Report Title
1
Identitii Limited
Annual Report FY21
Contents
A letter from our Chairman ................................................................................... 3
A letter from our CEO ........................................................................................... 4
Directors Report .................................................................................................... 6
Auditor’s Independence Declaration .................................................................. 22
Consolidated Statement of Profit or Loss and Other Comprehensive Income . 23
Consolidated Statement of Financial Position ................................................... 25
Consolidated Statement of Changes in Equity .................................................. 27
Consolidated Statement of Cash Flows ............................................................. 29
Notes to the Consolidated Financial Statements ............................................... 31
Directors’ Declaration ......................................................................................... 75
Independent Auditor’s Report ............................................................................ 76
Additional ASX Information ................................................................................ 80
Corporate Directory ............................................................................................ 82
About Identitii
Identitii is helping reduce regulatory
risk, without replacing legacy
technology.
Identitii Limited
Annual Report FY21
Chairman’s Letter
A letter from
our Chairman
Dear shareholders and friends,
I am pleased to provide you with Identitii’s FY21
Annual Report.
Over the past twelve months we have enjoyed
stability and alignment on our Board, meeting
frequently with our CEO and key leadership team
members to discuss key issues and continue
reviewing the effectiveness of our strategy. In
addition to ensuring good governance and
effective return on capital, the Board’s primary
focus is our customer acquisition and revenue
growth plans, which I am confident will accelerate
in the year ahead. We are also mindful of our
other value drivers, such as our U.S. Patent, our
Payble joint venture with CommBank’s
x15ventures, and several other emerging projects.
We also welcomed Tim Phillipps to the Board of
Directors this year, following his 45-year career
with Deloitte, ASIC and the Victoria Police, where
he specialised in regulatory technology and
fighting financial crime. Tim has been a fantastic
addition to the Board, leveraging his industry
knowledge, experience and network to help the
team evolve our strategy and connect us with
senior decision makers within the financial
services industry. Tim’s appointment also
addressed the need for further independent
governance, in addition to our Co-founder and
CEO who are both heavily invested in the
business.
The Board is proud of the achievements our team
delivered this year, although we are certainly
mindful that our acquisition of new customers was
below expectation. That said, we are optimistic
about our strategy, confident there is significant
and genuine demand for our products, and fully
supportive of our CEO’s ability to execute
successfully in the year ahead.
Thank you for your ongoing support. I look
forward to a successful year ahead.
Steve James,
Chairman
3
Identitii Limited
Annual Report FY21
A letter from our CEO
A letter from
our CEO
Dear shareholders and friends,
There are many reasons to be proud of this past
year, as we made tremendous advances in some
less visible foundations for success, that will
deliver benefit this year and beyond. Of particular
note, I am immensely proud of the team and the
culture we have built, and increasingly confident in
both our evolving strategy and its execution. That
said, there is little doubt we fell short of our new
customer aspirations and that shareholders and
the market were hoping for more.
Identitii’s incredible network of supporters, both
shareholders and observers alike, is one of our
key brand assets that we consistently leverage to
secure productive meetings with prospective
customers. This traction, together with our
growing brand awareness and recognition within
the industry, continue to inspire and reassure
everyone at Identitii that we will genuinely deliver
our vision of a trusted and transparent global
financial services industry.
The right strategy
Identitii is a growing RegTech provider solving the
problem that, whilst money moves around the
world with relative ease today, there is growing
demand from government regulators and
customers to see more granular information about
individual financial transactions. For most of the
global financial services industry, the use of
multiple legacy systems, that create and store
data in different formats and locations, makes it
incredibly difficult to meet this demand.
Globally, we are witnessing significant growth in
fines, reputational damage and jail-time for
executives, for non-compliance with growing
regulatory requirements. This increasing scrutiny,
predominantly on the legacy technology used by
most of the industry, is driving significant interest
in the technology Identitii is developing. Our
strategy to enhance what is already there enables
our customers to quickly meet the demands of
regulators and customers alike.
Evolving for success
Whilst we have relished significant interest in our
technology from some of the biggest global
brands in the industry, both here in Australia and
in other key global markets, the industry’s lengthy
and complicated buying journey remains our
biggest challenge. This is something that has a
significant impact on us, yet we have very little
control over.
Perhaps the biggest lesson we have learned this
year, is that working hard to close these large
deals can take a very long time, consume
significant capital and frustrate shareholders in the
process. Whilst winning these deals should, and
will, always form part of our core revenue growth
strategy – we’ve recognised the need to look for
alternative, additional revenue streams to help us
scale.
This is why we were so excited to recently
announced the launch of a Software-as-a-Service
version of the Identitii platform, and the first
customer in an all-new segment to sign with us.
Novatii (ASX:NOV) are the first of many new
customers that will help us grow revenue in a
more linear fashion, to stabilise market sentiment
during periods between the larger wins.
The right culture
“Culture eats strategy for breakfast” – said
consultant and writer Peter Drucker, implying that
a powerful and empowering culture is a surer
route to organisational success, than a great
strategy. I’m hopeful that at Identitii we have both.
We survey the temperature of our team every
three weeks, and more than 90% of our team
have responded over the past three months,
meaning they believe giving feedback is a
worthwhile exercise because we will do something
with it. And we certainly do.
To provide a little more insight into our culture, our
two highest scoring questions are “Taking
everything into account, I would say that (Identitii)
is a great place to work” at 83% (last three
months) average and “Identitii inspires me to do
my best work every day” at 81% average. We are
right to be very proud of these key cultural
indicators.
4
Identitii Limited
Annual Report FY21
The right people
Over the past twelve months, Identitii has
implemented a scalable organisational design,
that focuses heavily on attracting and engaging
customers, to ensure there is real, validated
market demand for the products we build.
Identifying and creating the right roles, from sales
and marketing, to product and technology, and
information security, is critical to ensure
operational efficiency and the best possible return
on shareholder capital.
With the right structure in place, the Company has
been able to focus on attracting some fantastic
talent, recruiting leaders from within the banking
industry to help us better understand our
prospective customers, and software engineers
from successful technology companies to help us
stay ahead of emerging trends. I am supremely
confident in the team we have built and their
ability to deliver our strategy in the year ahead.
Summarising the year
I am very proud of the long list of achievements
the team delivered this year, increasingly
optimistic about our strategy given the validation
our technology is receiving in the market, and
confident that all translates into real value in the
year ahead. I am also conscious this past year
delivered less customer growth than was
expected of us and hope I have provided enough
insights into our awareness of that, but more
importantly into what we are already doing
differently this year as a result.
I hope you enjoy reading our annual report, and
take this opportunity to say thank you for your
continued support of the Board, the Executive and
our Team.
Regards,
John Rayment
Chief Executive Officer
A letter from our CEO
FY21 Highlights
H1
● Mastercard signed 5-year global MSA
Identitii awarded ISO 27001 certification
●
●
Identitii launched new RegTech strategy
● First project with Mastercard commenced
● Won global RegTech competition at
Sibos
● Patent approval granted in the U.S.
● Second project with Mastercard
commenced
● CBA's x15ventures invested in Payble
● $7.9M raised
H2
● Joe Higginson joined from Investec Bank
● HSBC renewed contract for additional
$2.0M
Identitii named in Deloitte APAC Fast 500
●
● x15ventures invested $1.0M into Payble
● Deloitte and ASIC veteran joined the
Board
● Overlay+ went live with customers twice:
– Reporting IFTI's and TTR's to
AUSTRAC
– Requesting missing information from
correspondent banks
● Revenue from customers up 45% from
FY20
● 634% growth in revenue from customers
(FY18-FY21)
FY22
● Novatti signed licence for AUSTRAC
reporting
● New SaaS platform announced to
shorten sales cycle and significantly
expand target customer base, due for
launch Q1 FY22
● Citibank signed LOI signalling upcoming
MSA to licence Overlay+ for AUSTRAC
reporting
5
Identitii Limited
Annual Report FY21
Directors Report
Directors Report
The Directors present their report together with the consolidated financial statements of the Group comprising
of Identitii Limited (the Company) and its subsidiaries for the year ended 30 June 2021 and the auditor’s report
thereon.
Directors
The Directors of the Company at any time during the year ended 30 June 2021 and up to the date of this report
are:
Name, qualification and independence status
Experience, special responsibilities and other
directorships
Executive
Mr. John Rayment
Dip Proj Mgt, Dip Bus Mgmt, Dip Bus Mktg
Executive Director
Non-Executive
Mr. Steven James
M(Fin Serv) Law, NSAA, Dip FM, GAICD
Independent Non-Executive Director
Chairman
John brings a wealth of experience to Identitii,
having supported many early-stage ventures
through sharp periods of growth. He has held
board and executive roles at Travelex across the
globe and has proven success in helping
businesses to scale in line with rapidly expanding
customer demand.
John is the Chief Executive Officer/Managing
Director of the Company.
Steve has held senior leadership and board
positions at multiple public and private
organisations, including the Commonwealth Bank
of Australia, CommSec, Aston Consulting,
Motorcycling Australia and Seer Asset
Management. He also played a pivotal role in
developing the first online stockbroking business
for financial planners, which was later sold to
CommSec.
Chairman of the Nomination and Remuneration
Committee and a member of the Audit and Risk
Committee.
6
Identitii Limited
Annual Report FY21
Directors Report
Name, qualification and independence status
Experience, special responsibilities and other
directorships
Non-Executive
Mr. Nicholas Armstrong
B. Sc
Non-Executive Director
Mr. Timothy Phillipps
Dip Arts
Independent Non-Executive Director
Appointed 27 May 2021
Mr. Stephen Porges
Independent Non-Executive Director
Chairman
Appointed 1 February 2021 (resigned 3 February
2021)
Nicholas is an entrepreneur, with over 15 years’
experience in building and scaling technology
businesses. Nicholas was founder and CEO of
COZero Holdings Ltd, an energy technology
company, until it was taken over by a Japanese
strategic investor in 2013. Nicholas co-founded
Identitii in 2014 with Eric Knight and was the
CEO for 6 years before moving into his new role
as Non-Executive Director in May 2020.
Member of the Nomination and Remuneration
Committee and of the Audit and Risk Committee.
Tim is a Financial Crime and RegTech expert
with 45 years of industry experience, most
recently at Deloitte, where he held Global and
Asia-Pacific roles in financial crime compliance
and analytics, and prior to that with ASIC as
Director of Enforcement.
Chairman of the Audit and Risk Committee and
member of the Nomination and Remuneration
Committee.
Company secretary
Elissa Hansen has over 20 years’ experience advising boards and management on corporate governance,
compliance, investor relations and other corporate related issues. She has worked with boards and
management on a range of ASX listed companies including assisting companies through the IPO process.
Elissa is a Chartered Secretary who brings best practice governance advice, ensuring compliance with the
Listing Rules, Corporations Act and other relevant legislation.
7
Identitii Limited
Annual Report FY21
Directors’ meetings
Directors Report
The number of Directors’ meetings and number of meetings attended by each of the Directors of the Company
during the financial year are:
Board of Directors
Audit and Risk
Committee
Nomination and
Remuneration
Committee
A
10
10
10
1
-
B
10
10
9
1
-
A
3
-
3
-
-
B
3
-
3
-
-
A
1
-
1
-
-
B
1
-
1
-
-
Steven James
John Rayment
Nicholas Armstrong
Timothy Phillipps
Stephen Porges
A
B
Eligible to attend
Attended
Principal activities
The principal activities of the Group during the financial year were business development, marketing and
research and development activities, as well as further development of Identitii’s Overlay+ platform. During the
year, Identitii announced a revised RegTech strategy which allowed it to focus on delivering growth across five
key areas:
• Deliver: Focus on servicing existing clients including HSBC, Mastercard, HomeSend and, as of July 2021,
Novatti;
•
Land: Leverage AUSTRAC’s public discussion of regulatory non-compliance to drive sales of Overlay+
Reporting;
• Expand: Grow reporting deals to include Request use cases (correspondent bank and remediation) once
contracts are agreed;
•
Innovate: continuously improve the core Overlay+ platform through ongoing innovation and product
updates; and
• Monetise: Maximise other previous technology investments, which no longer fit the Company’s core
RegTech strategy.
Identitii operates in a growing market, with global spending on RegTech solutions predicted to reach US$130
billion by 2025 (Juniper Research, ‘RegTech: Market Opportunities, Challenges and Forecasts 2021-2025’).
Increasing enforcement of regulatory obligations by governments around the world, including AUSTRAC who
levied $2 billion in fines for non-compliance in the past two years alone, rising financial crime, the appearance
of new players in the financial services industry and accelerated adoption of digital technologies have
combined to push regulated entities to find new, technology-based ways to simplify and automate how they
conduct financial crime compliance.
Identitii is well placed to take advantage of this trend with its Overlay+ platform that makes it easier for regulated
entities to process payments and ensure compliance. Identitii gives financial services businesses a single view
of their data, solving the problem that the information needed to process and report financial transactions is
often incomplete, inaccurate, or even missing, holding up payments and increasing the risk of non-compliance.
8
Identitii Limited
Annual Report FY21
Review of operations
Directors Report
During the year ended 30 June 2021, the Group achieved the following milestones:
• On 24 July 2020, the Group confirmed it had successfully raised an additional $1.9 million by placing 27.3
million Residual Shortfall Shares reserved per the Company’s Entitlement Offer prospectus.
• On 24 August 2020, the Group announced it had signed a five year Master Services Agreement (MSA)
with Mastercard International Incorporated (Mastercard).
• On 30 September 2020, the Group announced it was awarded ISO 27001 information security certification.
• On 15 October 2020, Identitii announced that it had won a global RegTech competition at the world’s
largest financial services and FinTech event, Sibos.
• On 21 October 2020, Identitii announced it had signed a Statement of Work (SOWs) with Mastercard,
following the MSA announced in August. The SOW sets out how Mastercard will use Overlay+ to securely
share financial crime compliance information within its cross-border payments network.
• On 24 November 2020, the Company went into a trading halt pending the completion of a placement to
sophisticated and institutional investors. The placement was oversubscribed raising $4.0 million in capital.
On 3 December 2020 a total of 27.5 million shares were issued at $0.146 per share.
• On 10 December 2020, the Company announced a second SOW under its MSA with Mastercard. The
SOW outlines how HomeSend will use Overlay+ to help support the delivery of financial crime compliance
obligations.
• On 14 December 2020, the Company was awarded U.S. Patent Approval. The patent covers the Group’s
secure financial information sharing ecosystem.
• On 15 December 2020, the Company announced it had signed, alongside CBA New Digital Businesses
Pty Ltd (x15ventures), a Memorandum of Understanding (MOU) with Identitii subsidiary Payble Pty Ltd
(Payble). x15ventures invested $0.150 million directly into Payble to help complete an existing trial.
• On 31 December 2020, the Group announced the closing of an oversubscribed share purchase plan
(SPP). On 6 January 2021, the Company issued a total of 13.7 million shares at $0.146 per share to
participating shareholders, raising an additional $2.0 million in capital.
• On 31 December 2020, the Group announced the resignation of CFO, Margarita Claringbold. This was
followed by the appointment of Trent Jerome on 1 February 2021.
• On 1 April 2021, the Group announced the renewal of its original 2017 contract with HSBC for a further
three years. The contract is worth up to $2.0 million over the term of the agreement. The global Master
Framework Agreement was also renewed allowing Identitii to licence its technology to any HSBC business
globally.
