Damstra Holdings Limited
Appendix 4E
Preliminary final report
1. Company details
Name of entity:
ABN:
Reporting period:
Previous period:
Damstra Holdings Limited
74 610 571 607
For the year ended 30 June 2023
For the year ended 30 June 2022
2. Results for announcement to the market
Revenues from ordinary activities
up
1.6% to
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA)
up
>100.0% to
Loss from ordinary activities after tax attributable to the owners of
Damstra Holdings Limited
down
16.9%
to
Loss for the year attributable to the owners of Damstra Holdings Limited down
16.9% to
$'000
29,463
7,242
(55,805)
(55,805)
Comments
The loss for the Group after providing for income tax amounted to $55,805,000 (30 June 2022: $67,152,000).
FY23 was a transformative year for Damstra. The FY23 financial statements reflect the scale of this transformation. In FY22
Damstra’s free cashflow was negative ($12,800,000). In FY23 it was negative ($3,300,000), a turnaround of ($9,500,000);
however, most importantly, Damstra generated positive free cashflow of $500,000 in Q4 FY23.
The business recorded an EBITDA of $7,200,000, $6,800,000 higher than FY22’s $500,000. EBITDA margin was 24.6%, up
22.9 percentage points (pp) on FY22. The strong increase in EBITDA reflects the operating leverage generated by delivering
more than $9,000,000 in annualised savings from our cost reduction program. The EBITDA % margin exceeded guidance.
The reconciliation between Net Profit and Loss and EBITDA is provided below.
Pro forma EBITDA is a financial measure that is not prescribed by Australian Accounting Standards (‘AAS’) and represents
the statutory loss under AAS adjusted for certain items. The directors consider loss before tax excluding other items (being
the impact of impairment, acquisition costs, restructuring and share-based payments expenses) to reflect the core earnings
of the Group. Pro forma EBITDA refers to Earnings Before Interest, Tax, Depreciation and Amortisation (‘EBITDA’) adjusted
for non-cash share-based payments, acquisition costs and other costs and impairment expenses.
A reconciliation between adjusted pro forma EBITDA and statutory loss is provided below:
Loss before tax based on statutory accounts
Impairment of goodwill and other assets
Share-based payments
Acquisition and other costs
Restructuring costs
Depreciation and amortisation expenses
Net finance costs
Pro forma EBITDA
Refer to Directors' report for further commentary on the results.
Consolidated
30 June 2023 30 June 2022
$'000
$'000
(55,805)
39,800
2,147
-
82
16,213
4,805
(62,414)
42,336
1,551
455
350
16,281
1,925
7,242
484
Damstra Holdings Limited
Appendix 4E
Preliminary final report
3. Net tangible assets
Net tangible assets per ordinary security
Net tangible assets calculations exclude right-of-use assets but include lease liabilities.
Reporting
Previous
period
Cents
period
Cents
(6.01)
(3.35)
The net tangible assets per ordinary security for the reporting period is calculated based on 257,564,013 (30 June 2022:
257,069,616) ordinary shares on issue (excluding 132,375 (30 June 2022: 626,772) treasury shares).
4. Control gained over entities
Not applicable.
5. Loss of control over entities
Not applicable.
6. Dividends
Current period
There were no dividends paid, recommended or declared during the current financial period.
Previous period
There were no dividends paid, recommended or declared during the previous financial period.
7. Details of associates and joint venture entities
Name of associate / joint venture
Reporting entity's
percentage holding
Contribution to profit/(loss)
(where material)
Reporting
Previous
Reporting
Previous
period
%
period
%
period
$'000
period
$'000
SkillPASS Trust
50.00%
50.00%
(109)
(38)
Group's aggregate share of associates and joint venture
entities' profit/(loss) (where material)
Profit/(loss) from ordinary activities before income tax
Income tax on operating activities
8. Foreign entities
Details of origin of accounting standards used in compiling the report:
Not applicable.
