More annual reports from Equity LifeStyle Properties:
2023 ReportPeers and competitors of Equity LifeStyle Properties:
PCTELELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT
31 DECEMBER 2018
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
CONTENTS
Corporate Directory
Chairman’s Letter
Directors’ Report
Auditor’s Independence Declaration
Financial Report
Directors’ Declaration
Independent Auditor’s Report
Corporate Governance Statement
Additional ASX Information
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
2
3
4
19
20
59
60
63
70
1
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
CORPORATE DIRECTORY
Directors
Major General (ret) Ami Shafran – Non-Executive Chairman
Mick Keelty – Deputy Chairman
Mr Nir Gabay – Managing Director
Mr David Furstenberg – Non-Executive Director
Mr Howard Digby – Non-Executive Director
Mr Raj Logaraj – Non-Executive Director
Company Secretary
Mr Mark Licciardo
Registered Office
Level 7
330 Collins Street
Melbourne VIC 3000
AUSTRALIA
Ph: +61 8 6377 8043
Email: info@el-sight.com
Web: www.el-sight.com
Auditor
BDO Audit (WA) Pty Ltd
38 Station Street
PO Box 700
Subiaco WA 6008
AUSTRALIA
Legal Advisor
Holding Redlich
Level 8
555 Bourke Street
Melbourne VIC 3000
AUSTRALIA
Share Registry
Automic Registry Services
Level 2, 267 St Georges Terrace
Perth WA 6000
AUSTRALIA
Phone: 1300 288 664 (within Australia) +61 2 9698 5414 (outside Australia)
Fax: +61 8 9321 2337
Email: hello@automic.com.au
Web: www.automic.com.au
Securities Exchange Listing
ASX Limited
Level 40, Central Park
152-158 St Georges Terrace
Perth WA 6000
ASX Code – ELS
2
Dear Shareholder,
It is with great enthusiasm that I wish to report to you the status of the company and the great plans awaiting us
in years to come.
Almost two years have gone by since Elsight was listed on the Australian Securities Exchange in June 2017, and
2018 has been quite an exciting year - full of challenges and successes.
2018 saw the company’s revenues grow by 80% compared to the 2017 year – a phenomenal achievement. The
team has been actively winning projects and customers in various verticals across the globe. Additionally, the
company has expanded its sales activities to strategic territories in the USA and Australia.
Not only have sales grown, but the type of customers the company has been targeting has changed significantly
from government to large corporations. Such a change allows the company higher stability in revenue and cash
flow.
In addition, Elsight is focusing on strategic segments such as Drones, Unmanned vehicles, and Telemedicine. At
the same time, the company continues with its solid penetration into its original markets of HLS, Defense and
Transportation.
The most exciting growth comes from the vast amount of new opportunities coming our way. Our new sales, bus
dev, and marketing team are currently cultivating a number of OEM opportunities - paving the way for the future.
The funds raised in 2017 and 2018 have been invested heavily in sales and marketing activities as well as in
development of our flagship product – Halo – Elsight’s next generation communication platform.
Halo’s first limited version is planned to be delivered to customers for pilots in Q3/2019 – ahead of schedule.
Halo will enjoy early revenues towards the end of 2019. However, this powerful yet nimble platform is expected
to dominate our 2020 revenues and beyond.
I’m very excited for the company and am looking forward to 2019 and beyond.
Sincerely,
Maj. Gen. (res) Ami Shafran
Chairman
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
3
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
Your Directors present their report, together with the financial statements of Elsight Limited (“the Company”) and controlled
entities (“the Group”) for the financial year ended 31 December 2018.
Directors
The names and the particulars of the Directors of the Company during or since the end of the financial year are:
Name
Status
Major General (ret) Ami Shafran
Non-Executive Chairman
Appointed
2 June 2017
Deputy Chairman
12 December 2018
Managing Director
Non-Executive Director
2 June 2017
2 June 2017
Non-Executive Director
13 December 2016
Non-Executive Director
1 August 2018
Non-Executive Director
13 December 2016
1 August 2018
Resigned
-
-
-
-
-
-
Mick Keelty AO APM
Mr Nir Gabay
Mr David Furstenberg
Mr Howard Digby
Mr Raj Logaraj
Dr Anton Uvarov
Principal Activities
The principal continuing activities of the Group during the year was the development and commercialisation of multichannel
high-band-width-mobile-secured-datalink technology.
Dividends
There were no dividends paid or recommended during the financial year ended 31 December 2018 (2017: Nil).
Review of operations
Unless otherwise stated all figures in this report are in the Company’s presentation currency US$.
Elsight Limited had a loss for the year of $4,206,972 (2017: loss of $$3,119,570). The 2018 loss included selling, general and
administrative expenses of $3,836,146 and non-cash share based payments of $1,362,695.
The net assets of the Group have increased by $3,135,237, from net assets of $1,364,823 at 31 December 2017 to net assets
of $4,500,060 at 31 December 2018.
As at 31 December 2018, the Group’s cash and cash equivalents increased from a balance of $1,093,853 at 31 December
2017 to a balance of $3,632,926. As at 31 December 2018 the Group has working capital of $4,288,342 (2017: $1,227,548).
Significant changes in the state of affairs
There were no significant changes to the Company or the state of its affairs during the year.
Review of operations
During the year ended 31 December 2018, the Company had the following highlights:
Continuous increase in quarter on quarter revenues;
80% increase in revenue for 2018 compared to 2017;
Integration work with leading automotive companies in the field of unmanned driving and UAV’s such as IAI, Easy
Aerial and others;
Strategic decision to open business development efforts in US market;
Partnership with Traffilog for integrated Video and Telematics platform;
Entered successful POC’s with large US government organisations;
Won several tenders Including Israeli defence force tender;
Successful second raising of funds on the ASX;
Received first substantial order from Alrena;
4
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
Technological enhancements in hardware and software that established foundation for new product development;
New branding and new website enabling the expansion of marketing activities into digital; and
Continued investing in building a winning team.
New Product development in 2018
Subsequent to the reporting period, the Company launched the “Halo” communications platform. This was the main
development focus of R&D during the year ended December 2018. The “Halo” project was pivotal for the Company,
designed to open up a number of key new opportunities for the Company including markets such as OEM (Original
Equipment Manufacturer), and embedded applications such as tablets and computers for police and first responders,
fleet or autonomous vehicles, handheld devices, and even the smallest drones.
The strategic shift in focus of sales and marketing to North America in mid-2019 was planned to cultivate opportunities
for “Halo” later in 2019.
Significant events after the reporting period
Since the reporting date the following significant events have occurred:
29/01/2019 – cancellation of unlisted options;
07/02/2019 – issue of 50,000 ESOP options; and
26/02/2019 – new product release at international mobile conference; and
08/03/2019 – appointment of CFO.
There were no other significant events after reporting date.
5
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
Information on Directors
Major General (ret)
Ami Shafran
Non-Executive Chairman (Appointed 2 June 2017)
Qualifications
-
Experience
Interest in Shares and
Options at the date of
this report
Major General Shafran is the former Heard of the Israeli Defence Force Information and
Communications Technology Command. In addition, he is currently the Head of the Centre for Cyber
Technology at Ariel University in Israel.
Over the course of his extensive career Major General Shafran held numerous prestigious and
prominent positions in the Defence and Intelligence forces of the Israeli Defence Force, including
serving as its Chief Scientist, service as Chief of Staff of the Ministry of Defence, and the Research and
Development Attache at the Israeli Embassy in Washington DC.
100,000 options expiring 9 October 2022 exercisable at A$0.60
Special Responsibilities Nil
Directorships held in
other listed entities
(last 3 years)
Nil
Mr Nir Gabay
Managing Director (Appointed 2 June 2017)
Qualifications
-
Experience
Nir is one of the founders of El-Sight Israel.