• On 12 April 2021, it was announced x15ventures had invested $1.0 million in Payble for a minority stake.
The funds will be used to accelerate Payble’s growth plans.
• On 4 May 2021, Identitii announced that Joe Higginson had joined as Chief Commercial Officer (CCO).
Joe is the former Head of Payments for Investec Bank and has also held the position of Global Head of
Payments at Travelex.
• On 27 May 2021, Timothy Phillipps joined the board as an independent non-executive Director.
Review of financial conditions
The Group reported revenue from contracts with customers of $1,364,197 for the year ended 30 June 2021
(30 June 2020: $941,592), an increase of 45% from the prior year. The Group reported a net loss after tax of
$5,873,875 for the year ended 30 June 2021 (30 June 2020: $7,074,479) which was substantially driven by
salary and employee benefit expenses and expenditure on research and development (R&D) related activities.
9
Identitii Limited
Annual Report FY21
Review of operations (continued)
Directors Report
The Group held $33,039 of borrowings and leases at 30 June 2021, had a positive net current asset balance
of $4,843,582 and a positive overall net asset balance of $5,002,124.
The Group had $4,489,311 of cash and cash equivalents on hand at 30 June 2021 and reported a net cash
outflow from operating activities of $4,759,614 during the year ended 30 June 2021.
Significant changes in the state of affairs
During the year, Identitii Limited founded new subsidiary Payble Pty Ltd (Payble) in conjunction with Elliott
Donazzan. Subsequent to incorporation, CBA New Digital Businesses Pty Ltd (x15ventures) invested $1.0
million in Payble to acquire a minority ownership stake and to assist in accelerating its growth plans. Identitii
Limited holds a 60% majority shareholding as at 30 June 2021.
In the opinion of the Directors there were no other significant changes in the state of affairs of the Group that
occurred during the year ended 30 June 2021, other than noted above.
Dividends
No dividends were declared or paid by the Company during the financial year ended 30 June 2021.
Events subsequent to reporting date
Following the results of a General Meeting held on 6 July 2021 the Company issued 285,714 shares at $0.07
per share to John Rayment in full and final settlement of his loan. Furthermore, 1,000,000 share options with
an exercise price of $0.25 were issued to both Steven James and Nicholas Armstrong in their capacity as Non-
Executive Directors of the Company. These share options vest over three years pending continued
employment and expire on 8 July 2024.
On 30 July 2021, the Group announced it had signed a three-year licence agreement with Novatti Group
Limited worth $0.2 million. The licence is for the Group’s new Software as a Service (SaaS) version of
Overlay+.
Other than the matters discussed above, there has not arisen in the interval between the end of the year and
the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of
the Directors, to affect significantly in future financial years the operations of the Group, the results of those
operations, or the state of affairs of the Group.
Likely developments
The Group will continue to develop the Overlay+ platform and continue to sign new customers and grow its
pipeline of partners. This will require further investment in product and business development and marketing.
Further information about likely developments in the operations of the Group and the expected results of those
operations in future financial years has not been included in this report because disclosure of the information
would likely result in unreasonable prejudice to the Group.
Environmental regulation
The Group’s operations are not regulated by any significant law of the Commonwealth or of a State or Territory
relating to the environment.
10
Identitii Limited
Annual Report FY21
Directors interests
Directors Report
The relevant interest of each Director in the shares and options over shares issued by the companies within
the Group, as notified by the Directors to the ASX in accordance with S205G(1) of the Corporations Act 2001,
at the date of this report is as follows:
Steven James
John Rayment (1)
Nicholas Armstrong (2)
Timothy Phillipps
Stephen Porges
Ordinary shares
Options over
ordinary shares
-
1,590,608
9,609,275
-
-
1,000,000
8,000,000
2,350,000
-
2,000,000
(1)
(2)
Shares held by Elorey Pty Ltd, of which John Rayment is a beneficiary
HSBC Custody Nominees (Australia) Pty Ltd acts as custodian over 7,000,000 shares for security purposes pursuant to a Master
Loan Agreement and Deed of Security entered into with Nicholas Armstrong in his personal capacity. Nicholas Armstrong remains
the ultimate beneficial owner of the shares. Majority of the balance of the shares and the options are held by 275 Invest 2 Pty Ltd
ATF the 275 Investment Trust, of which Nicholas Armstrong is a beneficiary
Share options
Unissued shares under option
At the date of this report, unissued shares of the Group under option are:
Expiry date
13 May 2022
2 October 2022
8 October 2022
21 October 2022
19 November 2022
1 January 2023
14 January 2023
11 February 2023
6 March 2023
18 March 2023
27 May 2023
8 July 2024
19 October 2025
Exercise price Number of shares
$0.10
$0.75
$0.75
$0.15
$0.75
$0.75
$0.75
$0.75
$0.75
$0.75
$0.75
$0.25
$0.15
5,000,000
2,292,686
50,000
2,000,000
97,169
100,000
14,018
12,191
49,680
30,548
100,000
2,000,000
8,000,000
11
Identitii Limited
Annual Report FY21
Share options (continued)
Expiry date
1 January 2026
1 July 2028
1 August 2028
Total unissued shares under option
All unissued shares are ordinary shares of the Company.
Directors Report
Exercise price Number of shares
$0.15
$0.75
$0.75
13,350,000
358,082
1,928,125
35,382,499
All options issued to employees under the Group’s Equity Incentive Plan expire on the earlier of their expiry
date or termination of the employee’s employment, unless approved otherwise by the Board. All other options
expire on their expiry date.
Further details about share-based payments to Directors and Key Management Personnel are included in the
remuneration report in Table 1.
Shares issued on exercise of options
During or since the end of the financial year, no ordinary shares of the Company were issued by the Group as
a result of the exercise of options.
Indemnification and insurance of officers and auditors
The Company has entered into a director protection deed with each Director. Under these deeds, the Company
indemnifies the Directors against all liabilities to another person that may arise from their position as Director
of the Company and its controlled entities.
The Company has not indemnified or made a relevant agreement for indemnifying against a liability to any
person who is or has been an auditor of the Group.
The Group paid insurance premiums in respect of Directors’ and Officers’ liability and legal expenses insurance
contracts for the year ended 30 June 2021 and subsequent to the year end. Such insurance contracts insure
against certain liability (subject to specific exclusions), persons who are or have been Directors or Executive
Officers of the Group.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year
by the auditor are outlined in Note 25 to the financial statements.
The Board are satisfied that the provision of non-audit services during the financial year, by the auditor, is
compatible with, and 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 integrity and
objectivity of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in the
APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical
Standards Board, including reviewing or auditing the auditor's own work, acting in a management or
decision-making capacity for the company, acting as advocate for the company or jointly sharing economic
risks and rewards.
12
Identitii Limited
Annual Report FY21
Directors Report
Officers of the Company who are former partners of RSM
There are no officers of the Company who are former partners of RSM.
Proceedings on behalf of the Group
No person has applied for leave of court to bring proceedings on behalf of the Group or intervene in any
proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all
or any part of those proceedings.
The Group was not a party to any such proceedings during the year.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001
is set out on page 22 and forms part of the Directors’ report for the year ended 30 June 2021.
Rounding of amounts to the nearest dollar
In accordance with ASIC Corporations (Rounding of Financial/Directors’ Reports) Instrument 2016/191, the
amounts in the Directors’ Report and consolidated financial statements have been rounded to the nearest
dollar.
13
Identitii Limited
Annual Report FY21
Directors Report
Audited Remuneration Report
The Directors present the Remuneration Report (the Report) for the Company and its subsidiaries (the Group)
for the year ended 30 June 2021. This Report forms part of the Directors’ Report and has been audited in
accordance with Section 300A of the Corporations Act 2001. The Report details the remuneration
arrangements for the Group’s Key Management Personnel (KMP):
• Executive Directors and other KMP
• Non-Executive Directors
KMP are those persons who, directly or indirectly, have authority and responsibility for planning, directing and
controlling the major activities of the Group.
1. Principles of remuneration
The performance of the Group depends upon the quality and commitment of the Directors and Executives.
The philosophy of the Directors in determining remuneration levels is to:
•
•
•
set competitive remuneration packages to attract and retain high calibre employees;
link executive rewards to shareholder value creation; and
establish appropriate hurdles for variable executive remuneration.
The Nomination and Remuneration Committee reviews and make recommendations to the Board on the
Group’s remuneration policies, procedures and practices. It also defines the individual packages offered to
Executive Directors and KMP, for recommendation to the Board.
The Board may consider engaging an independent remuneration consultant to advise the Board on appropriate
levels of remuneration relative to its industry peer group.
In accordance with Corporate Governance best practice (Recommendation 8.2), the structure of Non-
Executive Director and Executive remuneration is separate and distinct as follows:
a) Non-Executive Directors
Fixed and variable remuneration
The Board seeks to set Non-Executive Directors’ remuneration at a level that provides the Group with
the ability to attract and retain Directors of a high calibre whilst incurring a cost that is acceptable to
shareholders.
The ASX Listing Rules specify that the aggregate remuneration of Non-Executive Directors shall be
determined from time to time by a general meeting. This amount has been fixed by the Company at
$250,000. The amount of aggregate remuneration and the manner in which it is apportioned amongst
directors is reviewed annually. The Board considers advice from shareholders and takes into account
the fees paid to Non-Executive Directors of comparable companies when undertaking the annual
review process.
Non-Executive Directors’ base fees cover all main board activities and membership of all committees;
however, they do not receive performance-related compensation and are not provided with retirement
benefits apart from statutory superannuation. Non-executive Directors are entitled to participate in the
Equity Incentive Plan.
14
Identitii Limited
Annual Report FY21
Directors Report
1. Principles of remuneration (continued)
Year ended to
Chairman’s fee
Non-Executive Directors fee
30 June 2021
$
30 June 2020
$
75,000
50,000
50,000
50,000
b) Executives and Executive Director remuneration
Remuneration for Executives and Executive Directors consists of fixed and variable remuneration only.
Fixed remuneration
Fixed remuneration is reviewed annually by the Directors. The process consists of a review of relevant
comparative remuneration in the employment market and within the Group. The Group may engage
an independent remuneration consultant to advise the Board on appropriate levels of remuneration for
the Group’s Executive Directors relative to its industry peer group.
Variable remuneration
Variable remuneration is provided in the form of share options under the Group Equity Incentive Plan
(EIP). Under the EIP, one share option entitles the holder to one share in the Company subject to
vesting conditions. Executives and Executive Directors vesting conditions are linked to continued years
of service and may be linked to performance hurdles. The Board have the discretion to settle share
options with a cash equivalent payment. Participants in the EIP will not pay any consideration for the
grant of the share option unless determined otherwise. Share options will not be listed and may not be
transferred, assigned or otherwise dealt with unless approved by the Directors. If the executive’s
employment terminates before the share options have vested, the share options will lapse, unless
approved otherwise by the Board.
2. Details of remuneration
Details of the remuneration of the KMP as defined in AASB 124 Related Party Disclosures are set out in Table
1 which follows.
The KMP of the Group have authority and responsibility for planning, directing and controlling the activities of
the Group. The KMP make or participate in making decisions that affect the whole, or a substantial part, of the
business or who have the capacity to affect significantly the Group’s financial standing.
The KMP of the Group are the Executive and Non-Executive Directors and the Chief Financial Officer.
15
Identitii Limited
Annual Report FY21
Directors Report
Details of the nature and amount of each major element of remuneration of each Director of the Company, and other KMP of the Group are:
Table 1
Short-term benefits
Post-
employment
Other long-term
benefits
Share-based
payments
Total % share-based
payments
Salary Consulting fee Superannuation
(A)
$
Share options
(B)
(variable)
$
$
$
Year ended 30 June 2021
$
Executive Directors
John Rayment (1)
Non-Executive Directors
Steven James (2)
Nicholas Armstrong (3)
Timothy Phillipps (4)
Other KMP
Trent Jerome (5)
Margarita Claringbold (6)
226,667
64,425
45,662
4,762
95,833
84,600
$
-
-
34,800
-
-
-
Total
521,949
34,800
21,533
14,107
442,384
704,691
63%
-
4,338
-
9,104
-
34,975
-
-
-
5,603
-
-
47,674
-
52,837
-
64,425
132,474
4,762
163,377
84,600
19,710
542,895
1,154,329
-
36%
-
32%
-
(1) Salary increased from $210,000 to $260,000 per annum effective 1 March 2021.
(2) Remuneration invoiced via Aston Consulting Pty Ltd of which Steven James is a beneficiary.
(3) Share options held via 275 Invest 2 Pty Ltd of which Nicholas Armstrong is a beneficiary.
(4) Appointed 27 May 2021.
(5) Appointed 1 February 2021.
(6) Remuneration invoiced via Gram Accounting & Advisory Pty Ltd of which Margarita Claringbold is a beneficiary. This includes remuneration for CFO, accounting and equity raise related services.
Resigned 31 December 2020.
(A) In accordance with AASB 119 Employee Benefits, annual leave is classified as other long-term employee benefits.
(B) The fair value of share options is calculated at the grant date using an option-pricing model and allocated to each reporting period from grant date to vesting date depending on the vesting conditions
attached to the options. The value disclosed is the portion of the fair value of the options recognised as an expense in the reporting period.
16
Identitii Limited
Annual Report FY21
Directors Report
Table 1
Short-term benefits
Post-
employment
Other long-
term benefits
Termination
benefits
Share-based
payments
Total % share-based
payments
Year ended 30 June 2020
$
$
Salary Consulting
fee
Superannuation
Share options
(B)
(variable)
(A)
$
5,743
4,650
-
-
$
-
-
$
-
-
$
-
-
$
70,848
12,000
145,935
12,000
13,864
21,506
25,000
170,634
388,939
-
-
-
-
-
6,749
3,089
1,052
-
-
-
-
-
-
-
-
-
-
-
-
47,395
125,184
-
-
-
-
35,606
12,112
16,740
165,549
-
-
44%
38%
-
-
-
-
Executive Directors
John Rayment (1)
Non-Executive Directors
Steven James (2)
Nicholas Armstrong (3)
Michael Aston (4)
Peter Lloyd (5)
Nathan Lynch (6)
Martin Rogers (7)
Other KMP
60,455
12,000
71,040
32,517
11,060
16,740
Margarita Claringbold (8)
165,549
Total
515,296
12,000
30,497
26,156
25,000
218,029
826,978
(1) Appointed as CEO on 19 March 2020.
(2) Remuneration invoiced via Aston Consulting Pty Ltd of which Steven James is a beneficiary. Appointed 19 March 2020.
(3)
Includes remuneration as Executive Director from 1 July 2019 – 15 May 2020 and as Non-Executive Director from 16 May 2020 – 30 June 2020. Share options held via 275 Invest 2 Pty Ltd of which
Nicholas Armstrong is a beneficiary.
(4) Share options held via M&M Funds Management Pty Ltd ATF Savu Superannuation Fund of which Michael Aston is a beneficiary. Resigned 17 March 2020.
(5) Resigned 17 March 2020.
(6) Appointed 8 December 2019 (resigned 3 March 2020).
(7) Remuneration invoiced via Structure Investments Pty Ltd ATF Rogers Family Trust of which Martin Rogers is a beneficiary. Resigned 8 October 2019.
(8) Remuneration invoiced via Gram Accounting & Advisory Pty Ltd of which Margarita Claringbold is a beneficiary. This includes remuneration for CFO, accounting and equity raise related services.