(109)
-
(38)
-
Damstra Holdings Limited
Appendix 4E
Preliminary final report
9. Audit qualification or review
Details of audit/review dispute or qualification (if any):
The financial statements have been audited and an unmodified opinion has been issued.
10. Attachments
Details of attachments (if any):
The Directors’ report and financial statements of Damstra Holdings Limited for the year ended 30 June 2023 is attached.
11. Signed
As authorised by the Board of Directors
Signed ___________________________
Date: 24 August 2023
Johannes Risseeuw
Executive Chairman
Melbourne
Damstra Holdings Limited
ABN 74 610 571 607
Directors’ report and financial statements - 30 June 2023
Damstra Holdings Limited
Directors' report
30 June 2023
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'Group') consisting of Damstra Holdings Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities
it controlled at the end of, or during, the year ended 30 June 2023.
Directors
The following persons were directors of Damstra Holdings Limited during the whole of the financial year and up to the date
of this report, unless otherwise stated:
Johannes Risseeuw
Christian Damstra
Drew Fairchild
Morgan Hurwitz
Simon Yencken
Sara La Mela
Principal activities
Damstra is a global leader in enterprise protection software. Its Enterprise Protection Platform (EPP) integrates an extensive
range of modules and products that allows organisations to mitigate and reduce unforeseen and unnecessary business risks
around people, workplaces, assets, and information.
Integral to the Damstra EPP, Damstra's Workforce Management, Learning Management and Connected Worker solutions
combine to ensure Protected People. In creating workplaces that are Safe, Damstra's Access Control, Digital Forms and
Safety Solutions are utilised. Assets are connected into operations, through integrated Asset Management enabling Asset
mobilisation and offerings in RFID (radio-frequency identification) and IOT (internet of things). Lastly Accessible Information,
Reporting BI tools and Predictive Analytics are critical to ensuring customers are making the right decisions with the right
information.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Group during the financial year.
Review of operations
The loss for the Group after providing for income tax amounted to $55,805,000 (30 June 2022: $67,152,000).
FY23 was a transformative year for Damstra. The FY23 financial statements reflect the scale of this transformation. In FY22
Damstra’s free cashflow was negative ($12,800,000). In FY23 it was negative ($3,300,000), a turnaround of ($9,500,000);
however, most importantly, Damstra generated positive free cashflow of $500,000 in Q4 FY23.
The business recorded an EBITDA of $7,200,000, $6,800,000 higher than FY22’s $500,000. EBITDA margin was 24.6%, up
22.9 percentage points (pp) on FY22. The strong increase in EBITDA reflects the operating leverage generated by delivering
more than $9,000,000 in annualised savings from our cost reduction program. The EBITDA % margin exceeded guidance.
The reconciliation between Net Profit and Loss and EBITDA is provided below.
We have recognised an impairment charge in our FY23 statements, accounted for all costs associated with extending our
financing facility and maintained conservative amortisation of software policies. These charges, as well as costs incurred to
achieve our cost reduction programme, have all been reflected in the FY23 accounts. These transformation adjustments
impacted profitability in FY23. The FY23 results set us up for a positive FY24 as we continue to deliver positive free cashflow
and drive toward profitability on a post-tax basis with the expectation of paying down debt and utilizing our $1,100,000 of
franking credits in future periods.
Pro forma EBITDA, pro forma EBITDA %, gross margin and pro forma operating expenses used in the review of operations
section below are financial measures that are not prescribed by Australian Accounting Standards (‘AAS’) and represent the
statutory loss under AAS adjusted for certain items. The directors consider loss before tax excluding other items (being the
impact of impairment, acquisition costs, restructuring and share-based payments expenses) to reflect the core earnings of
the Group. Pro forma EBITDA refers to Earnings Before Interest, Tax, Depreciation and Amortisation (‘EBITDA’) adjusted
for non-cash share-based payments, acquisition costs and other costs and impairment expenses. A reconciliation between
adjusted pro forma EBITDA and statutory loss is provided below.