Commencing his career in the Israeli military, he has more than 20 years’ experience in
communications, security and surveillance including a mobile cellular provider, local municipality, and
high tech companies., and was previously a member of an Israeli Special Forces unit.
During the past ten years Nir has been involved in a number of technological and business
achievements. Among them is the establishment of El-Sight Israel, which was founded based on his
communications and security experiences.
26,127,974 Ordinary shares, 29,595,000 Performance Options expiring 2 June 2022 exercisable at
A$0.20, and 110,000 options expiring 9 October 2022 exercisable at A$0.60
Interest in Shares
and Options at the
date of this report
Special
Responsibilities
Directorships held in
other listed entities
(last 3 years)
Nil
Nil
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
6
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
Information on Directors
Mr Mick Keelty AO
APM
Qualifications
Experience
Deputy Chairman (Appointed 12 December 2018)
Masters in Public Policy and Administration, Graduate Certificate in Criminal Justice Education, AIM
(Fellow)
Mick joined the Australian Federal Police Force (AFP) in Canberra and rose through the ranks to be
appointed Commissioner in 2000; the first AFP member to achieve this milestone promotion. In this
position, Mick filled several integral roles, including serving as the inaugural Chairperson of the
Australian Crime Commission (now the Australian Crime & Intelligence Commission). He was also the
Chair of the Asia Pacific Group on Money Laundering, a regional organisation of the Financial Action
Task Force based in France, an initiative of the G7 group of nations. During his tenure as Commissioner,
Mick oversaw the police responses to the Bali bombings, the Indian Ocean Tsunami and other regional
events.
Since leave the AFP in 2009, Mick has spearheaded major government reviews and inquiries, leading
to monumental organisational changes. Mick has held and continues to hold positions on several
government and private sector advisory boards.
Interest in Shares
and Options at the
date of this report
Special
Responsibilities
Directorships held in
other listed entities
(last 3 years)
Nil
Nil
Nil
Mr David
Furstenberg
Non-Executive Director (Appointed 2 June 2017)
Qualifications
-
Experience
Interest in Shares
and Options at the
date of this report
Special
Responsibilities
Directorships held in
other listed entities
(last 3 years)
David has held various senior CEO, Chairman, Board member and VP Global sales positions in a number
of publicly traded and privately owned companies, including Comverse (NASDAQ: CNSI) and
Audiocodes (NASDAQ: AUDC), Enure, and Vista (a subsidiary of Israel Aerospace Industries).
Most recently David was the active Chairman at NovelSat and the CEO at InsurBit, as well as a director
of White Cyber Knight Ltd Insurix Inc., all companies involved in cyber and security businesses in some
form.
David has built a speciality in assisting with the turnaround of high tech companies through product
and market repositioning (as opposed to reduction in force).
250,000 options expiring 9 October 2022 exercisable at A$0.60
Nil
Nil
7
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
Information on Directors
Mr Howard Digby
Non-Executive Director (Appointed 13 December 2016)
Qualifications
Bachelor of Engineering (Mechanical) (Honours)
Experience
Interest in Shares
and Options
Special
Responsibilities
Directorships held in
other listed entities
(last 3 years)
Howard began his career at IBM and has spent 25 years managing technology related businesses in the
Asia Pacific region, of which 12 years were spent in Hong Kong. More recently, he was with The
Economist Group as Regional Managing Director. Prior to this, he held senior regional management
roles at Adobe and Gartner. Upon returning to Perth, Howard served as Executive Editor of WA
Business News and now spends his time as an advisor and investor, having played key roles in several
M&A and reverse takeover transactions.
1,795,834 Ordinary shares and 750,000 Options expiring 2 June 2020 exercisable at $0.30
Nil
4DS Memory Limited (current)
IMEXHS Limited (current)
Omni Market Tide Limited (current)
HearMeOut Limited (resigned 11 September 2017)
Estrella Resources Ltd (resign 3 April 2017)
Mr Raj Logaraj
Non-Executive Director (Appointed 1 August 2018)
Qualifications
LLB, LL M
Experience
Mr Logaraj’s career spans law and investment banking. He has served on the Boards of public
companies listed on the Australian Stock Exchange (ASX), Singapore Stock Exchange (SGX) and the
Malaysian Stock Exchange (Bursa Malaysia), dealing with a diverse range of businesses including
Agribusiness, FMCG, Uranium Mining, Medical Devices, Financial Services and on University
Committees and Government Councils in Australia and overseas.
He practiced Law as a Partner of a major law firm in Singapore following graduation with a LLB (Hons)
degree from the National University of Singapore where he also taught Commercial Law part-time. He
subsequently obtained a LL M degree from Sydney University majoring in International Tax and Public
Company Finance and practised law as an International Partner of Baker & McKenzie in Australia
responsible for the development of its business in the ASEAN region, as Head of the Corporate and
Commercial Group of the Australian offices and as Chair of its Business Development Committee before
joining Turnbull & Partners (now Goldman Sachs Australia) as Executive Director. He then worked for
Temasek Holdings in Singapore as a Board Director, President of the Financial Solutions Group of its
stockbroking unit and Chair of the Risk and Management Committee.
Interest in Shares
and Options
Special
Responsibilities
Directorship held in
other listed entities
(last 3 years)
50,000 Ordinary shares
Nil
Nil
8
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
Information on Directors
Dr Anton Uvarov
Non-Executive Director (Appointed 13 December 2016, Resigned 1 August 2018)
Qualifications
PhD, MBA
Experience
Anton has significant experience as an equity analyst both in Australia and overseas. Prior to moving
to Australia, he was with Citigroup Global Markets, where he spent two years as a member of the New
York based Healthcare team. Anton’s technical expertise and company knowledge spreads across a
variety of industries and spectrum of market capitalisations, with his particular interest in early stage
startups.
Interest in Shares
and Options
1,708,334 Ordinary shares and 750,000 Options expiring 2 June 2020 exercisable at $0.30 (as at the
date of resignation)
Special
Responsibilities
Nil
Directorship held in
other listed entities
(last 3 years)
HearMeOut Limited (resigned 11 September 2017)
Actinogen Medical Limited (resigned 14 August 2017)
Information on Key Management
Mr Roee Kashi
Vice President – Research and Development
Qualifications
-
Experience
Roee commenced his career in the Israeli Defence Force and has over nine years of experience and
expertise in building and developing digital video systems.
Roee has been responsible for some major technological achievements including the development of
the core software of El-Sight Israel’s DVR that is responsible for video encoding and transmission, user
interface design and construction of the system, handheld software development (Pocket PC,
Smartphone), moving cameras, smart searches, and send notification email recordings to name a few.
Information on Company Secretary
Mr Mark Licciardo
Company Secretary
Qualifications
B.Bus (Acc), GradDip CSP, FGIA, FCIS, FAICD
Experience
Mr Licciardo is the founder and Managing Director of Mertons Corporate Services. Mark has
extensive experience working with Boards of high profile ASX listed companies in the areas of
corporate governance, accounting & finance and company secretarial practice. His expertise is in
developing and guiding effective governance and he is considered a leader in this sector. His 35 year
corporate career has encompassed executive roles in banking and finance, funds management,
investment and infrastructure development. Mark is a director of various ASX listed public and
private companies, a former Chairman of the Governance Institute of Australia Victorian division,
Academy of Design (LCI Melbourne) and Melbourne Fringe Festival and a former company secretary
of Top 50 ASX listed companies Transurban Group and Australian Foundation Investment Company.