17
Identitii Limited
Annual Report FY21
3. Service agreements
Directors Report
The following is a summary of the current major provisions of the agreement relating to remuneration of the
Executive Director.
John Rayment – Chief Executive Officer
John Rayment is the Chief Executive Officer of the Group and is considered a key member of the Group’s
management team.
John receives a base salary of $260,000 per annum plus superannuation and holds 8,000,000 share options
with attached service and performance vesting conditions.
During the year ended 30 June 2021, no bonuses were paid to John Rayment.
Employment Conditions
Commencement date: 19 March 2020
Term: Ongoing until notice is given by either party
Review: Annually
Notice period required on termination: 3 months by either party
Termination benefits: None
Independent Review
To ensure the Group complies with industry best practice in relation to the remuneration of its Executive
Director, the Non-Executive Directors of the Group will consider engaging the services of a remuneration
consultant to conduct an independent assessment of the remuneration packages negotiated with its Executive
Director.
The following is a summary of the current major provisions of the agreement relating to remuneration of
Executive KMP:
Trent Jerome – Chief Financial Officer
Trent Jerome is the Chief Financial Officer of the Group and is considered a key member of the Group’s
management team.
Trent receives a base salary of $230,000 per annum plus superannuation and holds 2,000,000 share options
with attached service and performance vesting conditions.
Employment Conditions
Commencement date: 1 February 2021
Term: Ongoing until notice is given by either party
Notice period required on termination: 3 months by either party
Termination benefits: None
The following is a summary of the current major provisions of the consulting agreement relating to remuneration
of Non-Executive Director, Nicholas Armstrong.
18
Identitii Limited
Annual Report FY21
Directors Report
3. Service agreements (continued)
Nicholas Armstrong – Non-Executive Director
In addition to Nicholas Armstrong’s role as Non-Executive Director, a consulting agreement was signed in the
prior year which required Nicholas to provide an additional 2.5 days per week to the Company at a rate of $800
per day (exclusive of GST). The agreement covered the provision of business consulting services to the CEO
as well as supporting the CEO to execute on agreed strategic, operational and commercial business
objectives. This consulting support was terminated effective 31 October 2020 in accordance with the terms of
the agreement.
Employment Conditions
Commencement date: 18 May 2020
Term: Until 31 October 2020
Notice period required on termination: 1 month by either party
Termination benefits: None
4. Equity instruments
All share options refer to options over ordinary shares of Identitii Limited, which are exercisable on a one-for-
one basis under the Equity Incentive Plan (EIP).
a) Options over equity instruments granted as compensation
All options expire on the earlier of their expiry date or termination of the individual’s employment.
Vesting is conditional on the individual remaining in employment during the vesting period unless
determined by the Board otherwise.
Share options were granted to KMP as compensation during the year ended 30 June 2021 as noted
in the table below.
b) Analysis of movements in equity instruments
The movement during the year in the number of options over ordinary shares in Identitii Limited held,
directly, indirectly or beneficially, by each KMP, including their related parties, is as follows:
Held at
1 July
2020
Granted
during
the year
Held at
30 June
2021
Vested
during
the year
Vested at
30 June
2021
Exercisable
at 30 June
2021
Steven James
John Rayment
-
-
-
- 8,000,000 8,000,000
-
-
-
-
-
-
Nicholas Armstrong
1,350,000
- 1,350,000
450,000
900,000
900,000
Timothy Phillipps
Stephen Porges (1)
-
-
-
- 2,000,000 2,000,000
Trent Jerome
- 2,000,000 2,000,000
Margarita Claringbold (2)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19
Identitii Limited
Annual Report FY21
4. Equity instruments (continued)
Directors Report
(1) Stephen Porges ceased as a Non-Executive Director on 3 February 2021. The options held balance at the end of the
financial period is at date of cessation.
(2) Margarita Claringbold ceased as Chief Financial Officer on 31 December 2020. The options held balance at the end of
the financial period is at date of cessation.
5. KMP transactions
a) Loans from KMP and their related parties
Details regarding loans outstanding at the end of the reporting period from KMP and their related
parties, where the individual’s aggregate loan balance exceeded $100,000 in the reporting period, are
as follows:
Balance at
1 July 2020
$
Balance at
30 June 2021
$
Interest not
charged
$
Highest balance
in period
$
John Rayment
100,000
20,000
-
100,000
This loan is for a 12 month term, is interest free and is to convert to equity at $0.07 per share in
accordance with shareholder approval. During the year, $80,000 of the loan was converted to equity
by issuing 1,142,857 shares to John Rayment at $0.07 per share, leaving a remaining loan balance of
$20,000 at 30 June 2021. Subsequent to year end, a further 285,714 shares were issued to John
Rayment in full and final settlement of his loan.
b) Other transactions with KMP
A number of KMP, or their related parties, hold positions in other entities that result in them having
control, or joint control, over the financial or operating policies of that entity.
A number of these entities transacted with the Group during the year. The terms and conditions of the
transactions with KMP and their related parties were no more favourable than those available, or which
might reasonably be expected to be available, on similar transactions to non-KMP related entities on
an arm’s length basis.
c) Movement in shares
The movement during the year in the number of ordinary shares in Identitii Limited held, directly,
indirectly or beneficially, by each KMP, including their related parties, is as follows:
Held at 1 July 2020
Acquired Held at 30 June 2021
Steven James
John Rayment
-
-
Nicholas Armstrong
9,555,263
Timothy Phillipps
Stephen Porges (1)
Trent Jerome
-
-
-
-
1,304,894
54,012
-
-
-
-
1,304,894
9,609,275
-
-
-
Margarita Claringbold (2)
7,000
142,857
149,857
20
Identitii Limited
Annual Report FY21
5. KMP transactions (continued)
Directors Report
(1)
Stephen Porges ceased as a Non-Executive Director on 3 February 2021. The ordinary shares held balance at the end
of the financial period is at date of cessation.
(2) Margarita Claringbold ceased as Chief Financial Officer on 31 December 2020. The ordinary shares held balance at the
end of the financial period is at date of cessation.
This Directors’ Report is signed in accordance with a resolution of the Board of Directors:
Steven James
Chairman
Sydney
26 August 2021
21
RSM Australia Partners
Level 13, 60 Castlereagh Street Sydney NSW 2000
GPO Box 5138 Sydney NSW 2001
T +61 (0) 2 8226 4500
F +61 (0) 2 8226 4501
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Identitii Limited for the year ended 30 June 2021, I declare
that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Gary Sherwood
Partner
Sydney NSW
Dated: 26 August 2021
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the
RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
22
Identitii Limited
Annual Report FY21
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Revenue from contracts with customers
Research and development tax incentive
Government grants
Other income
Interest income
Note
30 June 2021
$
30 June 2020
$
8
9
1,364,197
905,319
417,936
12,726
1,823
941,592
740,381
364,539
-
14,396
Total revenue and other income
2,702,001
2,060,908
Expenses
Salaries and employee benefit expenses
Share based payments
Consultants fees
Advertising and marketing
Depreciation and amortisation
General expenses
Interest expense
Legal expenses
Office expenses
Travel and accommodation
Short-term lease payments
Impairment / (reversal) on trade receivables
Gain on lease modification
10
Research and development expenses
Total expenses
2,690,002
806,766
886,805
121,794
402,013
1,056,250
46,757
151,536
435,698
24,844
24,292
2,530
(72,005)
1,998,594
8,575,876
2,913,502
1,125,708
1,490,385
238,464
121,759
725,734
70,095
214,104
289,426
184,426
62,050
(2,291)
-
1,702,025
9,135,387
Loss before income tax
Income tax expense
Loss for the year
(5,873,875)
(7,074,479)
11
-
-
(5,873,875)
(7,074,479)
23
Identitii Limited
Annual Report FY21
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Note
30 June 2021
$
30 June 2020
$
Other comprehensive income
Items that may be reclassified subsequently to profit
or loss
Foreign currency translation
65,893
8,853
Total comprehensive loss for the year
(5,807,982)
(7,065,626)
Loss for the year attributable to:
Owners of Identitii Limited
Non-controlling interests
Comprehensive loss for the year attributable to:
Owners of Identitii Limited
Non-controlling interests
(5,825,443)
(7,074,479)
20
(48,432)
-
(5,873,875)
(7,074,479)
(5,759,550)
(7,065,626)
20
(48,432)
-
(5,807,982)
(7,065,626)
Basic and diluted loss per share (cents)
12
(4.46)
(12.18)
24
Identitii Limited
Annual Report FY21
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
Assets
Cash and cash equivalents
13
4,489,311
1,411,309
Note
30 June 2021
$
30 June 2020
$
Research and development tax incentive receivable
Trade receivables
Other receivables
Contract assets
Current assets
Intangible assets
Property, plant and equipment
Non-current assets
Total assets
Liabilities
Trade and other payables
Employee provisions
Contract liabilities
Borrowings and lease liabilities
Current liabilities
Borrowings and lease liabilities
Non-current liabilities
Total liabilities
8
8
14
15
16
17
8
18
18
905,319
227,419
153,832
26,400
740,381
43,702
186,343
66,500
5,802,281
2,448,235
57,006
101,536
158,542
62,112
852,275
914,387
5,960,823
3,362,622
271,109
474,901
179,650
33,039
958,699
-
-
267,734
668,468
44,545
848,930
1,829,677
474,818
474,818
958,699
2,304,495
Net assets
5,002,124
1,058,127
25
Identitii Limited
Annual Report FY21
Consolidated Statement of Financial Position
Equity
Share capital
Share options reserve
Foreign currency translation reserve
Other reserves
Retained losses
Equity attributable to owners of Identitii Limited
Non-controlling interests
Total equity
Note
30 June 2021
$
30 June 2020
$
19
29
20
20
25,775,278
17,930,105
4,517,002
3,710,236
73,017
688,123
7,124
-
(26,414,781)
(20,589,338)
4,638,639
363,485
1,058,127
-
5,002,124
1,058,127
26
Identitii Limited
Annual Report FY21
Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity
Note
Share
capital
Share
option
reserve
$
$
Foreign
currency
translation
reserve
$
Balance at 1 July 2020
17,930,105
3,710,236
7,124
Loss after tax
Other comprehensive income
Total comprehensive loss
-
-
-
Issue of ordinary share capital
Costs of equity raising
NCI acquisition without loss of control
Equity-settled share based payments
19
19
20
29
8,063,347
(218,174)
-
-
-
-
-
-
-
-
806,766
-
65,893
65,893
-
-
-
-
Other
reserves
Retained
losses
Total
Non-
controlling
interest
Total equity
$
-
-
-
-
-
-
688,123
-
$
$
(20,589,338)
1,058,127
$
-
$
1,058,127
(5,825,443)
(5,825,443)
(48,432)
(5,873,875)
-
65,893
-
65,893
(5,825,443)
(5,759,550)
(48,432)
(5,807,982)
-
-
-
-
8,063,347
(218,174)
-
-
8,063,347
(218,174)
688,123
411,917
1,100,040
806,766
-
806,766
Balance at 30 June 2021
25,775,278
4,517,002
73,017
688,123
(26,414,781)
4,638,639
363,485
5,002,124
27
Identitii Limited
Annual Report FY21
Consolidated Statement of Changes in Equity
Note
Share
capital
Share
option
reserve
$
$
Foreign
currency
translation
reserve
$
Balance at 1 July 2019
16,261,495
2,584,528
(1,729)
Initial application of AASB 16
-
-
-
Adjusted balance at 1 July 2019
16,261,495
2,584,528
(1,729)
Loss after tax
Other comprehensive income
Total comprehensive loss
Issue of ordinary share capital
Costs of equity raising
Equity-settled share based payments
19
19
29
-
-
-
1,908,158
(239,548)
-
-
-
-
-
-
1,125,708
-
8,853
8,853
-
-
-
Balance at 30 June 2020
17,930,105
3,710,236
7,124
Other
reserves
Retained
losses
Total
Non-
controlling
interest
Total equity
$
-
-
-
-
-
-
-
-
-
-
$
$
(13,485,660)
5,358,634
(29,199)
(29,199)
(13,514,859)
5,329,435
(7,074,479)
(7,074,479)
-
8,853
(7,074,479)
(7,065,626)
-
-
-
1,908,158
(239,548)
1,125,708
(20,589,338)
1,058,127
$
-
-
-
-
-
-
-
-
-
-
$
5,358,634
(29,199)
5,329,435
(7,074,479)
8,853
(7,065,626)
1,908,158
(239,548)
1,125,708
1,058,127
28
Identitii Limited
Annual Report FY21
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
Note
30 June 2021
$
30 June 2020
$
Cash flows from operating activities
Receipts from customers
Receipts from government grants and tax incentives
1,395,598
1,192,781
1,093,022
1,509,266
Payments to suppliers and employees
(7,348,417)
(7,269,044)
Cash flows utilised in operations
(4,760,038)
(4,666,756)
Interest received
Interest and other costs of finance paid
3,193
(2,769)
15,019
(5,866)
Total cash flows from operating activities
22
(4,759,614)
(4,657,603)
Cash flows from investing activities
Acquisition of property, plant and equipment
(45,136)
(18,608)
Proceeds from disposal of property, plant and
equipment
Acquisition of intangible assets
Other investing cash flows
-
-
-
Total cash flows from investing activities
(45,136)
Cash flows from financing activities
Proceeds from the issue of shares
Transaction costs related to the issue of shares
Proceeds from borrowings
Repayment of borrowings
Lease payments
Transaction costs related to borrowings and leases
Other financing cash flows
8,923,237
(341,405)
-
(600,000)
(125,649)
(61,687)
100,000
1,840
(62,112)
12,830
(66,050)
1,758,158
(464,722)
850,000
-
(95,710)
(30,913)
-
Total cash flows from financing activities
7,894,496
2,016,813
29
Identitii Limited
Annual Report FY21
Consolidated Statement of Cash Flows
Note
30 June 2021
$
30 June 2020
$
Net increase / (decrease) in cash held
Opening cash balance
Effect of movement in exchange rates
Closing cash balance
13
3,089,746
1,411,309
(11,744)
4,489,311
(2,706,840)
4,120,380
(2,231)
1,411,309
30
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
1. Reporting entity
Identitii Limited (the Company) is a Company incorporated and domiciled in Australia and whose shares are
publicly traded on the Australian Securities Exchange (ASX:ID8). The registered office and principal place of
business is Level 2, 129 Cathedral Street, Woolloomooloo, NSW 2011.
These consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Identitii
Limited as at 30 June 2021 and the results of all subsidiaries for the year then ended. Identitii Limited and its
subsidiaries together are referred to in these financial statements as the Group.
The Group is a for profit entity and is primarily involved in developing and licensing enterprise software for
regulated entities. Its main product Overlay+ is a platform that helps reduce regulatory risk, without replacing
technology systems.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 26 August
2021.
2. Basis of preparation
These consolidated financial statements are general purpose financial statements which have been prepared
in accordance with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards
Board (AASB) and the Corporations Act 2001. The consolidated financial statements comply with International
Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB).
Details of the Group’s accounting policies are included in Note 6.
Going concern
The financial report has been prepared on the going concern basis which contemplates the continuity of normal
business activities and the realisation of assets and settlement of liabilities in the ordinary course of business
and assumes the Group will have sufficient cash resources to pay its debts as and when they become due
and payable for at least 12 months from the date of signing the financial report.