1
Damstra Holdings Limited
Directors' report
30 June 2023
For the year ended 30 June 2023, the Group reported revenue of $29,463,000 (2022: $28,989,000), when added to the
$325,000 (2022: $273,000) of revenue for the equity-accounted joint venture in SkillPass total revenue recognised was
$29,788,000 (2022: $29,262,000).
Key operational and financial metrics for the financial year ended 30 June 2023:
Key financial metrics1
Revenue growth vs previous corresponding period ('pcp')
Gross margin
Research and development expenses as a % of revenue
Sales and marketing expenses as a % of revenue
General and administration expenses as a % of revenue
Pro forma EBITDA margin
30 Jun 2023 30 Jun 2022
%
%
1.6%
77.5%
(17.7%)
(24.5%)
(32.8%)
24.6%
7.2%
65.9%
(27.2%)
(30.1%)
(38.9%)
1.7%
1: Key financial metrics are shown on a pro forma basis excluding those items reconciling between loss before tax and pro
forma EBITDA shown below, being impairment of goodwill and other assets, share-based payment, restructuring costs and
acquisition and other costs. Research and development, sales and marketing and general administration expenses include
both direct and indirect costs.
A reconciliation between loss before tax and pro forma EBITDA is provided below.
Loss before tax based on statutory accounts
Impairment of goodwill and other assets
Share-based payments
Acquisition and other costs
Restructuring costs
Depreciation and amortisation expenses
Net finance costs
Pro forma EBITDA
30 Jun 2023 30 Jun 2022
$'000
$'000
(55,805)
39,800
2,147
-
82
16,213
4,805
(62,414)
42,336
1,551
455
350
16,281
1,925
7,242
484
Included in the loss is an impairment of goodwill of $39,800,000 which has arisen from the changed global capital market
environment which increased the post-tax weighted average cost of capital from 11% to 14.75% (32% increase), and also
from the disappointing revenue performance from the Solo product from the Vault acquisition. The underlying outcomes from
the impairment model are for continued positive revenue growth, margin expansion and increasing cash generation.
Revenue:
The growth in revenue during the financial year was driven by:
●
The increased contribution from North American customers from the implementation of recent contract wins for Barrick
Gold and Capstone Copper for the EPP solution;
Continued strong demand from Australian mining and civil construction verticals; and
The loss of a major client, Newmont with reduced revenue recognised in the first half of the corresponding prior period.
●
●
Gross operating margin:
For the year ended 30 June 2023, the Group reported a gross operating margin of $23,087,000 (2022: $19,286,000) or
19.71% up on the prior year. The gross operating margin percentage was 77.5%, an improvement on the 65.9% from the
previous corresponding year, resulting from cost-saving initiatives reducing the cost of sales by $3,276,000 while maintaining
revenue. Gross operating margin is calculated based on the revenue from operations less directly attributable costs
associated with revenue earned.
2
Damstra Holdings Limited
Directors' report
30 June 2023
Pro forma operating expenses:
The key driver for operating expenses was the impact of cost saving initiatives to reset the cost base for the integration of
recent acquisitions whilst continuing the Group’s continued investment in future growth, particularly in the US market.
●
The Group’s sales and marketing function reported pro forma expenses of $7,294,000 which represents 24.5% of
revenue, down from $8,822,000 or 30.1% in the prior year;
Research and development of a total of $5,266,000 (excluding capitalised costs), primarily due to the development of
new EPP functions and the enhancement of existing modules, which represents 17.7% of revenue, down from
$7,970,000 or 27.2% of revenue in the prior year; and
General and administrative expenses were $9,769,000, which represent 32.8% of revenue, compared to $11,374,000
or 38.9% of revenue incurred in the prior year.
●
●
Pro forma operating expenses exclude share-based payments and other costs in the reconciliation between loss before tax
and pro forma EBITDA.