9
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
Meetings of Directors
The number of formal meetings of Directors held during the period and the number of meetings attended by each director
was as follows:
Ami Shafran
Mick Keelty
Nir Gabay
Appointed 2 June 2017
Appointed 12 December 2018
Appointed 2 June 2017
David Furstenberg
Appointed 2 June 2017
Appointed 13 December 2016
Appointed 1 August 2018
Appointed 13 December 2016, Resigned 1 August 2018
Howard Digby
Raj Logaraj
Anton Uvarov
Options
DIRECTORS’ MEETINGS
Number eligible
to attend
9
Number
Attended
8
1
9
9
9
5
4
0
9
9
9
5
4
Unissued shares under option
At the date of this report, the unissued ordinary shares of Elsight Limited under option are as follows:
Expiry Date
2 June 2020
Issue Date
2 June 2017
18 June 2021
19 June 2018
2 June 2022
2 June 2022
2 June 2017
2 June 2017
9 October 2022
29 December 2017
9 October 2022
2 October 2018
14 November 2022
9 January 2018
4 February 2023
4 March 2023
31 July 2023
31 July 2023
7 May 2018
7 May 2018
2 October 2018
2 October 2018
Status
Unlisted
Listed
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Exercise Price
Number Under Option
A$0.30
A$1.00
A$0.20
A$0.20
A$0.60
A$.060
$A1.08
A$0.80
A$0.745
A$0.675
A$0.60
7,000,000
6,878,983
30,000,000
8,608,000
151,000
460,000
25,000
36,000
12,000
152,000
200,000
53,522,983
No option holder has any right under the options to participate in any other share issue of the Company or of any other entity.
No options were exercised during the year (2017: Nil).
Proceedings on Behalf of Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to
which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those
proceedings.
The Company was not a party to any such proceedings during the year.
10
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
Indemnifying Officers
The Company indemnifies each of its Directors, officers and company secretary. The Company indemnifies each director or
officer to the maximum extent permitted by the Corporations Act 2001 from liability to third parties, except where the liability
arises out of conduct involving lack of good faith, and in defending legal and administrative proceedings and applications for
such proceedings.
The Company must use its best endeavours to insure a director or officer against any liability, which does not arise out of
conduct constituting a wilful breach of duty or a contravention of the Corporations Act 2001. The Company must also use its
best endeavours to insure a Director or officer against liability for costs and expenses incurred in defending proceedings
whether civil or criminal.
Insurance Premiums
During the year the Company paid insurance premiums to insure directors and officers against certain liabilities arising out of
their conduct while acting as an officer of the Group. Under the terms and conditions of the insurance contract, the nature
of the liabilities insured against and the premium paid cannot be disclosed.
Environmental Regulations
In the normal course of business, there are no environmental regulations or requirements that the Company is subject to.
Likely Developments and Expected Results of Operations
The Company’s principal continuing activity is the development and commercialisation of multichannel high-band-width-
mobile-secured-datalink technology. The Company’s future developments, prospects and business strategies are to continue
to develop and commercialise this technology.
Indemnification of Auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, BDO Audit (WA) Pty Ltd, as part of the
terms of its audit engagement agreement against claims by third parties arising from their report on the financial report.
Non-audit Services
During the year, BDO Audit (WA) Pty Ltd, the Company’s auditor provided no non-audit services. Details of their remuneration
can be found within the financial statements at Note 7 Auditor’s Remuneration.
In the event that non-audit services are provided by BDO (WA) Pty Ltd, the Board has established certain procedures to ensure
that the provision of non-audit services are compatible with, and do not compromise, the auditor independence
requirements of the Corporations Act 2001. These procedures include:
non-audit services will be subject to the corporate governance procedures adopted by the Company and will be
reviewed by the Board to ensure they do not impact the integrity and objectivity of the auditor; and
ensuring non-audit services do not involve reviewing or auditing the auditor’s own work, acting in a management or
decision making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.
r
o
19 of the financial report. F
Auditor’s Independence Declaration
The auditor’s independence declaration for the year ended 31 December 2018 has been received and can be found on page
11
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
Remuneration Report (Audited)
This remuneration report for the year ended 31 December 2018 outlines the remuneration arrangements of the Group in
accordance with the requirements of the Corporations Act 2001 (Cth), as amended (Act) and its regulations. This information
has been audited as required by section 308(3C) of the Act.
The remuneration report is presented under the following sections:
Introduction
1.
2. Remuneration governance
3. Executive remuneration arrangements
4. Non-executive Director fee arrangements
5. Details of remuneration
6. Additional disclosures relating to equity instruments
7.
Loans to key management personnel (KMP) and their related parties
8. Other transactions and balances with KMP and their related parties
1.
Introduction
Key Management Personnel (KMP) have authority and responsibility for planning, directing and controlling the major
activities of the Group. KMP comprise the directors of the Company and identified key management personnel.
Compensation levels for KMP are competitively set to attract and retain appropriately qualified and experienced directors
and executives. The Board may seek independent advice on the appropriateness of compensation packages, given trends in
comparable companies both locally and internationally and the objectives of the Group’s compensation strategy.
Key management personnel covered in this report are as follows:
Name
Status
Major General (ret) Ami Shafran
Non-Executive Chairman
Appointed
2 June 2017
Deputy Chairman
12 December 2018
Managing Director
Non-Executive Director
2 June 2017
2 June 2017
Non-Executive Director
13 December 2016
Non-Executive Director
1 August 2018
Non-Executive Director
13 December 2016
1 August 2018
Vice President – Research
and Development
2 June 2017
-
Resigned
-
-
-
-
-
-
Mick Keelty
Mr Nir Gabay
Mr David Furstenberg
Mr Howard Digby
Mr Raj Logaraj
Dr Anton Uvarov
Mr Roee Kashi
2. Remuneration governance
The Directors believe the Company is not currently of a size nor are its affairs of such complexity as to warrant the
establishment of a separate remuneration committee. Accordingly, all matters are considered by the full Board of Directors,
in accordance with a remuneration committee charter.
During the financial year, the Company did not engage any remuneration consultants.
12
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
3. Executive remuneration arrangements
The compensation structures are designed to attract suitably qualified candidates, reward the achievement of strategic
objectives, and achieve the broader outcome of creation of value for shareholders. Compensation packages may include a
mix of fixed compensation, equity-based compensation, as well as employer contributions to superannuation funds. Shares
and options may only be issued subject to approval by shareholders in a general meeting.
At the date of this report the Company has two appointed executives, Mr Nir Gabay as Managing Director and Mr Roee Kashi
as Vice President – Research and Development. The terms of their Executive Employment Agreements with Elsight Limited
are summarised in the following table.
Executive Name
Mr Nir Gabay
Mr Roee Kashi
Services Agreement Summary
Executive salary of ILS 772,668 per annum (based on the exchange rate at the date of this
report, equals approximately US$206,155 per annum). Executive salary increased from
ILS 440,000 (US$117,396) per annum to ILS 772,668 (US$206,155) per annum in
November 2018 with ILS 189,679 (US$50,000) payable upfront.
Reimbursement of reasonable business expenses incurred in the ordinary course of the
business in accordance with the Group’s reimbursement policies.
The agreement commenced on 5 April 2017 and may be terminated by either party on 12
months’ notice, but is for a minimum period of three years. It may be terminated
immediately with justifiable cause.
Executive salary of ILS 660,000 per annum (based on the exchange rate at the date of this
report, equals approximately US$176,094 per annum). Executive salary increased form
ILS 420,00 (US $112,060) per annum to ILS660,000 (US$176,094) per annum in November
2018.
Reimbursement of reasonable business expenses incurred in the ordinary course of the
business in accordance with the Group’s reimbursement policies.
The agreement commenced on 6 April 2017 and may be terminated by either party on
180 days’ notice. It may be terminated immediately with justifiable cause.