The statement of profit or loss and other comprehensive income for the year ended 30 June 2021 reflects a
loss for the year of $5,873,875 and total cash outflows from operating activities of $4,759,614.
The Directors believe that it is reasonably foreseeable that the Company will continue as a going concern and
that it is appropriate to adopt the going concern basis in the preparation of the financial report after considering
the following:
• The Group has $4,489,311 in cash and cash equivalents as at the balance date;
• The Group successfully raised $8.9 million in funding during the year ended 30 June 2021 and is evaluating
plans to secure additional funding later in the calendar year;
• The Group has the ability to scale back a significant portion of its expenditure if required; and
•
the Company signed a Master Service Agreement with Mastercard during the year, extended its contract
with HSBC for a further three years and has other potential customer engagements in the pipeline.
Consequently, the Directors have concluded there are reasonable grounds to believe that the Group will
continue to be able to pay its debts as and when they become due and payable for a period of no less than 12
months from the date of signing this financial report and that the preparation of the 30 June 2021 financial
report on a going concern basis is appropriate.
31
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
3. Functional and presentation currency
These consolidated financial statements are presented in Australian dollars which is the Group’s functional
currency. The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191 and in accordance with that instrument, amounts in the consolidated financial statements
and directors’ report have been rounded off to the nearest Australian dollar, unless otherwise stated.
4. Use of judgements and estimates
In preparing these consolidated financial statements, management has made judgements and estimates that
affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income
and expenses. Management bases its judgements, estimates and assumptions on historical experience and
on various other factors, including expectations of future events that management believe to be reasonable
under the circumstances. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are
recognised prospectively.
a) Judgements
Information about judgements made in applying accounting policies that have the most significant effect
on the amounts recognised in the financial statements is included in the following notes:
COVID-19 pandemic – judgement has been exercised in considering the impacts that the COVID-19
pandemic has had, or may have, on the Group based on known information. This consideration extends
to the nature of the services offered, customers, staffing and geographic regions in which the Group
operates; and
Note 8 – revenue recognition: whether revenue from licence fees is recognised over time or at a point in
time.
b) Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties at 30 June 2021 that have a significant risk
of resulting in a material adjustment to the carrying amounts of assets and liabilities in the next financial
year are as follows:
The measurement and realisation of the R&D tax incentive: determining the percentage of expenditure
that is directly attributable to eligible R&D activities when measuring the R&D tax incentive. Uncertainty
exists over the quantum and timing of realisation of the R&D tax incentive claim until such time as the
claim has been examined and accepted by the Australian Tax Office (ATO);
Note 11 – recognition of deferred tax assets: availability of future taxable profit against which deductible
temporary differences and tax losses carried forward can and cannot be utilised; and
Note 29 – share based payments: key assumptions in determining the valuation of share based payment
transactions on grant date. Key assumptions include expected expiry dates, volatility rates and likelihood
of vesting.
32
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
5. New or amended accounting standards and interpretations
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board (AASB) that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted in preparing these consolidated financial statements.
A number of new standards and amendments to standards are effective for annual periods beginning on or
after 1 April 2021 and earlier application is permitted; however, the Group has not early adopted the new or
amended standards in preparing these consolidated financial statements.
The following amended standards and interpretations are not expected to have a significant impact on the
Group’s consolidated financial statements:
• AASB 2021-03 Amendments to Covid-19 Related Rent Concessions beyond 30 June 2021;
• AASB 2020-8 Amendments to Interest Rate Benchmark Reform;
• AASB 2014-10 Amendments to Sale or Contribution of Assets between an Investor and its Associate or
Joint Venture;
• AASB 2020-1 Amendments to Classification of Liabilities as Current or Non-Current;
• AASB 2020-3 Amendments to Annual Improvements 2018-2020 and Other Amendments;
• AASB 2021-2 Amendments to Disclosure of Accounting Policies and Definition of Accounting Estimates;
• AASB 17 Insurance Contracts.
6. Significant accounting policies
a) Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Identitii
Limited as at 30 June 2021 and the results of all subsidiaries for the year then ended. Identitii Limited and
its subsidiaries together are referred to in these financial statements as the Group.
Subsidiaries are those entities over which the Group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They are de-consolidated from
the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group
are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the
impairment of the asset transferred. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in
ownership interest, without the loss of control, is accounted for as an equity transaction, where the
difference between the consideration transferred and the book value of the share of the non-controlling
interest acquired is recognised directly in equity attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of
profit or loss and other comprehensive income, statement of financial position and statement of changes
in equity of the Group. Losses incurred by the subsidiaries are attributed to the non-controlling interest in
full, even if that results in a deficit balance.
33
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
6. Significant accounting policies (continued)
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities
and non-controlling interest in the subsidiary together with any cumulative translation differences
recognised in equity. The Group recognises the fair value of the consideration received and the fair value
of any investment retained together with any gain or loss in profit or loss.
b) Foreign currency transactions
Transactions in foreign currencies are translated to the functional currency of the Group at the exchange
rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional
currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured
at fair value in a foreign currency are translated into the functional currency at the exchange rate when
the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign
currency are translated at the exchange rate at the date of the transaction. Foreign currency differences
are generally recognised in profit or loss and presented within general expenses.
c) Revenue from contracts with customers
Information about the Group’s accounting policies relating to contracts with customers is provided in Note
8.
d) Research and development tax incentive
The R&D tax incentive encourages companies to engage in R&D benefiting Australia, by providing a tax
offset (or a cash refund if in a tax loss position) for eligible R&D activities. The Group recognises the R&D
tax incentive in profit or loss when the Group incurs the eligible R&D expenditure. The R&D tax incentive
income is presented on a gross basis and is not netted off against the R&D costs to which it relates.
e) Government grants
The Group recognises an unconditional government grant in profit or loss when the grant becomes
receivable. Grants that compensate the Group for expenses incurred are recognised in profit or loss on a
systematic basis in the periods in which the expenses are recognised. The grants are recognised on a
gross basis in income and are not netted off against the expenditure to which it relates.
Refer to Note 9 for further details.
f) Employee benefits
Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for
the amount expected to be paid under short
sharing plans if the Group has a
present legal or constructive obligation to pay this amount as a result of past service provided by the
employee and the obligation can be estimated reliably.
term cash bonus or profit
‑
‑
34
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
6. Significant accounting policies (continued)
Other long
term employee benefits
‑
The Group’s net obligation in respect of long
term employee benefits is the amount of future benefit that
employees have earned in return for their service in the current and prior periods. That benefit is
discounted to determine its present value. Re-measurements are recognised in profit or loss in the period
in which they arise.
‑
Termination benefits
Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of
those benefits and when the Group recognises costs for a restructuring. If benefits are not expected to be
settled wholly within 12 months of the reporting date, they are discounted.
Share based payment arrangements
Equity-settled share based compensation benefits are provided to employees. Equity-settled transactions
are awards of shares, or options over shares, that are provided to employees in exchange for the
rendering of services.
The cost is measured at fair value on grant date using a suitable option pricing model such as Black
Scholes, Binomial or Monte Carlo. The grant date fair value of equity settled share based payment
arrangements is recognised as an expense, with a corresponding increase in equity over the vesting
period of the award. The amount recognised as an expense is adjusted to reflect the number of awards
for which the related service and non-market performance conditions are expected to be met, such that
the amount ultimately recognised is based on the number of awards that meet the related service and
non-market performance conditions at the vesting date. For share based payment awards with non-
vesting conditions, the grant date fair value of the share based payment is measured to reflect such
conditions and there is no true up for differences between expected and actual outcomes. Market
conditions are taken into consideration in determining fair value. Therefore, any awards subject to market
conditions are considered to vest irrespective of whether or not that market condition has been met,
provided all other conditions are satisfied.
g) Income tax
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the
extent that it relates to items recognised directly in equity.
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year
and any adjustment to the tax payable or receivable in respect of previous years. The amount of tax
payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects
uncertainty related to incomes taxes, if any. It is measured using tax rates enacted or substantively
enacted at the reporting date. Current tax also includes any tax liability arising from dividends.
Current tax assets and liabilities are offset only if certain criteria are met.
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes.
35
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
6. Significant accounting policies (continued)
Deferred tax is not recognised for:
•
•
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a
business combination and that affects neither accounting nor taxable profit or loss; and
temporary differences related to investments in subsidiaries to the extent that the Group is able to
control the timing of the reversal of the temporary differences and it is probable that they will not
reverse in the foreseeable future.
Deferred tax assets are recognised for unused tax losses, tax credits and deductible temporary
differences, to the extent that it is probable that future taxable profits will be available against which they
can be utilised. Future taxable profits are determined based on the reversal of relevant taxable temporary
differences. If the amount of taxable temporary differences is insufficient to recognise a deferred tax asset
in full, the future taxable profits, adjusted for reversals of existing temporary differences, are considered,
based on the business plans for individual subsidiaries in the Group. Deferred tax assets are reviewed at
each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit
will be realised; such reductions are reversed when the probability of future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent
that is has become probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when
they reverse, using tax rates enacted or substantively enacted at the reporting date. The measurement
of deferred tax reflects the tax consequences that would follow the manner in which the Group expects,
at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if certain criteria are met.
h) Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or
consumed in the Group’s normal operating cycle; it is held primarily for the purpose of trading; it is
expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent
unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting
period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group’s normal operating
cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the
reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12
months after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
i) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other
short-term, highly liquid investments with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
36
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
6. Significant accounting policies (continued)
j) Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using
the effective interest method, less any allowance for expected credit losses. Trade receivables are
generally due for settlement within 45 days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime
expected loss allowance. To measure the expected credit losses, trade receivables have been grouped
based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
k) Contract assets
Contract assets are recognised when the Group has transferred goods or services to the customer but
where the Group is yet to establish an unconditional right to consideration. Contract assets are treated as
financial assets for impairment purposes.
l) Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and
accumulated impairment losses.
If significant parts of an item of property, plant and equipment have different useful lives, they are
accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
Subsequent expenditure
Subsequent expenditure is capitalised only when it is probable that the future economic benefits
associated with the expenditure will flow to the Group.
Depreciation
Depreciation is calculated to write off the cost of items of property, plant and equipment less their
estimated residual values using the straight-line method over their estimated useful lives and is generally
recognised in profit or loss.
The estimated useful lives of property, plant and equipment for current and comparative periods are as
follows:
Right-of-use asset
Office fit out
Computer equipment
Office equipment
2021
3 years
3 years
3 years
5 years
2020
6 years
6 years
3 years
5 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted
if appropriate.
37
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
6. Significant accounting policies (continued)
m) Intangible assets
Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are
not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets
are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised
in profit or loss arising from the derecognition of intangible assets are measured as the difference between
net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of
finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or
useful life are accounted for prospectively by changing the amortisation method or period.
The estimated useful lives of intangible assets for current and comparative periods are as follows:
Acquired software
n) Trade and other payables
2021
1 year
2020
1 year
These amounts represent liabilities for goods and services provided to the Group prior to the end of the
financial year and which are unpaid. Due to their short-term nature, they are measured at amortised cost
and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
o) Contract liabilities
Contract liabilities represent the Group’s obligation to transfer goods or services to a customer and are
recognised when a customer pays consideration, or when the Group recognises a receivable to reflect its
unconditional right to consideration (whichever is earlier) before the Group has transferred the goods or
services to the customer.
p) Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of
transaction costs. They are subsequently measured at amortised cost using the effective interest method.
q) Leases
The Group adopted AASB 16 from 1 July 2019 applying the modified retrospective approach, under which
the cumulative effect of initial application was recognised in retained earnings at 1 July 2019. Except for
short-term leases and leases of low-value assets, right-of-use assets and corresponding lease liabilities
are recognised in the statement of financial position.
For classification within the statement of cash flows, the interest and the principal portion of the lease
payments are disclosed in financing activities.
For lessor accounting, the standard did not substantially change how a lessor accounts for leases.
38
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
6. Significant accounting policies (continued)
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is
measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any
lease payments made at or before the commencement date net of any lease incentives received, any
initial direct costs incurred, and an estimate of costs expected to be incurred for dismantling and removing
the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is the shorter. Where the Group expects to obtain ownership
of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of
use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially
recognised as the present value of the lease payments to be made over the term of the lease, discounted
using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s
incremental borrowing rate.
Lease payments comprise of:
•
•
•
•
fixed payments less any lease incentive receivables;
variable lease payments that depend on an index or a rate;
amounts expected to be paid under residual value guarantees; and
the exercise price of a purchase option when the exercise of the option is reasonably certain to occur,
and any anticipated termination penalties.
The variable lease payments that do not depend on an index or a rate are expensed in the period in which
they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts
are remeasured if there is a change in the following: future lease payments arising from a change in an
index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination
penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use
asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
Short-term leases and low-value assets
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-
term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these
assets are expensed on a straight line basis to profit or loss over the lease term.
r) Financial instruments
Recognition and initial measurement
Trade receivables are initially recognised when they are originated. All other financial assets and financial
liabilities are initially recognised when the Group becomes a party to the contractual provisions of the
instrument.
A financial asset (unless it is a trade receivable without a significant financing component) or financial
liability is initially measured at fair value plus transaction costs that are directly attributable to its acquisition
or issue. A trade receivable without a significant financing component is initially measured at the
transaction price.
39
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
6. Significant accounting policies (continued)
Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured at: amortised cost; fair value in other
comprehensive income (FVOCI) – debt investment; FVOCI – equity investment; or fair value through profit
or loss (FVTPL).
Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its
business model for managing financial assets, in which case all affected financial assets are reclassified
on the first day of the first reporting period following the change in the business model.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not
designated as FVTPL:
•
•
It is held within a business model whose objective is to hold assets primarily to collect contractual
cash flows; and
Its contractual term gives rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding (SPPI test).
The Group does not have any debt or equity investments that are classified and measured at FVOCI.
Therefore, all financial assets that do not meet the classification requirements for amortised cost are
classified and measured at FVTPL.
Financial assets – assessment whether contractual cash flows are solely payments of principal and
interest
For the purpose of this assessment, principal is defined as the fair value of the financial asset on initial
recognition. Interest is defined as consideration for the time value of money and for the credit risk
associated with the principal amount outstanding during a particular period of time and for other basic
lending risks and costs, as well as profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Group
considers the contractual terms of the instrument. This includes assessing whether the financial asset
contains a contractual term that could change the timing or amount of contractual cash flows such that it
would not meet this condition. In making this assessment, the Group considers:
•
•
•
•
contingent events that would change the amount or timing of cash flows;
terms that may adjust the contractual coupon rate;
prepayment and extension features; and
terms that limit the Group’s claim to cash flows from specified assets.
A prepayment feature is consistent with the solely payments of principal and interest criterion if the
prepayment amount substantially represents unpaid amounts of principal and interest on the principal
amount outstanding, which may include reasonable additional compensation for early termination of the
contract. Additionally, for a financial asset acquired at a discount or premium to its contractual par amount,
a feature that permits or requires prepayment at an amount that substantially represents the contractual
par amount plus accrued contractual interest is treated as consistent with this criterion if the fair value of
the prepayment feature is insignificant at initial recognition.
40
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
6. Significant accounting policies (continued)
Financial assets – subsequent measurement and gains and losses
Type of financial asset
Financial assets at FVTPL
Financial assets at
amortised cost
These assets are subsequently measured at fair value. Net gains and
losses, including any interest or dividend income, are recognised in profit
or loss.