The decrease in operating expenses has resulted from various cost-saving initiatives from the integration and rationalisation
of the cost base of past acquisitions and business improvements whilst continuing to invest in growth markets including costs
associated with strategic investments to continue the scale-up of the US business.
Other expenses
Depreciation and amortisation expense have resulted from investments in plant and equipment, internal software
development, and acquired intangible assets. Depreciation and amortisation expense have remained consistent with the
prior year reflecting consistent investment by the Group across the two financial years and the amortisation profile of acquired
intangible assets.
Share-based payments expense relates to the potential benefit associated with the Group’s equity incentive plans. To realise
the benefits of these incentive plans, employees need to meet targets as approved at the FY22 Annual General Meeting
(AGM) and past plans that remain active. The FY23 Equity Incentive Plans include both, long term and short term incentives,
that require the achievement of minimum hurdles and KPI targets. Refer to note 35 for more details.
Financial position:
As at 30 June 2023, the Group has outstanding borrowings of $17,208,000 (2022: $10,055,000). The Group has cash
balance of $7,446,000 (including term deposits) (2022: $10,095,000 (including term deposits)).
The Group achieved positive free cashflow in the fourth quarter of FY23, and with the impact of the cost savings program
resetting the cost base of the Group, and with new contract wins that will increase revenue, the Group expects to be cashflow
positive in FY24.
Strategic update
The Group is executing its vision of being a global provider of Enterprise Protection Platform services and sees continuing
strong growth in the future in both local and international markets.
Continuing on from new North American contract wins in FY22, the Company's North American operations have grown as
expected, and with recent new contract expansions, revenue from the North American region will continue to support revenue
growth in FY24 and beyond. Late in FY23 a number of new and existing customers have chosen to implement or upgrade
their services to the Enterprise Protection Platform (EPP), these client wins validate the significant investment into the EPP
product over the last two years and reinforce the effectiveness of the strategy of offering multiple solutions focused integrated
models within the EPP to address particular client’s needs without requiring bespoke or multiple software products.
The Group strategy is focused on three areas, geographic expansion, verticals and product.
1. Geographic expansion
Our products are now used in more than 25 countries globally. ANZ is the core business, and we have a small footprint in
Asia through our existing clients. Both regions are contributing positively to the Group. Our key investment focus to date has
been in North America, which has been underpinned by the successful implementation of recent client wins and agreement
to expand our services with our existing clients. FY23 saw the successful implementation of our client wins in FY22 which
has generated additional “next phase” opportunities with these large global tier 1 clients. Our sales pipeline continues to
grow, with our value proposition around EPP now well understood in the market and accepted as being internationally
competitive with potential clients and partners.
3
Damstra Holdings Limited
Directors' report
30 June 2023
2. Verticals
We have a diverse global customer base, with the majority of our revenue coming from the resilient civil construction and
mining sectors and we have growing exposure to the facilities management verticals via our developing global relationship
with CBRE. In North America, the sales pipeline is strongly skewed to mining, where our core capability exists, however we
continue to evaluate other sectors, including facilities management opportunistically where there is a strong use case for our
products.
Material business risks
The following is a summary of material business risks that could adversely affect our financial performance and growth
potential in future years and how we propose to mitigate such risks.
Macroeconomic risks
The Group’s financial performance can be impacted by current and future economic conditions which it cannot control, such
as increases in interest rates and inflation, which could impact the demand and investment decisions of our customers. The
Group stays abreast of these conditions, focuses on its internal debtor controls and diversifies its customer base to help
manage these risks.
Competitive market and changes to market trends
The Group operates in a competitive market. Innovation is constant and superior products that may be released to the market
that could result in pricing pressures on our product and result in unfavourable product positioning within the market. We
manage this risk by maintaining product development teams that are highly experienced and remain abreast of the latest
technological advances and implications for our current and future products. We also continue to invest in our brand which
continues to be well regarded within Australia and internationally.