At this stage the Board does not consider the Group’s earnings or earnings related measures to be an appropriate key
performance indicator (KPI). In considering the relationship between the Group’s remuneration policy and the consequences
for the Company’s shareholder wealth, changes in share price are analysed as well as measures such as successful completion
of business development and corporate activities.
Performance Conditions Linked to Remuneration
The Group has established and maintains Employee Limited Employee Share Option Plan (Plan) to provide ongoing incentives
to Eligible Participants of the Company. Eligible Participants include:
a Director (whether executive or non-executive) of any Group Company;
a full or part time employee of any Group Company;
a casual employee or contractor of a Group Company; or
a prospective participant, being a person to whom the Offer was made but who can only accept the Offer if
arrangement has been entered into that will resulting in the person becoming an Eligible Participant.
The Board adopted the Plan to allow Eligible Participants to be granted Options to acquire shares in the Company.
The purpose of the Plan is to assist in the reward and motivation of Eligible Participants and link the reward of Eligible
Participants to performance and the creation of Shareholder value. It is designed to align the interest of Eligible Participants
more closely to the interests of Shareholders by providing an opportunity for Eligible Participants to receive shares. It provides
the Eligible Participants with the opportunity to share in any future growth in value of the Company and provides greater
incentives for Eligible Participants to focus on the Company’s longer term goals. A total of 460,000 options were issued to
key management personnel under the Plan during the 2018 financial year (2017: 38,608,000).
13
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
Total
r
o
F
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
4. Non-executive Director fee arrangements
The Board policy is to remunerate Non-executive Directors at a level to comparable companies for time, commitment, and
responsibilities. Non-executive Directors may receive performance related compensation. Directors’ fees cover all main Board
activities and membership of any committee. The Board has no established retirement or redundancy schemes in relation to
Non-executive Directors.
The maximum aggregate amount of fees that can be paid to Non-executive Directors is presently limited to an aggregate of
AU$500,000 (US$352,629) per annum and any change is subject to approval by shareholders at the General Meeting. Fees
for Non-executive Directors are not linked to the performance of the Company. However, to align Directors’ interests with
shareholder interests, the Directors are encouraged to hold shares in the Company.
Total fees for the Non-executive Directors for the financial year were $80,283 (2017: $87,304) and cover main Board activities
only. Non-executive Directors may receive additional remuneration for other services provided to the Group.
All non-executive directors enter into a service agreement with the Company in the form of a letter of appointment. The
letter summarises the board policies and terms, including remuneration, relevant to the office of director.
5. Details of Remuneration
The Key Management Personnel of Elsight Limited includes the current and former Directors of the Company and Key
Management Personnel of Elsight during the year ended 31 December 2018.
31-Dec-18
Directors:
Ami Shafran
Mick Keelty
Nir Gabay
David Furstenberg
Howard Digby
Raj Logaraj
Anton Uvarov
Key management:
Roee Kashi
Short Term
Salary, Fees &
Commissions
Post-
Employment
Retirement
Benefits
US$
US$
Non-
monetary
benefits
US$
Other(i)
Share-based
payments(ii)
Total
Performance
based
remuneration
US$
US$
US$
22,636(iii)
2,412
155,304
22,636(iii)
37,376
18,690
21,805
139,826
420,685
-
-
-
-
-
-
2,715
-
25,351
2,412
21,043
16,866
15,428
848,317
1,056,958
-
-
-
-
-
-
-
-
-
-
-
-
6,788
-
-
-
29,424
37,376
18,690
21,805
20,000
41,043
9,875
26,741
14,679
30,107
382,740
567,120
1,240,560
1,759,136
11%
-
80%
23%
-
-
-
67%
71%
(i) Israeli social benefits.
(ii)Share-based payment expense is recorded pro-rata over the vesting period. Refer to Section 6 Additional disclosures
relating to equity instruments for further information on share based payments granted to directors and key management
during the year.
(iii) Consulting fees.
14
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
Short Term
Salary, Fees &
Commissions
Post-
Employment
Retirement
Benefits
US$
US$
Non-
monetary
benefits
US$
Other(i)
Share-based
payments(ii)
Total
Performance
based
remuneration
US$
US$
US$
21,826
142,515
21,826
21,826
21,826
-
115,311
345,130
-
18,746
-
5,540
-
-
8,813
579,056
-
-
-
-
-
-
21,826
754,670
21,826
21,826
21,826
-
-
-
17,295
36,041
-
-
-
-
5,540
10,193
19,006
223,509
366,308
802,565
1,208,282
-
77%
-
-
-
-
61%
66%
31-Dec-17
l
y
n
o
Directors:
Ami Shafran
Nir Gabay
David Furstenberg
Howard Digby
Anton Uvarov
Nathan Barbarich
Key management:
Roee Kashi
e
s
u
Total
l
a
n
o
s
r
e
p
r
o
F
(i) Israeli social benefits.
(ii)Share-based payment expense is recorded pro-rata over the vesting period. Refer to Section 6 Additional disclosures
relating to equity instruments for further information on share based payments granted to directors and key management
during the year.
6. Additional disclosures relating to equity instruments
KMP Shareholdings
There were no shares issued as remuneration or on the exercise of options during the 2018 financial year (2017: nil).
The number of ordinary shares in Elsight Limited held by each KMP of the Group during the financial year is as follows:
31-Dec-18
Balance at start
of the year
Shares acquired
during the year(i)
Balance at Date
of Appointment/
(Resignation)(ii)
Balance at
end of the year
Directors:
Ami Shafran
Mick Keelty
Nir Gabay
David Furstenberg
Howard Digby
Raj Logaraj
Anton Uvarov
Key management:
Roee Kashi
Total
-
-
26,052,974
-
1,708,334
-
1,708,334
2,894,775
32,364,417
-
-
75,000
-
87,500
50,000
-
-
212,500
-
-
-
-
-
-
(1,708,334)
-
(1,708,334)
-
-
26,127,974
-
1,795,834
50,000
-
2,894,775
30,868,583
(i)On-market purchases during the year.
(ii)Mr Uvarov resigned on 1 August 2018 and is not considered to be a KMP from this date.
Options awarded, vested and lapsed during the year
The tables below disclose the number of share options granted, vested or lapsed during the year.
15
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
Share options do not carry any voting or dividend rights, and can only be exercised once the vesting conditions have been
met, until their expiry date.
KMP Options Holdings
The number of options over ordinary shares held by each KMP of the Group during the financial year is as follows:
31-Dec-18
Directors:
Ami Shafran
Mick Keelty
Nir Gabay
David Furstenberg
Howard Digby
Raj Logaraj
Anton Uvarov
Key management:
Roee Kashi
Total
Balance at
the start of
the year
Granted as
remuneration
during the
year(i)
Exercised
during the
year
Balance at
Date of
Appointment
/
(Resignation)
(ii)
Balance at
the end of the
year
Vested and
exercisable
Vested and
un-
exercisable(iii)
Unvested
and
un-
exercisable
-
-
29,595,000
-
750,000
-
750,000
9,013,000
40,108,000
100,000
-
110,000
250,000
-
-
-
-
460,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(750,000)
100,000
-
29,705,000
250,000
750,000
-
-
-
(750,000)
9,013,000
39,818,000
-
-
-
-
750,000
-
-
-
750,000
-
-
9,865,000
-
-
-
-
100,000
-
19,840,000
250,000
-
-
-
135,000
10,000,000
8,878,000
29,068,000
(i)Refer terms and conditions of the share-based payment arrangements section below for details of remuneration options
issued during the year.
(ii)Mr Uvarov resigned on 1 August 2018 and is not considered to be a KMP from this date.