These assets are subsequently measured at amortised cost using the
effective interest method. The amortised cost is reduced by impairment
losses. Interest income, foreign exchange gains and losses and
impairment are recognised in profit or loss. Any gain or loss on
derecognition is recognised in profit or loss.
Financial liabilities – classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified
as FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial
recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including
any interest expenses, are recognised in profit or loss. Other financial liabilities are subsequently
measured at amortised cost using the effective interest method. Interest expense and foreign exchange
gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in
profit or loss.
Derecognition
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial
asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which
substantially all the risks and rewards of ownership of the financial asset are transferred or in which the
Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not
retain control of the financial asset. The Group also derecognises a financial asset when its terms are
modified and the cash flows associated with the modified asset are substantially different, in which case
a new financial asset based on the modified terms is recognised at fair value.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or
expire. The Group also derecognises a financial liability when its terms are modified and the cash flows
of the modified liability are substantially different, in which case a new financial liability based on the
modified terms is recognised at fair value. On derecognition of a financial liability, the difference between
the carrying amount extinguished and the consideration paid (including any non-cash assets transferred
or liabilities assumed) is recognised in profit or loss.
Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the statement of
financial position when, and only when, the Group currently has a legally enforceable right to offset the
amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability
simultaneously.
41
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
6. Significant accounting policies (continued)
s) Impairment
A. Non-derivative financial assets
Financial instruments and contract assets
The Group recognises loss allowances for expected credit losses (ECLs) on:
•
•
financial assets measured at amortised cost; and
contract assets
The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following,
which are measured at 12-month ECLs:
•
•
financial assets (excluding trade receivables) that are determined to have low credit risk at the
reporting date; and
other financial assets and bank balances for which credit risk (ie. the risk of default occurring over
the expected life of the financial instrument) has not increased significantly since initial
recognition.
Loss allowances for trade receivables and contract assets are always measured at an amount equal
to lifetime ECLs and are calculated using a provision matrix under the simplified approach.
When determining whether credit risk of a financial asset has increased significantly since initial
recognition and when estimating ECLs, the Group considers reasonable and supportable information
that is relevant and available without undue cost or effort. This includes both quantitative and
qualitative information and analysis, based on the Group’s historical experience and informed credit
assessment and includes forward looking information and the use of macro-economic factors.
The Group assumes that the credit risk on a financial asset has increased if it is more than 30 days
past due.
The Group considers a financial asset to be in default when:
•
•
the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the
Group to actions such as realising security (if held); or
the financial asset is more that 90 days past due.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a
financial instrument.
12-month ECLs are the portion of ECLs that result from default events that are possible within the 12
months after the reporting date (or a shorter period if the expected life of the instrument is less than
12 months).
The maximum period considered when estimating ECLs is the maximum contractual period over which
the Group is exposed to credit risk.
Measurement of ECLs
ECLs are a probability weighted estimate of credit losses. Credit losses are measured as the present
value of all cash shortfalls (ie. the difference between the cash flows due to the entity in accordance
with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the
effective interest rate of the asset.
42
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
6. Significant accounting policies (continued)
ECLs for trade receivables and contract assets are calculated using a provision matrix based on
historical default rates adjusted for current and forecast credit conditions including other business,
financial and economic factors such as geographical region and external credit rating.
Credit impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at amortised cost are
credit impaired. A financial asset is credit impaired when one or more events that have a detrimental
impact on the estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit impaired includes the following:
•
•
•
•
significant financial difficulty of the borrower;
a breach of contract such as default or being more that 90 days past due;
restructuring of an amount due to the Group on terms that the Group would not consider
otherwise; or
it is probable that the borrower will enter bankruptcy or other financial reorganisation.
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying
amount of the assets.
There have been no changes in estimation techniques or significant assumptions made during the
year.
Write off
The gross carrying amount of a financial asset is written off when the Group has no reasonable
expectations of recovering a financial asset in its entirety or a portion thereof. For corporate customers,
the Group individually makes an assessment with respect to the timing and amount of write off based
on whether there is reasonable expectation of recovery. The Group expects no significant recovery for
the amount written off. However, financial assets that are written off could still be subject to
enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.
B. Non
financial assets
‑
At each reporting date, the Group reviews the carrying amounts of its non-financial assets to determine
whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable
amount is estimated.
For impairment testing, assets are grouped together into the smallest group of assets that generates
cash inflows from continuing use that are largely independent of the cash inflows of other assets or
cash generating units (CGUs).
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less
costs to sell. Value in use is based on the estimated future cash flows, discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money
and the risks specific to the asset or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable
amount. Impairment losses are recognised in profit or loss. They are allocated to reduce the carrying
amount of assets in the CGU on a pro rata basis. An impairment loss is reversed only to the extent
that the asset’s carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss had been recognised.
43
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
6. Significant accounting policies (continued)
t) Share capital
Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from
equity. Income tax relating to transaction costs of an equity transaction is accounted for in accordance
with AASB 112.
u) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST
incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the
acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net
amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other
payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or
financing activities which are recoverable from, or payable to the tax authority, are presented as operating
cash flows.
v) Comparative figures
Comparative figures have been adjusted to conform to changes in presentation for the current financial
year where required by Accounting Standards or as a result of changes in Accounting Policy.
w) Fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date in the principal or, in its absence, the
most advantageous market to which the Group has access at that date. The fair value of a liability reflects
its non-performance risk. A number of the Group’s accounting policies and disclosures require the
measurement of fair values, for both financial and non-financial assets and liabilities.
When one is available, the Group measures fair value of an instrument using the quoted price in an active
market for that instrument. A market is regarded as active if transactions for the asset or liability take place
with sufficient frequency and volume to provide pricing information on an ongoing basis. If there is no
quoted price in an active market, then the Group uses valuation techniques that maximise the use of
relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique
incorporates all of the factors that market participants would take into account in pricing a transaction.
The best evidence of the fair value of a financial instrument on initial recognition is normally the transaction
price ie. the fair value of the consideration given or received.
If the Group determines that the fair value on initial recognition differs from the transaction price and the
fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor
based on a valuation technique for which any unobservable inputs are judged to be insignificant in relation
to the measurement, then the financial instrument is initially measured at fair value, adjusted to defer the
difference between the fair value on initial recognition and the transaction price. Subsequently, that
difference is recognised in profit or loss on an appropriate basis over the life of the instrument but no later
than when the valuation is wholly supported by observable market data or the transaction is closed out.
44
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
7. Operating segments
An operating segment is a component of the Group
•
•
that engages in business activities from which it may earn revenues and incur expenses (including
revenue and expenses relating to transactions with the Group’s other components), and
whose operating results are reviewed regularly by the Group’s chief operating decision maker for the
purpose of making decisions about allocating resources to the segment and assessing its performance.
The Group currently has one reportable segment, which develops and licenses enterprise software for
regulated entities. The revenues and profits generated by the Group’s operating segment and segment assets
are summarised below:
For the year ended 30 June
Sales to external customers
Other revenue and income
Total segment revenue and income
Unallocated revenue:
Interest revenue
Total revenue and other income
EBITDA
Depreciation and amortisation
Interest revenue
Interest expense
Loss before income tax
Income tax expense
Loss for the year
Enterprise Software Development and
Licensing
2021
$
1,364,197
1,335,981
2,700,178
2020
$
941,592
1,104,920
2,046,512
1,823
14,396
2,702,001
2,060,908
(5,422,756)
(6,897,021)
(406,185)
(121,759)
1,823
(46,757)
14,396
(70,095)
(5,873,875)
(7,074,479)
-
-
(5,873,875)
(7,074,479)
Segment assets
5,960,823
3,362,622
Segment liabilities
958,699
2,304,495
45
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
7. Operating segments (continued)
Geographic information
The Group’s main operations and place of business is in Australia, with majority of its revenue being derived
in the United States of America.
Revenue from contracts with customers
Asia
Australia
United States of America
30 June 2021
$
30 June 2020
$
505,989
341,625
516,583
578,592
363,000
-
1,364,197
941,592
Revenue is based on the location of the customer. Refer to Note 8 for further detail on major customers,
products and services.
Location of non-current assets
Australia
Other
30 June 2021
$
30 June 2020
$
158,542
914,387
-
-
158,542
914,387
Non-current assets include intangible, property, plant and equipment and leased assets.
8. Revenue
The Group generates revenue primarily from the licensing of enterprise software and the provision of
professional and maintenance services to its customers.
a) Performance obligations and revenue recognition policies
Under its contracts, the Group grants a licence to the customer for the use of its software. The contract
will specify the term of the licence, the jurisdictions in which the licence may be utilised and protocols to
be followed to extend the licence beyond the agreed licence term.
The contracts also facilitate the provision of certain software, training, maintenance, customisation and
configuration or other services from the Group in consideration for the payment of fees. The customer is
granted, for the term of each contract, a non-exclusive, perpetual, irrevocable and royalty-free licence to
use the software in a specific use case. The Group retains all rights, title and interest in the intellectual
property of the software.
46
Identitii Limited
Annual Report FY21
8. Revenue (continued)
Notes to the Consolidated Financial Statements
The Group is currently recognising revenue under these contracts for licence fees, maintenance fees,
usage fees and professional services, each regarded as a separate performance obligation. Revenue is
measured based on the consideration specified in the contract and is recognised when the Group
transfers control over the product or service to the customer. Charges are determined by a number of
factors including transaction volume, customisation requirements, ongoing support and maintenance and
new feature releases. Pricing changes for each renewal term are to be mutually agreed in writing.
The following table provides information about the nature and timing of the satisfaction of performance
obligations in its contracts with customers including the related revenue recognition policies.
Product and
services
Licence fees
Nature and timing of satisfaction of performance obligations
The contracts require the Group to undertake maintenance and software
enhancement activities throughout the licence period that significantly affects
the intellectual property (IP) to which the customers have rights. The nature of
the Group’s performance obligation in granting a licence is regarded as a right
to access the IP and thus the Group recognises licence fee revenue over time.
Licence fee revenue is recognised in equal monthly instalments from the date
the licence is first transferred and for the term of the contract. The licence fee
is a fixed annual fee as specified in the contract.
There remains $627,502 in relation to contracted licence fees for which no
revenue or deferred revenue has been recognised as the performance
obligations have not been met as at 30 June 2021.
Maintenance fees
Maintenance (software, equipment and hosted services maintenance) is to be
provided to customers on an ongoing basis from the date the licence is first
transferred and throughout the term of the contract.
The maintenance fee is a fixed annual fee as specified in the contract.
Under AASB 15, the performance obligation to provide maintenance services
is first met upon transfer of the licence and is ongoing throughout the term of
the contract. The total maintenance fee revenue to be billed under the contract
is recognised in equal monthly instalments over time from the date the licence
is first transferred.
There remains $55,364 in relation to contracted maintenance fees for which no
revenue or deferred revenue has been recognised as the performance
obligations have not been met as at 30 June 2021.
47
Identitii Limited
Annual Report FY21
8. Revenue (continued)
Product and
services
Usage fees
Notes to the Consolidated Financial Statements
Nature and timing of satisfaction of performance obligations
Usage fee revenue is determined by the number of successful transactions (as
defined in the contract) and is based on information provided to the Group by
the customer. Usage fees are recognised only when the later of the usage
occurs and the licence fee obligation has been satisfied. Usage fees are
variable fees and may be subject to an annual cap as specified in the contract.
The Group recognises usage fee revenue over time based on when the usage
occurs.
Professional services
(including setup,
training and other
support costs)
Professional services include setup, training and support costs as well as
individual customisation projects that are separate and distinct performance
obligations.
The Group recognises revenue at a point in time based on time and materials
incurred in delivering the product and services to its customers as per the terms
and prices specified in the contract. Invoices are generated on confirmation of
product and service delivery and revenue is recognised at that point in time.
There remains $341,709 in relation to contracted professional services for
which no revenue or deferred revenue has been recognised as the
performance obligations have not been met as at 30 June 2021.
Where revenue is billed in advance, a contract liability is recognised and amortised over the period of the
invoice. Where revenue is billed in arrears, a contract asset is recognised at the time of revenue
recognition and transferred to trade receivables when the invoice is generated.
Warranties, returns and refunds
The warranty period will run from the licence start date and over a specified period of time. Under the
warranty period the Group undertakes that the product and services supplied are of satisfactory quality
and fit for purpose, free from defects in design, operate in accordance with the contract and that
appropriate master copies are maintained by the Group.
In the event of an unresolved third party intellectual property rights claim, customers may elect to return
all deliverables under the contract and be refunded in full for all charges paid by the customer to date.
Revenue is recognised to the extent that it is highly probable that a significant reversal in the amount of
cumulative revenue recognised will not occur. Due to the absence of any third party intellectual property
rights claims during the current and prior period, no adjustment has been made to revenue recognised
during the period for expected returns.
Customers may terminate or partially terminate the contract by written notice to the Group. Customers
shall be entitled to a pro-rata refund of fees paid in advance of the termination date unless termination by
the customer is for no reason. Due to the absence of any such written notices to the Group during the
current and prior period, no adjustment has been made to revenue recognised during the period for
expected refunds on termination.
48
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
8. Revenue (continued)
b) Disaggregation of revenue
In the following table, revenue is disaggregated by nature of product and service and is done so in
conjunction with the Group’s reporting segment.
For the year ended 30 June
Nature of product and service
Licence and usage fees
Maintenance fees
Professional services
Revenue from contracts with customers
c) Contract balances
Enterprise Software Development and
Licensing
2021
$
359,206
21,303
983,688
1,364,197
2020
$
207,553
21,069
712,970
941,592
The following table provides information about trade receivables, contract assets and contract liabilities
from contracts with customers.
Trade receivables
Contract assets
Contract liabilities
30 June 2021
$
30 June 2020
$
227,419
26,400
43,702
66,500
(179,650)
(44,545)
Reconciliation of the written down values of contract assets and contract liabilities at the beginning and
end of the current and prior financial year are set out below:
Contract assets
Opening balance 1 July
Additions
Transfer to trade receivables
Closing balance 30 June
30 June 2021
$
30 June 2020
$
66,500
153,400
(193,500)
26,400
-
66,500
-
66,500
49
Identitii Limited
Annual Report FY21
8. Revenue (continued)
Contract liabilities
Opening balance 1 July
Payments received in advance
Transfer to revenue – in opening balance
Transfer to revenue – other balances
Closing balance 30 June
Notes to the Consolidated Financial Statements
30 June 2021
$
30 June 2020
$
44,545
550,533
(44,545)
(370,883)
179,650
34,425
87,941
(34,425)
(43,396)
44,545
No information has been provided about remaining performance obligations at 30 June 2021 that have
an original expected duration of one year or less, as allowed by AASB 15.
9. Government grants
Export market development grant
COVID-19 related grants
30 June 2021
$
30 June 2020
$
100,000
317,936
417,936
150,000
214,539
364,539
The Export Market Development Grant (EMDG) scheme is a key Australian Government financial assistance
program that encourages small to medium sized Australian businesses to develop export markets by granting
funding to cover eligible export expenditure, up to a maximum claim of $150,000. The Group recognises the
EMDG in profit or loss when the application is successful and the Group receives an unconditional right to the
income.
COVID-19 related grants were temporary subsidies for businesses affected by COVID-19 and consisted mostly
of the JobKeeper and Cash Flow Boost payment schemes. Both schemes have closed as at the date of this
report.