Loss of a Major Customer
The Group has a number of large customers that contribute to a material component of its revenue generation. The Group
maintains a close relationship with these customers to ensure customer service levels are maintained and any issues are
managed effectively on a timely basis. The Group is also diversifying its customer base, including adding two new top ten
customers in the last two years, which helps manage these risks.
Privacy and Cybersecurity
The Group handles personal and sensitive information. The Group has strong systems and controls in place and is audited
annually to ensure management systems are in place and operating effectively, including in relation to the management of
customer data. The Group holds current ISO 9001 (Quality Management System), ISO 27001 (IT Security Management
Systems) and SOC 2 (Service Organisation Controls) compliance accreditation. In addition, the Group is dedicated to
keeping its workforce appropriately trained and updated with privacy and data breach training and scenario testing initiatives.
Throughout the financial year, the Group issued training to all staff in relation to privacy, cybersecurity and data breaches.
Access to Networks and Data Centres
The Group and its customers rely on access to networks and data centres to continue operations. To manage this risk, the
Group engages internationally recognised network and data centre suppliers with Cloud based services and data storage
that maximises the ability to continue operations.
Reliance on key personnel
The Group engaged in staff development programs to ensure the skills and experience of potential successors as part of its
succession planning initiatives.
Regulatory compliance
The Group is subject to a number of Australian laws and regulations such as privacy laws. The Group maintains sufficient
internal controls to ensure continued compliance.
Matters subsequent to the end of the financial year
The following matters have arisen since 30 June 2023 that may have a significant affect on groups operations and
performance in the future financial year:
4
Damstra Holdings Limited
Directors' report
30 June 2023
(a) On 14 July 2023 and 17 July 2023 Damstra signed contract expansions with multiple clients with an estimated ARR of
$800,000.
(b) On 18 July 2023 Damstra extended is loan facility with PFG via committed terms finalised on the 5 June 2023. The
long-form documents were executed in July extending the facility until November 2026.
(c) On 1 August 2023 Damstra’s Non-Executive Directors agreed to salary sacrifice all of their director's fees for Zero priced
Options for FY24 with an annual positive cash flow impact of $500,000. This is subject to shareholder approval at the
FY23 AGM.
(d) On 2 August 2023 Damstra issued 81,285 ordinary shares following the exercise of options on this date.
Other than the matters described above no other matters or circumstance has arisen since 30 June 2023 that has significantly
affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in
future financial years.
Likely developments and expected results of operations
Information on likely developments in the operations of the Group and the expected results of operations are included within
the 'review of operations' section above.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Johannes Risseeuw
Executive Chairman
Bachelor of Economics from the University of Sydney and Graduate Diploma of Applied
Finance from Kaplan Professional
Johannes joined the Group in 2012 and has held the role of Executive Chairman since
2017. He was the former Vice President, Mergers & Acquisitions, Asia Pacific at Shell,
where he drove billion dollar plus transactions across Australia, Singapore, Hong Kong,
Malaysia and the Middle East. He was previously the Chief Investment Officer of
Questus Energy Pty Ltd, focused on the acquisition and management of oil and gas
assets, and Chief Operating Officer at Skilled Group Limited. Johannes is a non-
executive director of US-based entity FanPlayr Inc.
Other current directorships:
None
Former directorships (last 3 years): None
Interests in shares:
Interests in options:
19,401,465 ordinary shares
4,929,070* options over ordinary shares
Name:
Title:
Qualifications:
Experience and expertise:
Christian Damstra
Chief Executive Officer
Diploma in Electrical Engineering from TAFE New South Wales
Christian joined the Group in 2002 as General Manager, after his father founded the
Company while undertaking contract work in the mining industry. He managed the
Company as a technology company as part of the Skilled Group, before leading a
management buy-out of the Company in 2016 along with Johannes Risseeuw. Prior to
joining the Group, Christian ran his own business consulting to the mining industry and
is a holder of an Open Cut Examiner Certificate of Competency.