(iii)Class A Performance Options vested on 7 June 2018 upon achievement of the vesting milestone. Mr Gabay and Mr Kashi
have both agreed that they will not exercise their performance options received upon meeting the first milestone until the
earlier of 8 June 2019 and the Company meeting the second milestone.
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 are as follows:
Option class
Number
granted
Grant Date
Vesting
and
exercise
date(i)
Expiry
date
Exercise
price
Value per
option at
grant
date(iv)
Vested
%
ESOP Options
8,608,000
2-Jun-17
(ii)
2-Jun-22
A$0.20
US$0.104
-
Class A Performance
Options
Class B Performance
Options
Class C Performance
Options
10,000,000
2-Jun-17
7-Jun-18
2-Jun-22
A$0.20
US$0.104
100%
10,000,000
2-Jun-17
7-Jun-19
2-Jun-22
A$0.20
US$0.104
10,000,000
2-Jun-17
7-Jun-20
2-Jun-22
A$0.20
US$0.104
ESOP Options
460,000
28-May-18
(iii)
9-Oct-22
$A0.60
US$0.265
(i)The vesting and exercise dates of the Performance Options are based on the definition of Year set out below.
-
-
-
16
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
Vesting of Performance Options is subject to achievement of the following performance milestones:
Option Class
Performance Milestone
Class A
Performance
Options
Class B
Performance
Options
Class C
Performance
Options
Class A Performance Options vested on 7 June 2018 upon achievement of the vesting
milestone (the Company achieving aggregate revenue of A$1,000,000 from the sale of
products based on the Technology in a Year(a) for broadcast to consumers or to
manufacturers of consumer or safety products or any business in the distribution chain
of consumer or safety products).
Class B Performance Options will vest and become exercisable upon the Company
achieving aggregate revenue of A$4,000,000 from total sales of products based on the
Technology in a Year(a).
Class C Performance Options will vest and become exercisable upon the Company
achieving aggregate revenue of A$10,000,000 from total sale of products based on the
Technology in a Year(a).
Assessed
likelihood of
milestone
achievement
100%
50%
-
(a)The term Year shall mean one of: (a) the time period commencing 1 January 2017 and ending on the 12 month
anniversary of the completion of the IPO; (b) the 12 month period immediately after the end of the first year, and
(c) the 12 month period immediately after the end of the second Year.
(ii)50% of the 8,608,000 options vest on 2 June 2019, with an additional 6.25% vesting at the end of each quarter of
continuous service thereafter. There are no performance milestones applicable to the ESOP Options.
(iii)50% of the 460,000 options vest on 2 October 2020, with an additional 6.25% vesting at the end of each quarter of
continuous service thereafter. There are no performance milestones applicable to the ESOP Options.
(iv)The value per option at grant date has been determined using a Black Scholes option pricing model. Details of Black
Scholes inputs and valuations can be found at Note 20. Share-based payment expense is recorded pro-rata over the vesting
period.
31-Dec-18
Directors:
Ami Shafran
Nir Gabay
David Furstenberg
Key management:
Roee Kashi
Fair value of
options
granted during
the year
Value of
options vested
during the year
Value of
options lapsed
during the year
US$
US$
US$
Remuneration
consisting of
options for the
year
US$
26,518
29,169
66,294
-
1,023,536
-
-
14,007
-
-
-
-
2,715
848,317
6,788
382,740
17
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
7.
Loans from key management personnel (KMP) and their related parties
There were no loans between the Group and its directors or key management personnel during the year.
8. Other transactions and balances with KMP and their related parties
Transactions with related parties are entered into on terms equivalent to those that prevail in arm’s length transactions. The
Group had the following transactions with members of the Group’s key management personnel and/or their related parties
during the year.
Key Management
Personnel or Their
Related Party
Nature of transaction
Ami Shafran
Director and consulting fees included within trade and other payables
Mick Keelty
Director fees included within trade and other payables
Nir Gabay
Executive salary and director fees included within trade and other
payables
Susana Gabay(i)
Salary and salary related expenses
Eden Gabay(i)
Professional services
David Furstenberg
Director and consulting fees included within trade and other payables
Howard Digby
Director fees included within trade and other payables
Raj Logaraj
Director fees included within trade and other payables
Roee Kashi
Salary and salary related expenses
Transaction
value
US$
-
-
-
Payable
balance
US$
41,139
2,275
45,147
93,608
2,951
2,376
-
-
-
-
-
41,139
5,876
3,526
6,990
(i)Related parties of Nir Gabay.
9. Voting of shareholders at last year’s annual general meeting
The Company received 73% “Yes” votes cast on its Remuneration Report for the 2017 financial year. The Company did not
receive any specific feedback at the AGM regarding its remuneration practices.
REMUNERATION REPORT (END)
Signed in accordance with a resolution of the Board of Directors.
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
18
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY PHILLIP MURDOCH TO THE DIRECTORS OF ELSIGHT LIMITED
As lead auditor of Elsight Limited for the year ended 31 December 2018, I declare that, to the best of
my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Elsight Limited and the entity it controlled during the period.
Phillip Murdoch
Director
BDO Audit (WA) Pty Ltd
Perth, 29 March 2019
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for
the acts or omissions of financial services licensees
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2018
Revenue from contracts with customers
Cost of sales
Gross profit
Other income
Selling, general and administrative expenses
Share based payments
Acquisition and listing costs
Loss on disposal of plant and equipment
Profit/(Loss) before finance expenses
Finance expenses
Profit/(Loss) before income tax
Income tax expense
Profit/(Loss) for the year
Note
3
4
20
2018
US$
1,691,922
(771,651)
920,271
78,277
2017
US$
941,000
(417,461)
523,539
4,433
(3,836,146)
(1,768,234)
(1,362,695)
-
-
(806,890)
(153,374)
(14,453)
(4,200,293)
(2,214,979)
4
(6,679)
(904,591)
(4,206,972)
(3,119,570)
-
-
(4,206,972)
(3,119,570)
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Foreign currency translation, net of tax
19(c)
(615,004)
(184,005)
Total comprehensive income/(loss) for the year attributable to owners
of the Company
(4,821,976)
(3,303,575)
Earnings/(loss) per Share attributable to owners of the Company
Basic earnings/(loss) per share (cents per share)
Diluted earnings/(loss) per share (cents per share)
8
8
(4.51)
(4.51)
(3.74)
(3.74)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with
the accompanying notes.
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
20
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2018
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventory
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Plant and equipment
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Borrowings
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Provision for employees’ severance benefits
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
SHAREHOLDERS’ EQUITY
Issued capital
Reserves
Accumulated losses
SHAREHOLDERS’ EQUITY
Note
9 a
10
11
12
13
14
15
15
17
18
19
2018
US$
3,632,926
1,152,211
314,277
93,272
5,192,686
326,701
45,140
371,841
5,564,527
883,882
20,462
904,344
64,976
95,147
160,123
1,064,467
2017
US$
1,093,853
568,745
203,485
-
1,866,083
254,736
48,829
303,565
2,169,648
581,255
57,280
638,535
126,656
39,634
166,290
804,825
4,500,060
1,364,823
11,667,737
1,613,865
(8,781,542)
4,500,060
5,091,738
847,655
(4,574,570)
1,364,823
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
21
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 31 DECEMBER 2018
Issued Capital
Accumulated losses
Share Based
Payment Reserve
Foreign Exchange
Reserve
Predecessor
Accounting Reserve
US$
US$
US$
US$
US$
Balance at 1 January 2017
Loss for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss) for
the year
Transactions with owners in their
capacity as owners:
Issue of shares
Capital raising costs
Share based payments
Transactions under common control
Balance at 31 December 2017
Loss for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss) for
the year
Transactions with owners in their
capacity as owners:
Issue of shares
Capital raising costs
Share based payments
Balance at 31 December 2018
5,000
-
-
-
5,842,132
(755,394)
-
-
5,091,738
-
-
-
7,059,429
(483,430)
-
11,667,737
(1,455,000)
(3,119,570)
-
(3,119,570)
-
-
-
-
(4,574,570)
(4,206,972)
-
(4,206,972)
-
-
-
(8,781,542)
-
-
-
-
-
-
1,296,456
-
1,296,456
-
-
-
-
-
1,381,214
2,677,670
32,000
-
(184,005)
(184,005)
-
-
-
-
(152,005)
-
(615,004)
(615,004)
-
-
-
(767,009)
-
-
-
-
-
-
-
(296,796)
(296,796)
-
-
-
-
-
-
(296,796)
The above Consolidated Statements of Changes in Equity should be read in conjunction with the accompanying notes.