•
•
Under the JobKeeper scheme, eligible employers could apply to receive up to $1,500 per eligible
employee per fortnight. The Group recognised the JobKeeper payments in profit or loss when the related
salaries were paid to eligible employees. The Company was eligible for JobKeeper up to 31 December
2020.
Under the Cash Flow Boost payment scheme, eligible businesses who employed staff received a cash
flow boost in the form of a credit when lodging their activity statements. This was to cover the tax withheld
from salaries paid to employees for the period covered by the activity statement. The Group recognised
the Cash Flow Boost in profit or loss when the activity statement was lodged.
50
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
10. Reassessment of lease terms
a) Leases
The Group leases office space in Australia over an initial term of three years with an option to extend for
a further three years. The lease has an escalation clause to account for inflation over time and, on renewal,
the terms of the lease will be renegotiated. On initial application of AASB 16: Leases on 1 July 2019, the
lease liability and right-of-use asset in relation to this office lease were calculated using a six year lease
term as it was assumed the option to extend would be exercised.
Due to a change in circumstances, the Group has decided not to exercise its option to extend the lease.
The current lease will expire in August 2021, following which it will default to a monthly term with either
party giving 3 months’ notice to terminate. This reassessment of the lease term has resulted in a
remeasurement of the lease liability and right-of-use asset with the following impact on the financial
statements for the year ended 30 June 2021:
Decrease in lease liability
Decrease in right-of-use asset
Gain on lease modification
b) Office fit out
30 June 2021
$
459,651
(387,646)
(72,005)
In line with the above, the Group reassessed the useful life of the office fit out asset from six years to
three years to align with the end of the current lease in August 2021. This is treated as a change in
accounting estimate and has resulted in an acceleration of office fit out depreciation in the current year of
$184,454 as follows:
Office fit out depreciation for the year – six years useful life
Office fit out depreciation for the year – three years useful life
Acceleration of depreciation during the year
11. Income tax expense
a) Amounts recognised in profit or loss
Current tax expense
Current year
Tax expense
30 June 2021
$
58,664
243,118
184,454
30 June 2021
$
30 June 2020
$
-
-
-
-
51
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
11. Income tax expense (continued)
b) Reconciliation of accounting loss to taxable loss
Loss before tax
Adjustments to accounting loss
Non-deductible expenses
Tax exempt income
Taxable loss
Tax expense
30 June 2021
$
30 June 2020
$
(5,873,875)
(7,074,479)
3,063,404
(1,053,724)
2,477,939
(740,381)
(3,864,195)
(5,336,921)
-
-
The Group is in a net tax loss position and does not recognise a deferred tax asset.
c) Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items, because it is not probable
that future taxable profit will be available against which the Group can use the benefits therefrom.
30 June 2021
30 June 2020
Gross amount
$
Tax effect
$
Gross amount
$
Tax effect
$
Tax losses
12,489,797
3,434,694
9,370,574
2,422,019
12. Loss per share
The calculation of basic and diluted loss per share has been based on the following loss attributable to ordinary
shareholders and weighted-average number of ordinary shares outstanding.
30 June 2021
$
30 June 2020
$
Loss for the year attributable to owners of Identitii Limited
(5,825,443)
(7,074,479)
Weighted-average number of ordinary shares
Issued ordinary shares at 1 July
81,778,198
54,518,799
Effect of shares issued during the year
48,799,915
3,575,003
Weighted-average number of ordinary shares at 30 June
130,578,113
58,093,802
Basic and diluted loss per share (cents)
(4.46)
(12.18)
52
Identitii Limited
Annual Report FY21
12. Loss per share (continued)
Notes to the Consolidated Financial Statements
Share based payment options have not been included in the calculation of diluted loss per share as these are
considered anti-dilutive as at 30 June 2021 and 30 June 2020.
13. Cash and cash equivalents
Bank balances
Term deposits
14. Intangible assets
Software – at cost
Less: Accumulated amortisation
Reconciliation of carrying amount
Balance at 1 July 2019
Amortisation expense
Balance at 30 June 2020
Amortisation expense
Balance at 30 June 2021
30 June 2021
$
30 June 2020
$
4,415,466
1,337,464
73,845
73,845
4,489,311
1,411,309
30 June 2021
$
30 June 2020
$
62,112
(5,106)
57,006
62,112
-
62,112
Software
$
62,112
-
62,112
(5,106)
57,006
53
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
15. Property, plant and equipment
Reconciliation of carrying amount
Right-of-
use asset
$
Office fit
out
$
Computer
equipment
$
Office
equipment
$
Total
$
Cost
Balance at 1 July 2019
-
351,024
83,461
41,935
476,420
Initial application of AASB 16
774,563
-
-
-
774,563
Adjusted balance at 1 July 2019
774,563
351,024
83,461
41,935
1,250,983
Additions
Disposals
-
-
-
-
18,608
-
18,608
(1,879)
(2,636)
(4,515)
Balance at 30 June 2020
774,563
351,024
100,190
39,299
1,265,076
Balance at 1 July 2020
774,563
351,024
100,190
39,299
1,265,076
Modification of lease
(396,024)
Additions
Disposals
-
-
-
-
-
-
49,330
(3,999)
-
-
-
(396,024)
49,330
(3,999)
Balance at 30 June 2021
378,539
351,024
145,521
39,299
914,383
Accumulated depreciation
Balance at 1 July 2019
-
38,765
25,053
4,766
68,584
Initial application of AASB 16
118,336
-
-
-
118,336
Adjusted balance at 1 July 2019
118,336
38,765
25,053
4,766
186,920
Depreciation
Disposals
129,080
58,504
31,291
8,100
226,975
-
-
(568)
(526)
(1,094)
Balance at 30 June 2020
247,416
97,269
55,776
12,340
412,801
Balance at 1 July 2020
247,416
97,269
55,776
12,340
412,801
Modification of lease
(8,378)
-
-
-
(8,378)
Depreciation
Disposals
128,986
243,118
31,623
7,834
411,561
-
-
(3,137)
-
(3,137)
Balance at 30 June 2021
368,024
340,387
84,262
20,174
812,847
54
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
15. Property, plant and equipment (continued)
Right-of-
use asset
$
Office fit
out
$
Computer
equipment
$
Office
equipment
$
Total
$
Carrying amounts
At 1 July 2019
-
312,259
58,408
37,169
407,836
Balance at 30 June 2020
527,147
253,755
Balance at 30 June 2021
10,515
10,637
44,414
61,259
26,959
852,275
19,125
101,536
The Group reassessed its office lease term from six to three years during the year, resulting in a decrease in
carrying amount of the right-of-use asset by $387,646. Similarly, the Group reassessed the useful life of the
office fit out asset from six years to three years resulting in an acceleration of depreciation in the current year.
Refer to Note 10 for further details.
The Group leases office space in Hong Kong under agreement for six months with an option to extend. As this
lease is short-term and of low value, it has been expensed as incurred during the year and not capitalised to
right-of-use assets.
16. Trade and other payables
Trade payables
Other payables and accruals
17. Employee provisions
Provision for annual leave
Superannuation payable
Employee taxes withheld
ATO debt payable
30 June 2021
$
30 June 2020
$
103,887
167,222
271,109
142,519
125,215
267,734
30 June 2021
$
30 June 2020
$
238,767
95,906
140,228
-
474,901
146,631
64,244
132,007
325,586
668,468
55
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
17. Employee provisions (continued)
Amounts not expected to be settled within the next 12 months
The provision for annual leave includes all unconditional entitlements where employees have completed the
required period of service and also where employees are entitled to pro-rata payments in certain
circumstances. The entire amount is presented as current, since the Group does not have an unconditional
right to defer settlement. However, based on past experience, the Group does not expect all employees to
take the full amount of accrued leave or require payment within the next 12 months.
18. Borrowings and lease liabilities
Current liabilities
Borrowings (a)
Lease liabilities (b)
Non-current liabilities
Lease liabilities (b)
a) Borrowings
Borrowings at the end of the year were as follows:
Director loan - John Rayment
R&D finance loan – Radium Capital
30 June 2021
$
30 June 2020
$
20,000
13,039
33,039
722,500
126,430
848,930
-
474,818
33,039
1,323,748
30 June 2021
$
30 June 2020
$
20,000
-
20,000
100,000
622,500
722,500
On 17 March 2020 the Group received a loan of $100,000 from John Rayment. This loan is for 12 months,
interest free and will convert to equity at $0.07 per share as approved by shareholders. On 17 November
2020 the Company issued 1,142,857 shares to John Rayment in partial settlement of this loan, leaving a
remaining loan balance of $20,000 as at 30 June 2021. Subsequent to year end, a further 285,714 shares
were issued to John Rayment in full and final settlement of his loan.
On 1 April 2020 the Group received a $600,000 loan facility with Radium Capital that was secured against
the R&D tax incentive cash refund expected to be received in relation to eligible R&D expenditure
incurred. The interest rate on the loan principal was 1.25% per month. This loan was settled in full on 29
July 2020.
56
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
18. Borrowings and lease liabilities (continued)
b) Lease liabilities
Lease liabilities are recognised on transition to AASB 16 Leases. The Group reassessed its office lease
term from six to three years during the year, resulting in a decrease in carrying amount of the lease liability
by $459,651. Refer to Note 10 for further details.
Lease liabilities are payable as follows:
For the year ended 30 June ($)
Less than one year
Between one and five years
Future minimum
lease payments
Interest
Present value of
future minimum
lease payments
2021
13,106
-
13,106
2021
67
-
67
2021
13,039
-
13,039
c) Terms and repayment schedule
The terms and conditions of outstanding borrowings and lease liabilities are as follows:
30 June 2021
30 June 2020
Nominal
interest
rate p.a
Year of
maturity
Face
value
$
Carrying
amount
$
Face
value
$
Carrying
amount
$
Director loan - unsecured
R&D finance loan - secured
Lease liabilities
Total liabilities
0%
15%
6%
2021
20,000
20,000
100,000
100,000
2020
-
-
600,000
622,500
2021
378,539
13,039
774,563
601,248
398,539
33,039 1,474,563 1,323,748
57
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
18. Borrowings and lease liabilities (continued)
d) Reconciliation of movements in borrowings and lease liabilities to cash flows arising from financing
activities
Balance at 1 July
Initial application of AASB 16
Restated balance at 1 July
Changes from financing cash flows
Proceeds from borrowings
Repayment of borrowings
Lease payments
Transaction costs related to borrowings and leases
Other financing cash flows
Total changes from financing cash flows
Other changes
Finance costs
Conversion of borrowings to equity
Lease modification
Movements in lease liability not yet paid
2021
$
1,323,748
-
1,323,748
2020
$
30,253
685,426
715,679
-
850,000
(600,000)
(125,649)
(61,687)
100,000
(687,336)
36,278
(180,000)
(459,651)
-
-
(95,710)
(30,913)
-
723,377
22,500
(150,000)
-
12,192
Balance at 30 June
33,039
1,323,748
58
Identitii Limited
Annual Report FY21
19. Share capital
Notes to the Consolidated Financial Statements
Ordinary shares
30 June 2021
30 June 2020
$
Number of
shares
$
Number of
shares
In issue at beginning of the year
17,930,105
81,778,198
16,261,495
54,518,799
Issued for cash, net of costs of equity –
entitlement offer
1,832,720
27,259,400
1,668,610
27,259,399
Issued in settlement of Director loan
80,000
1,142,857
Issued for cash, net of costs of equity –
placement
Issued for cash, net of costs of equity –
share purchase plan
Issued not for cash – consideration for
marketing services
In issue at end of the year –
authorised, fully paid and no par
value
3,903,426
27,500,000
1,978,750
13,698,630
50,277
411,986
-
-
-
-
-
-
-
-
25,775,278 151,791,071
17,930,105
81,778,198
All ordinary shares rank equally with regard to the Company’s residual assets.
Holders of ordinary shares are entitled to dividends as declared from time to time and are entitled to one vote
per share at general meetings of the Company.
Issue of ordinary shares
On 24 July 2020, as part of the entitlement issue, the Board approved the issue of 27,259,400 ordinary shares
in the Company at a price of $0.07 per share.
On 17 November 2020, the Company issued 1,142,857 shares at $0.07 per share to John Rayment in partial
settlement of his loan.
On 3 December 2020, as part of a placement to institutional investors, the Board approved the issue of
27,500,000 ordinary shares in the Company at a price of $0.146 per share.
On 6 January 2021, as part of a share purchase plan, the Board approved the issue of 13,698,630 ordinary
shares in the Company at a price of $0.146 per share. On this same date, the Company also approved the
issue of 411,986 shares at $0.146 per share, for no cash consideration, to a consultant in relation to marketing
services provided to the Company.
Nature and purpose of reserves
The share option reserve comprises the cost of the Company shares issued under the Group’s share based
payment plans. Refer to Note 29.
59
Identitii Limited
Annual Report FY21
19. Share capital (continued)
Notes to the Consolidated Financial Statements
The foreign currency translation reserve comprises all foreign currency differences arising from the translation
of the financial statements of foreign operations.
Other reserves comprises the notional equity gain on dilution of the parent entity’s ownership interest in its
subsidiary without a loss of control.
Dividends
No dividends were declared or paid by the Company for the current or previous year.
20. Non-controlling interest
The following table summarises the information relating to each of the Group’s subsidiaries that has a material
non-controlling interest (NCI), after intra-group eliminations.
NCI percentage
Current assets
Non-current assets
Current liabilities
Net assets
Net assets attributable to NCI
Loss after tax
Total comprehensive loss
Loss allocated to NCI
Other comprehensive loss allocated to NCI
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net increase in cash and cash equivalents
Payble Pty Ltd
39.9%
n/a
30 June 2021
$
30 June 2020
$
925,258
2,258
28,926
898,590
411,917
203,116
203,116
48,432
48,432
(174,868)
(3,327)
1,100,040
921,845
-
-
-
-
-
-
-
-
-
-
-
-
-
60
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
20. Non-controlling interest (continued)
In April 2021, x15ventures acquired a 31.3% interest in Payble, decreasing Identitii’s ownership from 87.5%
to 60.1%. The carrying amount of Payble’s net liabilities in the Group’s consolidated financial statements on
the date of x15ventures investment was $98,625.
Carrying amount of NCI given
Consideration received
Increase in equity attributable to owners of the parent
30 June 2021
$
30 June 2020
$
411,877
1,100,000
688,123
-
-
-
21. Capital management
The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market
confidence and to sustain future development of the business. Management monitors the return on capital.