Other current directorships:
None
Former directorships (last 3 years): None
Interests in shares:
Interests in options:
20,037,772 ordinary shares
4,890,216* options over ordinary shares
*
1,000,000 of the ZEPO's granted by the NRC to Mr Risseeuw and Mr Damstra are subject to shareholder approval at
the FY23 AGM.
5
Damstra Holdings Limited
Directors' report
30 June 2023
Name:
Title:
Qualifications:
Experience and expertise:
Drew Fairchild
Non-Executive Director
Bachelor of Business from Monash University, Master of Applied Finance from
Melbourne University, and a graduate of the Group Business Leadership Program
(Insead).
Drew joined the Group as a Non-Executive Director in 2016. He has more than 20
years' experience as a Chief Financial Officer and entrepreneur, having commenced
his career with Shell Australia, becoming Finance Director and a member of the Board.
Prior to his appointment as the Non-Executive Director, he assisted the Company as
an adviser during the buy-out of the Company from the Programmed Group. Prior to
joining the Group, Drew worked as a Chief Financial Officer within both Fulton Hogan
and Cleanaway, and founded an oil and gas investment fund that was sponsored by
Intermediate Capital Group PLC. Drew was also the co-founder of the now ASX listed
Top Shelf International, a premium Australian spirits company.
None
Other current directorships:
Former directorships (last 3 years): Managing Director of Top Shelf International Holdings Ltd (ASX: TSI)
Special responsibilities:
Interests in shares:
Interests in options:
Chairman of Audit and Risk Committee.
5,072,563 ordinary shares
277,696 options over ordinary shares
Experience and expertise:
Name:
Title:
Qualifications:
Morgan Hurwitz
Non-Executive Director
Bachelor of Arts from Monash University and is a graduate of the Australian Institute of
Company Directors
Morgan joined the Group as a Non-Executive Director in 2016. He has over 30 years’
experience in the Technology, Industrials, Oil and Gas, Aviation and Logistics
industries and has extensive experience developing technology strategies and
implementing technology across a range of industries in Australia and internationally.
Prior to joining the Group, he was the President of Supply Chain and Chief Information
Officer at Linfox, Global Chief Information Officer at Orica Limited, and held a number
of senior IT roles within Shell in Melbourne and London. He is currently an investor and
sits on a number of boards and provides technology advisory and mentoring. He is a
Graduate of the Australian Institute of Company Directors, IMD (Switzerland) and holds
a BA Degree.
Chairman and Non-Executive Director of Leighton O’Brien (unlisted) – appointed 1 July
2021
Former directorships (last 3 years): None
Special responsibilities:
Other current directorships:
Chairman of Nomination and Remuneration Committee and member of Audit and Risk
Committee
5,080,957 ordinary shares
144,363 options over ordinary shares
Interests in shares:
Interests in options:
Experience and expertise:
Name:
Title:
Qualifications:
Simon Yencken
Non-Executive Director
Bachelor of Laws from Monash University and Bachelor of Science (Mathematics) from
Monash University
Simon joined the Group as a Non-Executive Director in 2019. He is the Chief Executive
Inc. which provides Customer Experience
Officer and
Personalization. Prior to joining the Group, he was a Director of Aconex Limited for 10
years (including Chairman between 2011 and 2014). Aconex was a provider of cloud
collaboration software for the construction industry, which was acquired by Oracle in
2018 for approximately US$1.2 billion. Simon is an active investor in various start-up
technology companies, and is Chairman of Matrak Industries.