22
Total
US$
(1,418,000)
(3,119,570)
(184,005)
(3,303,575)
5,842,132
(755,394)
1,296,456
(296,796)
1,364,823
(4,206,972)
(615,004)
(4,821,976)
7,059,429
(483,430)
1,381,214
4,500,060
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Note
2018
US$
2017
US$
1,380,214
719,307
(4,706,119)
(2,668,717)
58,683
(6,679)
4,433
(91,186)
Net cash provided by/(used in) operating activities
9 b
(3,273,901)
(2,036,163)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment
Purchase of intangible assets
Payments for pledged deposits
Proceeds from deposits
Loan proceeds received from the Company prior to acquisition date
Cash held by the Company at acquisition date
2 a
(165,709)
(173,957)
-
-
(50,000)
(35,644)
43,658
-
-
-
366,178
18,993
Net cash provided by/(used in) investing activities
(122,051)
125,570
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from the issue of shares
Proceeds from bank loans
Repayment of convertible loans
Repayment of borrowings
Net cash provided by/(used in) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Foreign exchange
6,594,517
3,556,279
-
-
93,238
(399,935)
(88,551)
(235,521)
6,505,965
3,014,061
3,110,014
1,103,468
1,093,853
7,000
(570,941)
(16,615)
Cash and cash equivalents at the end of the financial year
9 b
3,632,926
1,093,853
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
23
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
These consolidated financial statements cover Elsight Limited (Company) and its controlled entities as a consolidated entity
(also referred to as Group). Elsight Limited is a company limited by shares, incorporated and domiciled in Australia. The Group
is a for-profit entity.
The financial statements were issued by the board of directors on 29 March 2019 by the directors of the Company.
The following is a summary of the material accounting policies adopted by the consolidated entity in the preparation and
presentation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation of the financial report
a) Statement of Compliance
These financial statements are general purpose financial statements which have been prepared in accordance with Australian
Accounting Standards (AASBs) (including Australian interpretations) adopted by the Australian Accounting Standard Board
(AASB) and the Corporations Act 2001.
Australian Accounting Standards set out accounting policies that the Australian Accounting Standards Board has concluded
would result in financial statements containing relevant and reliable information about transactions, events and conditions.
Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with
International Financial Reporting Standards.
b) Basis of Measurement and Reporting Conventions Including Capital Reorganisation
The financial statements, except for cash flow information, have been prepared on an accruals basis and are based on
historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets
and financial liabilities. The amounts presented in the financial statements have been rounded off to the nearest dollar unless
stated otherwise.
On 2 June 2017 Elsight Limited (‘ELS’) completed a transaction with the shareholders of El-Sight Ltd to acquire 100% of the
share capital of El-Sight Ltd in exchange for 35,381,386 shares. In accordance with Australian Accounting Standards, the
acquisition does not meet the definition of a business combination as ELS was established for the sole purpose of facilitating
the listing process and to acquire El-Sight Ltd by way of an equity swap. The shareholders of El-Sight Ltd received the same
proportion of equity instruments in ELS.
c) Adoption of New and Amended Accounting Standards
A number of new or amended standards became applicable for the current reporting period and the Group had to change its
accounting policies as a result of the adoption of the following standards:
AASB 9 Financial Instruments; and
AASB 15 Revenue from Contracts with Customers.
The impact of the adoption of these standards and the new accounting policies are disclosed in Note 1d below. The impact
of these standards, and the other new and amended standards adopted by the Group, has not had a material impact on the
amounts presented in the Group’s financial statements.
24
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
d) Changes in Accounting Policies
This note explains the impact of the adoption of AASB 9 Financial Instruments and AASB 15 Revenue from Contracts with
Customers on the Group’s financial statements and also discloses the new accounting policies that have been applied from 1
January 2018, where they are different to those applied in prior periods.
AASB 9 Financial Instruments – Impact of Adoption
Impairment of financial assets
The Group’s financial assets subject to AASB 9’s new expected credit loss model are cash and trade receivables,
which arise from the provision of services and sale of goods.
The impact of the impairment requirements of AASB 9 on cash and cash equivalents has not resulted in a material
impact to the financial statements.
Under AASB 9, the Group was required to revise the impairment methodology used in the calculation of its provision
for doubtful debts to the expected credit loss model. This change in methodology has not had a material impact on
the financial statements. The Group applies the AASB 9 simplified approach to measuring expected credit losses
which uses a lifetime expected loss allowance for all trade receivables. Trade receivables are written off when there
is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include,
amongst others, the failure or a debtor to engage in a repayment plan with the Group, and a failure to make
contractual payments for a period of greater than 120 days past due.
AASB 9 Financial Instruments – Accounting Policies Applied from 1 January 2018
Classification
From 1 January 2018, the Group classifies its financial assets in the following measurement categories:
o
o
those to be measured subsequently at fair value (either through OCI, or through profit or loss), and
those to be measured at amortised cost.
The classification depends on how the Group manages the financial assets and the contractual terms of the cash
flows. At year end, all of the Group’s financial assets have been classified as those to be measured at amortised
cost.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the
financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Impairment
From 1 January 2018, the Group assesses expected credit losses associated on a forward looking basis. For trade
receivables, the Group applies the simplified approach permitted by AASB 9, which requires expected lifetime losses
to be recognised from initial recognition of the receivables.
AASB 15 Revenue from Contracts with Customers – Impact of Adoption
The Group has adopted AASB 15 Revenue from Contracts with Customers from 1 January 2018 which resulted in
changes to accounting policies but no adjustments to the amounts recognised in the financial statements.
The impact of the adoption of AASB 15 has not resulted in a material impact to the financial statements.
25
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
AASB 15 Revenue from Contracts with Customers – Accounting policies
Group revenues consist of the following elements:
physical products which are sent to the customer, where revenue is recognised upon shipment or arrival
of goods, dependent on the terms that have been agreed with the customer;
IT services, where revenue is recognised in the accounting period in which the services are rendered;
installation fees, which are recognised upon the completion of product installation; and
other revenue including cloud services fees which are recognised over the service period; software license
fees which are recognised over the license period; maintenance fees for which contracts are generally
one year with revenue recognised over the contract period; and service level agreements which are
recognised over the agreement period.
In relation to IT services, cloud services, software licence, maintenance fees and service level agreements, the
Group recognises a contract liability where payments received exceed the services rendered.
The Group has no material contracts where the period between the transfer of the promised goods or services to
the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any
of the transaction prices for the time value of money.
e)
Principles of Consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December
2018. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee
and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if
and only if the Group has:
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the
investee);
Exposure, or rights, to variable returns from its involvement with the investee, and
The ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts
and circumstances in assessing whether it has power over an investee, including:
The contractual arrangement with the other vote holders of the investee,
Rights arising from other contractual arrangements,
The Group’s voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary
acquired or disposed of during the year are included in the statement of profit or loss and other comprehensive income from
the date the Group gains control until the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of
the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line
with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating
to transactions between members of the Group are eliminated in full on consolidation.