The Group monitors capital using a ratio of net debt to equity. Net debt is calculated as total liabilities (as
shown in the statement of financial position) less cash and cash equivalents. The Group’s net debt to equity
ratio at 30 June was as follows:
Total liabilities
Less: Cash and cash equivalents
Net (assets) / debt
30 June 2021
$
30 June 2020
$
958,699
4,489,311
(3,530,612)
2,304,495
1,411,309
893,186
Equity
5,002,124
1,058,127
Net debt to equity ratio
n/a
0.84
61
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
22. Reconciliation of cash flows from operating activities
Loss for the year
Adjustments for:
Other income – rent relief
Equity settled share based payment transactions
Annual leave provision
Depreciation and amortisation
Loss / (gain) on disposal of asset
Gain on lease modification
Bank revaluation and unrealised FX gains and losses
Interest expense and other finance costs
Capital raise transaction costs
Non-cash lease movements
Bad and doubtful debts
Equity settled consulting fees
Related party loans written off
Other non-cash generating expenses
Changes in:
Trade and other receivables
R&D tax receivable
Contract assets
Trade and other payables
Employee provisions
Contract liabilities
30 June 2021
$
30 June 2020
$
(5,873,875)
(7,074,479)
(12,726)
806,766
92,572
416,667
862
(72,005)
(10,151)
43,988
123,231
-
2,530
50,277
-
3,381
-
1,125,708
-
226,975
(919)
-
8,128
59,589
236,392
(24,897)
(2,291)
-
10,320
(309)
(4,428,483)
(5,435,783)
(151,206)
(164,938)
40,100
3,375
(193,567)
135,105
149,029
465,534
(66,500)
(126,407)
346,404
10,120
Net cash from operating activities
(4,759,614)
(4,657,603)
62
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
23. Financial instruments – fair values and risk management
i. Accounting classifications and fair values
The carrying amount of the Group’s financial assets and financial liabilities is a reasonable approximation of
fair value due to their short term nature.
ii. Financial risk management
The Group has exposure to the following risks arising from financial instruments:
•
•
•
credit risk (see ii (b))
liquidity risk (see ii (c))
foreign currency risk (see ii (d))
a) Risk management framework
The Company’s Board of Directors has overall responsibility for the establishment and oversight of the
Group’s risk management framework. The Board of Directors has established the Audit and Risk
Committee, which is responsible for developing and monitoring the Group’s risk management policies.
The Group’s risk management policies are established to identify and analyse the risks faced by the
Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk
management policies are reviewed regularly to reflect changes in market conditions and the Group’s
activities.
b) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations and arises principally from the Group’s receivables from customers.
The carrying amount of financial assets and contract assets represents the maximum credit exposure.
Impairment losses on financial assets and contract assets recognised in profit or loss are as follows:
Increase / (decrease) in impairment loss on trade
receivables and contract assets arising from contracts
with customers
30 June 2021
$
30 June 2020
$
2,530
(2,291)
Trade receivables and contract assets
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.
Management also considers the factors that may influence the credit risk of its customer base including
the default risk associated with the industry and country in which the customers operate.
The Group limits its exposure to credit risk from trade receivables by establishing a maximum payment
period of 45 days for corporate customers.
Expected credit loss assessment for corporate customers
The Group uses a provision matrix to measure ECLs of trade receivables from corporate customers,
which comprise of a small number of large balances.
63
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
23. Financial instruments – fair values and risk management (continued)
The Group is still in its early stages of revenue generation with a small customer base and therefore
doesn’t have extensive historical information on which to base its loss rates. Its loss rates are
management’s best estimate based on industry comparatives and will be updated at every reporting
period to reflect current and forecast credit conditions including other business, financial and economic
factors. Loss rates are determined separately for each credit risk grade, based on external credit rating
definitions from a reputable credit rating agency. To date no customer balances have been written off or
credit impaired at the reporting date.
The following tables provides information about the exposure to credit risk and ECLs for trade receivables
and contract assets for corporate customers as at 30 June 2021.
30 June 2021
External
credit rating
Weighted
average loss
rate
Credit
impaired
Not past due
BBB- to AAA
0 - 30 days
BBB- to AAA
61 - 180 days
BBB- to AAA
0.1%
0.5%
3.0%
No
No
No
30 June 2020
External
credit rating
Weighted
average loss
rate
Credit
impaired
Gross
carrying
amount
$
125,179
27,814
77,000
229,993
Impairment
loss
allowance
$
125
139
2,310
2,574
Gross
carrying
amount
$
Impairment
loss
allowance
$
Not past due
BBB- to AAA
0.1%
No
43,746
43,476
44
44
Cash and cash equivalents and other receivables
The Group held cash and cash equivalents of $4,489,311 at 30 June 2021 (30 June 2020: $1,411,309).
The majority of cash and cash equivalents are held with financial institution counterparties, which are
rated A- to AA, based on credit agency ratings. The Group considers its cash and cash equivalents to
have low credit risk based on the external credit ratings of the counterparties.
The Group held other receivables of $153,831 at 30 June 2021 (30 June 2020: $186,343). The Group
considers its other receivables to have low credit risk based on historical data available, the reputation of
the counterparties and the systematic ease with which the receivables are recoverable.
The Group did not recognise an impairment allowance for cash and cash equivalents and other
receivables during the current and prior year under review.
64
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
23. Financial instruments – fair values and risk management (continued)
Movements in the allowance for impairment in respect of trade receivables, contract assets and
other financial assets
The movement in the allowance for impairment in respect of trade receivables, contract assets and other
financial assets during the year was as follows.
Balance at 1 July
Net remeasurement of loss allowance
Balance at 30 June
c) Liquidity risk
30 June 2021
$
30 June 2020
$
44
2,530
2,574
2,335
(2,291)
44
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with
its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach
to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities
when they are due without incurring unacceptable losses or risking damage to the Group’s reputation.
The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate, but
manageable, borrowing facilities are maintained. The Group also monitors the level of expected cash
inflows on trade and other receivables together with expected cash outflows on trade and other payables.
Exposure to liquidity risk
The following are the contractual maturities of financial liabilities at the reporting date. The amounts are
gross, undiscounted and include contractual interest payments where applicable.
30 June 2021
Carrying
amount
$
Total
$
2 months or
less
$
2-12
months
$
12 months
or more
$
Contractual cash flows
Borrowings and leases
33,039
(33,039)
(33,039)
Trade and other payables
271,109
(271,109)
(271,109)
304,148
(304,148)
(304,148)
-
-
-
-
-
-
65
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
23. Financial instruments – fair values and risk management (continued)
Contractual cash flows
30 June 2020
Carrying
amount
$
Total
$
2 months or
less
$
2-12
months
$
12 months
or more
$
Borrowings and leases
1,323,748
(1,323,748)
(20,216)
(828,714)
(474,818)
Trade and other payables
267,734
(267,734)
(267,734)
-
-
1,591,482
(1,591,482)
(287,950)
(828,714)
(474,818)
d) Foreign currency risk
The Group is exposed to transactional foreign currency risk to the extent that there is a mismatch between
the currencies in which sales, purchases, receivables and borrowings are denominated and the respective
functional currencies of the Group companies. The Group’s exposure to foreign currency risk is
concentrated primarily in trade receivables which are invoiced in United States Dollars (USD). As USD
sales increase there will be a natural hedge in place as majority of Group expenditure is in Australian
Dollars (AUD). Other foreign currency risk is not material at present.
Exposure to foreign currency risk
The following is the summary quantitative data about the Group’s exposure to currency risk as reported
to the management of the Group:
Trade receivables
Trade payables
Net statement of financial position exposure
Sensitivity analysis
30 June 2021
USD
30 June 2020
USD
71,088
(16,561)
54,527
30,000
(30,000)
-
If foreign exchange rates were to increase / decrease by 10 per cent from rates used to determine fair
values as at the end of the reporting period, assuming all other variables that might impact fair value
remain constant, then the impact on profit or loss for the year would be as follows:
Impact on profit after tax
10% increase in USD/AUD exchange rate
10% decrease in USD/AUD exchange rate
30 June 2021
$
30 June 2020
$
7,239
(6,581)
-
-
There has been no change in assumptions or method used to determine foreign currency sensitivity from
the prior year.
66
Identitii Limited
Annual Report FY21
24. Commitments
Notes to the Consolidated Financial Statements
The Group has no commitments or contingencies other than those described in Leases Note 18 (b).
25. Auditors’ remuneration
During the financial year the following fees were paid or payable for services provided by RSM, the auditor of
the Company, its network firms and unrelated firms:
30 June 2021
$
30 June 2020
$
Audit and review services
RSM (Australia)
Audit and review of financial statements
51,500
44,000
RSM (Hong Kong)
Audit and review of financial statements
20,989
72,489
-
44,000
26. Related parties
Parent and ultimate controlling party
Identitii Limited is the parent and ultimate controlling party of the Group.
Transactions with Key Management Personnel (KMP)
a) KMP compensation
KMP compensation comprised the following:
Compensation by category
Short-term employment benefits
Post-employment benefits
Other long-term employment benefits
Termination benefits
Share-based payments
30 June 2021
$
30 June 2020
$
556,749
34,975
19,710
-
542,895
1,154,329
527,296
30,497
26,156
25,000
218,029
826,978
Compensation of the Group’s KMP includes salaries, non-cash benefits and mandatory contributions to
post-employment superannuation and provident funds. Certain Directors as well as senior employees of
the Group are entitled to participate in the Equity Incentive Plan.
67
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
26. Related parties (continued)
b) KMP transactions
KMP of the Company control approximately 7% of the voting shares of the Company as at 30 June 2021.
A number of KMP, or their related parties, hold positions in other entities that result in them having control,
or joint control, over the financial or operating policies of that entity.
A number of these entities transacted with the Group during the year. The terms and conditions of the
transactions with KMP and their related parties were no more favourable than those available, or which
might reasonably be expected to be available, on similar transactions to non-KMP related entities on an
arm’s length basis.
The aggregate value of transactions and outstanding balances related to KMP and entities over which
they have control or significant influence were as follows:
Transactions
Transaction values for year
ended 30 June
Balance outstanding as at
30 June
2021
$
2020
$
2021
$
2020
$
Loan from Director – John Rayment
80,000
100,000
20,000
100,000
An unsecured loan with no interest and a 12 month repayment term was advanced from John Rayment
to the Company in March 2020. $80,000 of this loan was converted to equity (1,142,857 shares at $0.07
per share) during the year as approved by shareholders at the AGM. Refer to Note 18 (a) for further
details.
27. List of subsidiaries
The table below lists the controlled entities of the Group.
Country of incorporation
Hong Kong
Identitii Hong Kong Limited
Australia
Payble Pty Ltd
% ownership
100
60
The Company provided $69,990 (30 June 2020: $548,600) of financial support during the year to Identitii Hong
Kong Limited to assist with the payment of current and ongoing general operating costs mostly in relation to
salaries and employee benefit expenses.
68
Identitii Limited
Annual Report FY21
28. Parent entity disclosures
Notes to the Consolidated Financial Statements
As at, and throughout, the financial year ended 30 June 2021, the parent entity of the Group was Identitii
Limited.
Results of parent entity
Total comprehensive loss for the year
(4,446,282)
(7,074,479)
30 June 2021
$
30 June 2020
$
Financial position for the parent entity
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity
Share capital
Reserves
Retained losses
Total equity
Contingent liabilities
6,805,285
6,961,866
900,588
900,588
2,448,235
3,362,622
1,829,677
2,304,495
25,775,278
17,930,105
4,517,002
3,717,360
(24,231,002)
(20,589,338)
6,061,278
1,058,127
The parent entity had no contingent liabilities as at 30 June 2021 and 30 June 2020.
Capital commitments
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021 and 30
June 2020.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in Note 6.
69
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
29. Share based payment arrangements
For the year ended 30 June 2021, the Group recognised a share based payment expense of $806,766 in the
statement of profit or loss (30 June 2020: $1,125,708) under the following share based payment arrangements.
Share options
30 June 2021
30 June 2020
$
Number of
options
$
Number of
options
Director options
Canaccord options
Gleneagle options
Equity incentive plan
(i)
(ii)
(ii)
(iii)
599,406
10,358,082
157,022
358,082
992,485
1,950,000
992,485
1,950,000
165,740
5,000,000
165,740
5,000,000
2,759,371
18,024,417
2,394,989
4,994,738
In issue at end of year
4,517,002
35,332,499
3,710,236
12,302,820
a) Description of share based payment arrangements
(i) Share options issued to Directors
Michael Aston (equity settled)
On 28 June 2018, Michael Aston was granted 400,000 share options at an exercise price of $0.75 per
share in his capacity as Director of the Company. 25% of the options vested immediately on issue with
the remaining 75% to vest in equal annual tranches over two years. On termination of his employment
with the Company in March 2020, 41,918 share options were forfeited with the remaining options
vesting immediately.
The fair value of share options granted to Michael Aston have been measured using the Black-Scholes
model. A share based payment expense of $nil in relation to these options has been recognised in the
statement of profit or loss for the year ended 30 June 2021.
John Rayment (equity settled)
On 21 October 2020, John Rayment was granted 8,000,000 share options at an exercise price of
$0.15 per share in his capacity as Director of the Company. The share options vest in four equal
instalments from grant date pending specific service, performance and market conditions being met
as follows:
(a) 2,000,000 share options vest in four equal annual tranches of 500,000 options each, commencing
1 July 2021, subject to continued service with the Company;
(b) 2,000,000 share options vest when the Group records revenue of at least $5 million in the
preceding twelve month period;
(c) 2,000,000 share options vest when the Group records revenue of at least $10 million in the
preceding twelve month period; and
(d) 2,000,000 share options vest when the Company’s closing share price on the ASX is at or above
$0.46 per share for twenty consecutive trading days.
70
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
29. Share based payment arrangements (continued)
The fair value of the options (a) – (c) have been measured using a Binomial Model whilst the fair value
of the options in (d) have been measured using a Monte Carlo Simulation. A share based payment
expense of $442,384 in relation to these options has been recognised in the statement of profit or loss
for the year ended 30 June 2021.
Stephen Porges (equity settled)
On 1 February 2021, Stephen Porges was granted 2,000,000 share options at an exercise price of
$0.15 per share in his capacity as Chairman of the Company. The share options were to vest in two
equal instalments from grant date pending specific share price conditions being met and subject to
continued employment with the Company. On termination of his employment with the Company on 3
February 2021, the share options no longer meet the vesting criteria.
A share based payment expense of $nil in relation to these options has been recognised in the
statement of profit or loss for the year ended 30 June 2021.
(ii) Share options issued to supplier of services
Canaccord Genuity (Australia) Limited (equity settled)
On 17 October 2018, the Company issued 1,950,000 share options to Canaccord Genuity (Australia)
Limited (Canaccord) in consideration for corporate advisory services to be provided in connection with
the Group’s ongoing capital markets strategy. The options vested immediately and were subject to a
mandatory escrow of 24 months commencing from the date of issue. The options expired on 1 July
2021.
The fair value of share options granted have been measured using the Black-Scholes model. A share
based payment expense of $nil in relation to these options has been recognised in the statement of
profit or loss for the year ended 30 June 2021.
Gleneagle Securities (Aust) Pty Ltd (equity settled)
On 13 May 2020, the Company issued 5,000,000 share options at an exercise price of $0.10 per share
to Gleneagle Securities (Aust) Pty Ltd (Gleneagle) in consideration for underwriting services provided
in connection with the Group’s entitlement issue. The options vested immediately and expire on 13
May 2022.
The fair value of share options granted have been measured using the Black-Scholes model. A share
based payment expense of $nil in relation to these options has been recognised in the statement of
profit or loss for the year ended 30 June 2021.
(iii) Equity Incentive Plan (equity settled)
On 10 January 2018 the Group established the Equity Incentive Plan (EIP). This is a long-term plan
under which share options or performance rights to subscribe for shares may be offered to eligible
employees and consultants as selected by the Directors at their discretion. Currently only share
options have been awarded under the EIP.
Under the EIP, one share option entitles the holder to one share in the Company subject to vesting
conditions such as the satisfaction of performance hurdles and/or continued employment. The Board
have the discretion to settle share options with a cash equivalent payment. Participants in the EIP will
not pay any consideration for the grant of the share option unless determined otherwise. Share options
will not be listed and may not be transferred, assigned or otherwise dealt with unless approved by the
Board.