Other current directorships:
None
Former directorships (last 3 years): None
Special responsibilities:
founder of Fanplayr
Member of Nomination and Remuneration Committee and member of Audit and Risk
Committee
1,244,444 ordinary shares
144,363 options over ordinary shares
Interests in shares:
Interests in options:
6
Damstra Holdings Limited
Directors' report
30 June 2023
Name:
Title:
Qualifications:
Experience and expertise:
Sara La Mela
Non-Executive Director
Bachelor of Arts from the University of Pennsylvania and an MBA from INSEAD and a
graduate of the Australian Institute of Company Directors
Sara has extensive experience as a technology executive in both Australia and North
America (Silicon Valley). She is currently the Head of Operations for the Product
Growth division at Canva. Prior to this, Sara held various sales and marketing roles at
Google and Twitter, and served as Chief Operating Officer of Local Measure, a SaaS
platform for customer communications management, for seven years.
None
Other current directorships:
Former directorships (last 3 years): Non-Executive Director of Whispir Limited (ASX: WSP)
Member of Nomination and Remuneration Committee
Special responsibilities:
60,000 ordinary shares
Interests in shares:
144,363 options over ordinary shares
Interests in options:
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
7
Damstra Holdings Limited
Directors' report
30 June 2023
Company secretaries
Paul Burrows and Carlie Hodges are both Company Secretaries of the Company.
Paul joined the Company as the Chief Financial Officer and Company Secretary effective from 28 November 2022. He is a
highly experienced CFO having worked in a number of ASX listed entities and global businesses. Most recently Paul has
been the CFO and Company Secretary of the ASX listed company Engenco Limited (2018-2022) a global engineering
services company. Before this, he has held senior finance roles in a number of technology companies such as Hansen
Technologies, REA Group and Telstra. Previous to that Paul worked at Ernst & Young focusing on information technology
processes. Paul has significant experience in corporate governance, mergers and acquisitions and financial reporting in high
growth environments together with hands-on experience in the implementation of system and process improvements. Paul
holds a Bachelor of Commerce degree, is a Chartered Accountant and is a Graduate of the Australian Institute of Company
Directors.
Carlie has held the role of Company Secretary since June 2019. She is an Executive Director at cdPlus Corporate services,
which provides outsourced corporate governance and company secretarial services to both private and public companies in
Australia. In addition, she is a Senior Associate at Coghlan Duffy & Co. She is also the Company Secretary of The Hydration
Pharmaceuticals Company Limited and Top Shelf International. Carlie holds a Bachelor of Science and Bachelor of Laws
from Deakin University, a Master of Arts from King's College London, and is admitted as a solicitor in the state of Victoria.
Andrew Ford was the previous Chief Financial Officer and Company Secretary of the Company until 28 November 2022.
Andrew assumed the Finance responsibility and became Chief Financial Officer on 28 February 2022. He had previously
spent the majority of his 20-year career in CFO and senior finance roles, he was a Finance Director for Infrabuild Ltd/GFG
Alliance. Prior to this he was the CFO of ASX-listed Godfreys Group Ltd. Andrew had also held finance positions with
Cleanaway Ltd, Skilled Group Ltd, BlueScope Ltd and professional services firm Deloitte. Andrew graduated with a
commerce degree from the University of Melbourne.
Meetings of directors
The number of meetings of the Company's Board of Directors ('the Board') and of each Board committee held during the
year ended 30 June 2023, and the number of meetings attended by each director were:
Full Board
Nomination and Remuneration
Committee
Audit and Risk Committee
Attended
Held
Attended
Held
Attended
Held
Johannes Risseeuw
Christian Damstra
Drew Fairchild
Morgan Hurwitz
Simon Yencken
Sara La Mela
10
10
10
10
9
9
10
10
10
10
10
10
-
-
-
2
1
2
-
-
-
2
2
2
-
-
5
5
5
-
-
-
5
5
5
-
Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
Remuneration report (audited)
The remuneration report details the key management personnel ('KMP') remuneration arrangements for the Group, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
KMP are those persons having authority and responsibility for planning, directing and controlling the activities of the entity,
directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
1
2
3
4
5
6
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional information
Additional disclosures relating to KMP
8
Damstra Holdings Limited
Directors' report
30 June 2023
Summary
Executive remuneration is heavily weighted towards performance-based pay, and for the 2023 financial year ('FY23') the
Board set challenging Employee Incentive Plan ('EIP') targets. These targets were designed to incentivise KMP and their
teams to perform for shareholders and only be rewarded for significant outperformance.