26
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A change in ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the
Group loses control over a subsidiary, it:
De-recognises the assets (including goodwill) and liabilities of the subsidiary
De-recognises the carrying amount of any non-controlling interests
De-recognises the cumulative translation differences recorded in equity
Recognises the fair value of the consideration received
Recognises the fair value of any investments retained
Recognises any surplus or deficit in profit and loss
Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained earnings, as
appropriate, as would be required if the Group had directly disposed of the related assets or liabilities.
f)
Income Tax
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable
income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured
at the amounts expected to be paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as
well unused tax losses.
Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss when
the tax relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been
fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition
of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is
realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement
also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or
liability.
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.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures,
deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be
controlled and it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and
liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income
taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended
that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods
in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
27
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
g)
Leases
Leases are classified at their inception as either operating or finance leases based on economic substance of the agreement
so as to reflect the risks and benefits incidental to ownership.
Operating Leases
The minimum lease payments made under operating leases are charged against profits in equal installments over the
accounting periods covered by the lease term where the lessor effectively retains substantially all of the risks and benefits of
ownership of the leased item.
The cost of improvements to or on leased property is capitalized, disclosed as leasehold improvements and amortised.
Finance leases
Leases which effectively transfer substantially all of the risks and rewards incidental to ownership of the leased item to the
Company are capitalised at the present value of the minimum lease payments and disclosed as property, plant and equipment
under lease. A lease liability of equal value is also recognised.
Capitalised lease assets are depreciated over the shorter of the estimated useful life of the assets and the lease term.
Minimum lease payments are allocated between interest expense and reduction of the lease liability with the interest
expense calculated using the interest rate implicit in the lease and recognised directly in net profit.
h)
Impairment of non-financial assets
At the end of each reporting period, the Directors assesses whether there is any indication that an asset may be impaired.
The assessment will include the consideration of external and internal sources of information, including dividends received
from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits.
If any such indication exists, an impairment test is carried out on the asset by comparing the asset’s recoverable amount,
being the higher of its fair value less costs to sell and its value in use, to the asset’s carrying amount. Any excess of the
asset’s carrying amount over its recoverable amount is recognised immediately in profit or loss. Where it is not possible to
estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash generating
unit to which the asset belongs.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
i)
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits available on demand with banks with original maturity of three
months or less.
j)
Trade receivables
Trade receivables are amounts due from customers for goods or services performed in the ordinary course of business. They
are generally due for settlement within 30 days are therefore are all classified as current. Trade receivables are recognised
initially at the amount of consideration that is unconditional which is considered to be fair value; none of the Group’s trade
receivables contain a financing component. The Group holds the trade receivables with the objective to collect the
contractual cashflows and therefore measures them subsequently at amortised cost using the effective interest method.
28
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss
allowance for all trade receivables and contract assets.
To measure the expected credit losses, trade receivables have been grouped based on share credit risk characteristics and
the days past due. The expected loss rates are based on the Group’s past history, existing market conditions and forward-
looking estimates at the end of each reporting period.
k)
Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the average
principle and includes expenditure incurred in acquiring the inventories and the costs incurred in bringing them to their
existing location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the
estimated costs of completion and selling expenses.
l) Operating expenses
Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin.
m) Depreciation
Depreciation is a systematic allocation of the depreciable amount of an asset over its useful life. The depreciable amount
is the cost of the asset, less its residual value.
An asset is depreciated from the date it is ready for use, meaning the date it reaches the location and condition required
for it to operate in the manner intended by management.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of the fixed
asset item, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied
in the assets.
The estimated useful lives for the current and comparative periods are as follows:
Computers – 3 years
Furniture and equipment – 7-17 years
Motor vehicles – 7 years
Leasehold improvements are depreciated over the shorter of the lease period or the useful life of the leasehold
improvement.
Depreciation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted if
appropriate.
29
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
n) Goods and Services Tax (GST)
Revenues, expenses, and assets are recognised net of the amount of GST, except where the amount of GST incurred is not
recoverable from the Australian Tax Office (ATO).
Receivable and payables are stated inclusive of the amount of GST receivable or payable. The net amount of the GST
recoverable from, or payable to, the ATO is included with other receivables and payables in the statement of financial
position.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and
financing activities, which are disclosed as operating cash flows.
o) Employee Benefits
Post-employment benefits
The Company has a post-employment benefit plan in place in accordance with its obligations under Israeli employment
law. Under Israeli employment law, in the event of termination of an employee, the Group is obligated to pay the employee
their last monthly salary multiplied by the number of years the employee was employed. The value of this severance pay
obligation is recorded net of accumulated severance fund benefits as a liability for employees’ severance benefits in the
Group’s statement of financial position.
Short term employee benefits
Short term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service
is provided or upon the actual absence of the employee when the benefit is not accumulated.
The employee benefits are classified, for measurement purposes, as short-term benefits or as other long-term benefits
depending on when the Group expects the benefits to be wholly settled.
Equity-settled compensation
The Group operates an employee share and option plan. Share-based payments to employees are measured at the fair
value of the instruments issued and amortised over the vesting periods. The fair value of performance right options is
determined using the satisfaction of certain performance criteria (Performance Milestones). The number of shares option
and performance rights expected to vest is reviewed and adjusted at the end of each reporting period such that the amount
recognised for services received as consideration for the equity instruments granted is based on the number of equity
instruments that eventually vest. The fair value is determined using either a Black Scholes or Monte Carlo simulation model
depending on the type of share-based payment.
p) Trade and other payables
Liabilities for trade creditors and other amounts carried at cost which is the fair value of the consideration to be paid in the
future for goods and services received, whether or not billed to the Group. Interest, when charged by the lender, is
recognised as an expense on an accruals basis.
30
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
q) Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are
measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period.
r)
Equity and reserves
Share capital represents the fair value of shares that have been issued. Any transaction costs associated with the issuing of
shares are deducted from share capital, net of any related income tax benefits. The option reserve records the value of
share-based payments.
s)
Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each entity within the Group is measured using the currency of the primary economic
environment in which that entity operates. The consolidated financial statements are presented in USA dollars which is the
Parent’s functional currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured
at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured
at fair value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the profit or loss.
Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive
income to the extent that the underlying gain or loss is recognized other comprehensive Income; otherwise the exchange
difference is recognised in profit or loss.
Group companies
The financial results and position of foreign operations whose functional currency is different from the Group’s presentation
currency are translated as follows:
assets and liabilities are translated at year-end exchange rates prevailing at that reporting period;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars
are recognised in other comprehensive income and included in the foreign currency translation reserve in the statement
of financial position. These differences are recognised in the profit or loss in the period in which the operation is disposed
of.
31
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
t)
Segment Information
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of
Directors (the chief operating decision makers) in assessing performance and in determining the allocation of resources.
The Group’s sole operating segment is consistent with the presentation of these consolidated financial statements.
u)
Share Based Payments
Share-based payments are measured at the fair value of goods or services received or the fair value of the equity
instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded
at the date the goods or services are received. The fair value of options is determined using the Black-Scholes pricing model.
The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that
the amount recognised for services received as consideration for the equity instruments granted is based on the number
of equity instruments that eventually vest.
v) Earnings per share
Basic earnings per share is calculated by dividing:
the profit attributable to member of the parent entity, excluding any costs of servicing equity other than ordinary
shares
by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year (if any).