71
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
29. Share based payment arrangements (continued)
If the employee’s employment terminates before the share options have vested, the share option will
lapse, unless approved otherwise by the Board. Eligible employees holding a share option pursuant
to the EIP have no rights to dividends and are not entitled to vote at shareholder meetings until that
share option is vested and, where required, exercised.
On 30 April 2021, the Company issued 14,100,000 share options at an exercise price of $0.15 per
share to eligible employees. The share options vest in equal instalments from grant date pending
specific service, performance and market conditions being met as noted in the table below.
A share based payment expense of $364,382 in relation to all EIP options has been recognised in the
statement of profit or loss for the year ended 30 June 2021.
The terms and conditions of share options granted under the EIP as at 30 June 2021 are as follows:
Grant date
Number of
share
options
issued
Forfeited
Share
options on
issue at 30
June 2021
Vesting
conditions
Contractual
life of
options
Valuation
Model
July 2018
1,350,000
-
1,350,000
3 years (1)
10 years Black-Scholes
August 2018
1,250,000
(671,875)
578,125
10% upfront,
3 years (2)
10 years Black-Scholes
October 2018
– December
2019
3,250,000
(603,708)
2,646,292
3 years (1)
4 years Black-Scholes
January 2019
200,000
(100,000)
100,000
2 years (3)
4 years Black-Scholes
March 2019
200,000
(200,000)
-
4 years (4)
5 years Black-Scholes
April 2021 (A)
2,500,000
-
2,500,000
4.5 years (5)
5 years
Binomial
April 2021 (A)
9,000,000
(750,000)
8,250,000
4.5 years (5)
5 years
Binomial
April 2021 (B)
250,000
April 2021 (A)
2,350,000
-
-
250,000
3.5 years (6)
5 years Monte Carlo
2,350,000
3 years (1)
5 years
Binomial
20,350,000 (2,325,583)
18,024,417
(1) 3 year equity incentive plan – share options vest in equal annual instalments over 3 years from grant date
(2) 3 year equity incentive plan – 10% of share options vest immediately on grant date with the remaining 90% of share options
held vesting in equal annual instalments over 3 years from grant date
(3) 2 year equity incentive plan – share options vest in equal annual instalments over 2 years from grant date
(4) 4 year equity incentive plan – share options vest in three equal instalments from grant date pending three specific performance
hurdles being met relating to product proof of value, commercialisation and go-live. Share option vesting has been estimated at
4 years
(5) 4.5 year equity incentive plan – share options vest in various instalments from grant date pending specific revenue and share
price targets being met and continuous employment with the company. Share option vesting has been estimated at 4.5 years
(6) 3.5 year equity incentive plan – share options vest on successful deployment of a company product across multiple entities.
Share option vesting has been estimated at 3.5 years
72
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
29. Share based payment arrangements (continued)
b) Measurement of grant date fair values
The following inputs were used in the measurement of the fair values at grant date of the share based
payment awards granted during the year:
Director options:
John Rayment
(a)
(b)
(c)
(d)
Number of options
2,000,000
2,000,000
2,000,000
2,000,000
Fair value at grant date
Share price at grant date
Exercise price
Expected volatility (1)
Contractual life of options (years)
Expected dividends
Risk free rate (2)
Valuation method
Expiry date
$0.1319
$0.1950
$0.1500
$0.1319
$0.1950
$0.1500
$0.1319
$0.1950
$0.1500
$0.1186
$0.1950
$0.1500
70 – 90%
70 – 90%
70 – 90%
70 – 90%
5
Nil
5
Nil
5
Nil
5
Nil
0.32%
0.32%
0.32%
0.32%
Binomial
Binomial
Binomial
Monte Carlo
20 October 2025
Equity incentive plan: Staff
Number of options
Fair value at grant date
Share price at grant date
Exercise price
Expected volatility (1)
Contractual life of options (years)
Expected dividends
Risk free rate (2)
Valuation method
Expiry date
(A)
13,850,000
$0.0844
$0.1400
$0.1500
(B)
250,000
$0.0716
$0.1400
$0.1500
70 – 90%
70 – 90%
5
Nil
5
Nil
0.67%
0.67%
Binomial
Monte Carlo
1 January 2026
(1) Expected volatility - a measure of the amount by which a share price is expected to fluctuate during a period and is based on
the historic share price volatility of the Company up to the Grant Date.
(2) Risk free rate - the yield available on Commonwealth Government bonds with a term comparable to the likely term of the
options.
73
Identitii Limited
Annual Report FY21
Notes to the Consolidated Financial Statements
29. Share based payment arrangements (continued)
c) Reconciliation of outstanding share options
The number and weighted-average exercise price of share options under the share based payment
arrangements noted above were as follows:
Number of
options
Weighted
average
exercise price
Number of
options
Weighted
average
exercise price
Outstanding at 1 July
12,302,820
2021
2021
$0.53
2020
8,558,334
Forfeited during the year
(1,070,321)
$0.33
(1,255,514)
Granted during the year
24,100,000
$0.15
5,000,000
Outstanding at 30 June
35,332,499
$0.28
12,302,820
2020
$0.78
$0.75
$0.10
$0.53
Exercisable at 30 June
11,049,165
$0.50
8,728,071
$0.44
30. Fair value measurements
The carrying amount of the Group’s financial assets and financial liabilities is a reasonable approximation of
fair value.
31. Subsequent events
Following the results of a General Meeting held on 6 July 2021 the Company issued 285,714 shares at $0.07
per share to John Rayment in full and final settlement of his loan. Furthermore, 1,000,000 share options with
an exercise price of $0.25 were issued to both Steven James and Nicholas Armstrong in their capacity as Non-
Executive Directors of the Company. These share options vest over three years pending continued
employment and expire on 8 July 2024.
On 30 July 2021, the Group announced it had signed a three-year licence agreement with Novatti Group
Limited worth $0.2 million. The licence is for the Group’s new Software as a Service (SaaS) version of
Overlay+.
The impact of the COVID-19 pandemic is ongoing and it is not practicable to estimate the potential impact,
positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures
imposed by the Australian Government and other countries, such as maintaining social distancing
requirements, quarantine, travel restrictions and any economic stimulus that may be provided.
74
Identitii Limited
Annual Report FY21
Directors’ Declaration
Directors’ Declaration
1.
In the opinion of the Directors of Identitii Limited (‘the Company’):
a.
the consolidated financial statements and notes that are set out on pages 23 to 74 are
in accordance with the Corporations Act 2001, including:
i.
giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its
performance for the financial year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001;
and
ii.
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.
3.
The Directors draw attention to Note 2 to the financial statements, which includes a statement of
compliance with International Financial Reporting Standards.
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001
from the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 2021.
Signed in accordance with a resolution of the Board of Directors:
Steven James
Chairman
Sydney
26 August 2021
75
INDEPENDENT AUDITOR’S REPORT
To the Members of Identitii Limited
Opinion
RSM Australia Partners
Level 13, 60 Castlereagh Street Sydney NSW 2000
GPO Box 5138 Sydney NSW 2001
T +61 (0) 2 8226 4500
F +61 (0) 2 8226 4501
www.rsm.com.au
We have audited the financial report of Identitii Limited (the Company) and its controlled entity (the Group), which
comprises the consolidated statement of financial position as at 30 June 2021, the consolidated statement of profit
or loss and other comprehensive income, 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:
(i) giving a true and fair view of the Group's financial position as at 30 June 2021 and of its financial
performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the 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 confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Group, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
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.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the
RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
76
Key Audit Matter
How our audit addressed this matter
Share-based payments – Refer to Note 29 in the financial statements.
The Group recognised a share-based payment
expense of $806,766 in the statement of profit or loss
for the year ended 30 June 2021 under various share
based payment arrangements.
Management has accounted for these arrangements
in accordance with AASB 2 Share-Based Payments.
Accounting for share-based payments and share
option reserves are considered as key audit matters
due to the following:
Accounting for share-based payments is
non-routine and complex.
inputs
There is significant judgement in relation to
the
the valuation models,
including the likelihood of vesting conditions
and performance hurdles being met, and the
appropriate valuation methodology to apply.
into
Our audit procedures in relation to the share-based
payments included the following:
Making enquiries of management about the
the
rationale behind
the
nature of and
instruments issued;
Reviewing the terms and conditions of the
instruments issued;
Reviewing managements expert's valuation
their
report, giving due consideration
independence and capability;
to
Reviewing
the valuation methodology
to
ensure it is in compliance with AASB 2;
Verifying the mathematical accuracy of the
underlying model;
Management engaged a third party expert
for the valuation process.
Reviewing the inputs to the valuation model for
reasonableness;
Critically evaluating the key assumptions used,
considering the market, the grant date share
the
price and current date share price,
expected volatility in the share price, the
vesting period, and the number of instruments
expected to vest;
Recalculating the value of the share-based
payment expense to be recognised and the
reserve balance, for accuracy, factoring in any
cancellations, modifications, expiry, or vesting;
and
Reviewing
the adequacy of
the relevant
disclosures,
in
respect of judgements made, in the financial
statements.
the disclosures
including
77
Key Audit Matter
How our audit addressed this matter
Payble ownership restructure (Intellectual property (IP) transfer and SAFE note conversion) –
Refer to Note 20 in the financial statements.
During the year, Identitii Limited founded a new
subsidiary Payble Pty Ltd (Payble) in conjunction
with Elliott Donazzan. Subsequent to incorporation,
CBA New Digital Businesses Pty Ltd (x15ventures)
invested $1m in Payble to acquire a minority
ownership stake and to assist in accelerating its
growth plans. Identitii Limited continues to hold a
60% majority shareholding as at 30 June 2021.
We identified the formation of the new subsidiary and
the resultant minority investment as a key audit
matter due to the following:
It is as significant transaction that occurred
during the period, and their judgement
involved in applying the requirements of
AASB
Financial
Statements in relation to quantification and
accounting in relation to the minority interest
and incoming equity.
Consolidated
10
There is a risk that the transfer of the IP from
to subsidiary was not correctly
transactions were
parent
effected given
between related group companies.
the
Our audit procedures in relation to the Payble
ownership structure included the following:
Reviewing
the various agreements and
to
understand the transactions, the consideration
received
accounting
and
considerations;
related
the
Reviewing the Company's accounting treatment
in relation to the incoming investment and
resultant non-controlling
to ensure
compliance with AASB 10 Consolidated
Financial Statements;
interest
Assessing
the
the compliance of
financial
presentation
the
Accounting
requirements
Standards in respect of the non-controlling
interest;
disclosures with
Australian
and
of
Reviewing the consolidation journal entries in
relation to the transfer of the IP from parent to
subsidiary as well as the journal entries in
relation to the non-controlling interest; and
In relation to the SAFE notes, RSM obtained
documentation
from management which
supports the conversion of liability settled notes
to equity settled notes as of 30 June 2021.
Other Information
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 30 June 2021 but does not include the financial report and the
auditor's report thereon.
Our opinion on the financial report does not cover the other information and 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
Responsibilities of the Directors for the Financial Report
The directors of the Group 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 the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: https://www.auasb.gov.au/auditors_responsibilities/ar2.pdf
This description forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 14 to 21 of the directors' report for the year ended
30 June 2021. In our opinion, the Remuneration Report of Identitii Limited, for the year ended 30 June 2021,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Group 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.
RSM AUSTRALIA PARTNERS
G N Sherwood
Partner
Sydney, NSW, dated: 26 August 2021
79
Identitii Limited
Annual Report FY21
Additional ASX Information
Additional ASX Information
In accordance with ASX Listing Rule 4.10, the Directors provide the following information as at 11 August
2021.
a) Distribution of shareholders and options holders
Fully paid ordinary shares
holding ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-9,999,999,999
Totals
Marketable Parcels
Holders
Number of shares % of issued capital
47
445
477
1,004
254
2,227
17,603
1,495,928
3,590,561
35,274,056
111,698,637
152,076,785
0.010
0.980
2.360
23.190
73.450
100.000
There are 649 shareholders holding less than a marketable parcel of 6,410 shares each (i.e. less than $500
per parcel of shares) based on the closing price of AUD 0.078 on 11 August 2021 representing a total of
2,418,511 shares.
Options
Identitii has 35,382,499 unlisted options on issue held by 39 option holders.
b) Substantial shareholders
A substantial shareholder is one who has a relevant interest in 5 per cent or more of the total issued shares in
the Company. Following are the substantial shareholders in the Company based on notifications provided to
the Company under the Corporations Act 2011:
Shareholder
275 Invest 2 Pty Ltd (1)
(1) 275 Invest 2 Pty Ltd and its related parties
c) Voting rights
Number of
shares held
% of issued
capital
9,609,275
6.32%
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting
or by proxy has one vote on a show of hands. There are no other classes of equity securities.
d) Restricted securities
The Company does not have any restricted securities on issue.
80
Identitii Limited
Annual Report FY21
e) Twenty largest shareholders
Shareholder
1 KTM Ventures Innovation Fund LP
2 HSBC Custody Nominees (Australia) Limited
Additional ASX Information
Number of
shares held
% of issued
capital
7,388,134
4.858%
4,273,259
2.810%
3 Bannaby Investments Pty Limited
3,356,630
2.207%
4 Wodi Wodi Pty Limited
3,018,792
1.985%
5 BNP Paribas Nominees Pty Ltd
2,759,581
1.815%
6 Pat Property Pty Ltd
7 Mr Benjamin Buckingham
2,579,837
1.696%
2,119,967
1.394%
8 O’Dwyer Technology Training Pty Limited
2,000,000
1.315%
9
Link Traders (Aust) Pty Ltd
10 275 Invest 2 Pty Ltd <275 Invest A/C>
1,964,733
1.292%
1,952,352
1.284%
11 CS Third Nominees Pty Limited
1,893,128
1.245%
12 Ms Sihol Marito Gultom
13 Pintia Pty Ltd
14 Oxleigh Pty Ltd
15 Mr Andrew Robert Robson
16 Creighton & Co Investments Pty Ltd
17 Elorey Pty Ltd
18 Mainstay Holdings Pty Ltd
19 Citicorp Nominees Pty Limited
20 Lotsa Nominees Pty Ltd
Total Securities of Top 20 Holdings
Total Securities
1,802,037
1.185%
1,801,877
1.185%
1,731,562
1.139%
1,703,254
1.120%
1,590,608
1.046%
1,590,608
1.046%
1,544,007
1.015%
1,533,813
1.009%
1,136,363
0.747%
47,740,542
31.392%
152,076,785
81
Corporate Directory
Share Registry
Boardroom Pty Limited
Level 12
225 George Street
Sydney
NSW 2000
Telephone: (02) 9290 9600
Identitii Limited
Annual Report FY21
Corporate Directory
Directors
Steven James, Chair
John Rayment
Nicholas Armstrong
Timothy Phillipps
Company Secretary
Elissa Hansen
Registered Office
Level 2
129 Cathedral Street
Woolloomooloo
NSW 2011
Telephone: (02) 9056 4160
ABN 83 603 107 044
Company Website
https://identitii.com/
Auditors
RSM Australia Pty Ltd
Level 13
60 Castlereagh Street
Sydney
NSW 2000
Solicitors
Law Squared
Level 13
50 Carrington St
Sydney
NSW 2000
Securities Exchange Listing
Identitii Limited shares are
Listed on the Australian
Securities Exchange.
ASX Code: ID8
82