area as a key audit
matter due to the judgement involved in
assessing the fair value of the options.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 31 December 2021, but does not include the financial
report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
78
DroneShield Limited | 2021 Annual Report
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have
no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with 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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
•
•
•
•
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as a going
concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
DroneShield Limited | 2021 Annual Report
79
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
REPORT ON THE REMUNERATION REPORT
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 40 to 46 of the directors’ report for the year
ended 31 December 2021.
In our opinion, the Remuneration Report of DroneShield Limited for the year ended 31 December 2021
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
HLB Mann Judd Assurance (NSW) Pty Ltd
Chartered Accountants
N J Guest
Director
Sydney, NSW
22 February 2022
80
DroneShield Limited | 2021 Annual Report
Shareholder Information
Holdings distribution at 21 February 2022
Holding Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,000 - over
Total
Holders
146
2,254
1,739
3,412
544
8,095
Total Shares
25,777
7,659,461
13,600,437
115,244,905
281,695,572
418,226,152
% Issued Share Capital
0.01%
1.83%
3.25%
27.56%
67.35%
100.00%
The shareholders are entitled to one vote for each share held.
Twenty largest shareholders at 21 February 2022
Position Holder Name
Shares Held % Issued Share Capital
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
BNP PARIBAS NOMINEES PTY LTD
BETA GAMMA PTY LTD
OLEG VORNIK
PETER JAMES
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
S R BENNETT PTY LTD
CITICORP NOMINEES PTY LIMITED
CARLA BALANCO
MR RICHARD GUY DARLING
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
BLACKWOOD CONSULTING PTY LTD
AZOTH LLC
SUPERHERO NOMINEES PTY LTD
ANGUS BEAN
MR MARK RICHARD JONES & MS MARGARET TAI
MR HEIN VICTOR GRAAFHUIS
MR VOLODYMYR YATSYNA
MR RICHARD JOFFE
SOIRHU PTY LTD
41,805,705
21,500,000
16,827,022
10,052,522
7,250,477
6,054,397
5,717,538
5,234,420
3,200,000
3,194,729
3,091,012
2,348,240
2,250,000
2,209,630
2,135,621
1,800,000
1,700,000
1,501,000
1,438,157
1,282,362
10.00%
5.14%
4.02%
2.40%
1.73%
1.45%
1.37%
1.25%
0.77%
0.76%
0.74%
0.56%
0.54%
0.53%
0.51%
0.43%
0.41%
0.36%
0.34%
0.31%
Total
Balance of register
Total issued capital
140,592,832
277,633,320
418,226,152
33.62%
66.38%
100.00%
The number of unquoted equity securities on issue as at 31 December 2021 was 24,115,834 held by 35 holders.
927 holders held less than a marketable parcel of DRO securities, based on the closing market price as at 31 December
2021 of $0.175.