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares;
and
the weighted average number of additional ordinary shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
w)
Intangible assets
Development costs that are directly attributable to the design and testing of identifiable and unique products controlled by
the Group are recognised as intangible assets when the following criteria are met:
it is technically feasible to complete the product so that it will be available for use;
management intends to complete the product and use or sell it;
there is an ability to use or sell the product;
it can be demonstrated how the product will generate probable future economic benefits;
adequate technical, financial and other resources to complete the development and to use or sell the product are
available, and
the expenditure attributable to the product during its development can be reliably measured.
Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready
for use.
Research expenditure and development expenditure that do not meet the criteria in set out above are recognised as an
expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent
period.
32
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
x) Predecessor Accounting
Business combinations involving entities under common control are accounted for using the predecessor accounting
method. Under this method;
carrying values are not restated in the accounts of the acquiring entity, rather prior book values are maintained.
As a result no fair value adjustments are recorded on the acquisition; and
the carrying value of net assets or liabilities acquired is recorded as a separate element of equity.
y) Critical Accounting Estimates and Judgements
The directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge
and best available current information. Estimates assume a reasonable expectation of future events and are based on
current trends and economic data, obtained both externally and within the Group.
Key Estimates and judgements
Share based payments
The Group initially measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions
requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the
grant.
This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life
of the share option, volatility and dividend yield and making assumptions about them, as well as an assessment of the
probability of achieving non-market based vesting conditions.
The probability of achieving non-market based vesting conditions of performance options is assessed at each reporting
period.
Management have applied judgement in assessing the likelihood of achieving the performance milestone for Class B
Performance Options based on revenues from future contracts expected to be realised prior to the vesting date.
The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 20.
Trade receivables
Management assess impairment of the Group’s trade receivables based on assumptions about risk of default and expected
loss rates. The Group uses judgement in making these assumptions and selecting the inputs for the expected credit loss
model under AASB 9 and impairment calculation, based on the Group’s past history, existing market conditions as well as
forward-looking estimates at the end of each reporting period.
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
33
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 2: COMMON CONTROL ENTITY
Summary of Acquisition – Prior period
On 13 December 2016, Elsight Limited (the acquirer) was incorporated in Australia primarily for the purpose of investigating
opportunities to invest in technology companies.
On 2 June 2017, the Company completed a transaction with the shareholders of El-Sight Ltd (Israel) under common control
to acquire 100% of the share capital in El-Sight Ltd in exchange for 35,381,386 ordinary shares in the Company.
Refer to Notes 1(b) Basis of measurement and reporting conventions, including capital reorganisation and 1(x) Predecessor
accounting for further information.
As at the date of acquisition, the assets and liabilities of the Company were as follows:
a)
Assets and Liabilities at Acquisition Date
Cash and cash equivalents
Prepayments
Other receivables
Intercompany loan receivable
Trade and other payables
Convertible loans
Net liabilities of Elsight Limited at acquisition date
b)
Predecessor Accounting Reserve
Net liabilities of Elsight Limited at acquisition date
Predecessor Accounting Reserve
2017
US$
18,993
32,494
7,989
369,986
(208,174)
(518,084)
(296,796)
(296,796)
(296,796)
34
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 3: REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue recognised at a point in time:
-
Sale of physical goods
Revenue recognised over a period of time:
-
IT consulting and other revenue
Total revenue
2018
US$
2017
US$
1,610,938
908,066
80,984
1,691,922
32,934
941,000
The Group has recognised the following assets and liabilities related to contracts with customers:
-
-
Contract assets
Contract liabilities
-
-
40,668
45,514
There were no significant movements in contract assets or liabilities during the year.
NOTE 4: EXPENSES
Profits/(Loss) before income tax from continuing operations includes the
following specific expenses:
2018
US$
2017
US$
Selling, general and administrative expenses:
-
Salaries and related expenses
- Marketing, exhibitions and advertising
-
-
-
-
-
-
Travel
Office rent, maintenance and communication
Depreciation and amortisation
Professional services
Research and development
Others
1,410,444
94,826
230,688
289,958
71,186
564,967
917,827
382,909
903,873
19,542
165,033
124,666
52,886
276,343
277,827
(51,936)
Total selling, general and administrative expenses
3,836,146
1,768,234
Finance expenses:
-
-
-
-
Interest and bank fees
Exchange rate differences
Related parties interest
Non-cash interest expense (Note 18(b))
Total finance expenses
6,679
-
-
-
6,679
61,290
13,122
16,774
813,405
904,591
35
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 5: INCOME TAX
The financial accounts for the year ended 31 December 2018 comprise the results of Elsight Australia and El-Sight Israel.
The legal parent is incorporated and domiciled in Australia where the applicable tax rate is 30% (2017: 30%). The applicable
tax rate in Israel is 23% (2017: 24%).
(a) Income tax expense
Current tax
Deferred tax
2018
US$
-
-
-
2017
US$
-
-
-
(b) The prima facie tax payable on loss from ordinary activities before
income tax is reconciled to the income tax expense as follows:
Income tax expense/(benefit) on operating loss at 27.07% (2017: 25.23%)
(2,203,410)
(194,827)
Non-deductible items
Non-deductible expenditure
Deferred tax assets not recognised
Income tax attributable to operating income/(loss)
Utilisation of tax losses
Income tax expense
Deferred tax assets
Investments
Accruals
Provisions
Tax losses
Deferred tax asset
Less deferred tax assets not recognised
Net deferred tax assets
Deferred tax liabilities
Other
Net deferred tax liabilities
Deferred tax assets not brought to account
Temporary differences
Operating tax losses
Capital loss
Unused tax losses for which no deferred tax asset has been recognised
Carry forward losses
63,626
2,139,784
(98,052)
292,879
-
-
-
1,538,003
4,710
58,158
835,151
2,436,022
(2,436,022)
-
-
-
1,540,890
835,151
-
2,376,041
-
-
-
-
4,901
-
287,978
292,879
(292,879)
-
-
-
4,901
287,978
108,915
401,794
Potential future income tax benefits attributable to tax losses carried forward have not been brought to account at 31
December 2018 because the Directors do not believe it is appropriate to regard realisation of the future income tax benefits
as probable.
36
l
y
n
o
e
s
u
l
a
n
o
s
r
e
p
r
o
F
ELSIGHT LIMITED
ABN 98 616 435 753
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 6: RELATED PARTY TRANSACTIONS
a) Key Management Personnel Compensation
The totals of remuneration paid to KMP during the year are as follows:
Short-term salary and fees
Retirement benefits
Non-monetary benefits
Other
Share based payments
Total KMP Compensation
b) Other related party transactions
2018
US$
2017
US$
420,685
345,130
41,043
26,741
30,107
36,041
5,540
19,006
1,240,560
802,565
1,759,136
1,208,282
Key management personnel or
their related party
Nature of transactions
Transaction value
Payable balance
Nir Gabay
Nir Gabay
Nir Gabay
Nir Gabay
Executive salary and director fees included
within trade and other payables
Issue of 26,052,974 ordinary shares(i)
Issue of 29,595,000 performance options(ii)
Interest(iii)
2018
US$
2017
2018
2017
US$
US$
US$
-
-
-
-
-
-
3,070,611
16,774
45,147
-
-
-
-
-
-
16,774
Salary and salary related expenses
93,608
21,370
2,951
Susana Gabay (related party of Nir
Gabay)
Eden Gabay (related party of Nir
Gabay)
Professional services
2,376
1,860
Dipio (related party of Nir Gabay
and Roee Kashi)
Revenue earned
Howard Digby
Howard Digby
Howard Digby
Lamma Nominees Pty Ltd (related
party of Howard Digby)
Anton Uvarov
Anton Uvarov
Yulia Uvarov
Continue reading text version or see original annual report in PDF format above