A summary of key remuneration outcomes for FY23, and those that relate to the following financial year, are as follows:
●
●
●
●
●
●
●
There will be no increase in the Executive Chairman, CEO’s, and CFO’s fixed remuneration for FY24;
There will be no increase Non-Executive Director fees in FY24;
The Non-Executive Directors' have participated in a salary sacrifice arrangement whereby they have sacrificed 20% of
their Board fees, excluding Committee fees, in return for zero price options (ZEPOs) in the Company. In FY24
(commencing from 1 August and subject to shareholder approval) they have agreed to salary sacrifice 100% of their
Board and Committee fees;
The Executive Chairman and CEO have participated in a salary sacrifice arrangement whereby they have sacrificed
5% of their salary in ZEPOs in the Company, this will continue for FY24;
The FY23 EIP revenue target was not achieved, and no EIP was payable in relation to the short term incentive program;
Options have been issued as part of the Long Term Incentive (LTI) that are subject to vesting conditions related to a
three year time period FY23-FY26; and
In recognition of business turnaround, the board approved the issue of ZEPOs to staff who contributed to this outcome.
As a result, the Chair and CEO have each been awarded 1 million ZEPOs, subject to shareholder approval at the FY23
AGM, and the CFO was awarded 350k ZEPOs. A further 4.5 million ZEPOs have been awarded to other staff who have
meaningly contributed to the turnaround.
Our Remuneration Framework
The information provided in this report summarises our remuneration framework, including the approach and rationale for
the structures for FY23 after a significant review and adjustment to the framework in FY22.
1. Principles used to determine the nature and amount of remuneration
The objective of the Group's executive reward framework is to ensure reward for performance is competitive and appropriate
for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation
of value for shareholders, and it is considered to conform to the market best practice for the delivery of reward. The Board
of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward governance
practices:
●
●
●
●
competitiveness and reasonableness;
acceptability to shareholders;
performance linkage / alignment of executive compensation; and
transparency.
The Nomination and Remuneration Committee ('NRC') is responsible for determining and reviewing remuneration
arrangements for its directors and executives. The performance of the Group depends on the quality of its directors and
executives. The remuneration philosophy is to attract, motivate and retain high performance and high-quality personnel.
The reward framework is designed to align executive reward to shareholders' interests. The Board has considered that it
should seek to enhance shareholders' interests by:
●
●
having economic profit as a core component of plan design;
focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering
constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value; and
attracting and retaining high calibre executives.
●
Additionally, the reward framework should seek to enhance executives' interests by:
●
●
●
rewarding capability and experience;
reflecting competitive reward for contribution to growth in shareholder wealth; and
providing a clear structure for earning rewards.
In accordance with best practice corporate governance, the structure of Non-Executive Director and Executive Director
remuneration is separate.
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Damstra Holdings Limited
Directors' report
30 June 2023
Non-Executive Directors' remuneration
Fees and payments to Non-Executive Directors reflect the demands and responsibilities of their role. Non-Executive
Directors' fees and payments are reviewed annually by the NRC. The NRC may, from time to time, receive advice from
independent remuneration consultants to ensure Non-Executive Directors' fees and payments are appropriate and in line
with the market. The Chairman's fees are determined independently to the fees of other Non-Executive Directors based on
comparative roles in the external market. The Chairman is not present at any discussions relating to the determination of his
own remuneration.
ASX listing rules require the aggregate Non-Executive Directors' remuneration be determined periodically by a general
meeting. The shareholders approved a maximum annual aggregate remuneration of $600,000 per annum. Non-Executive
Directors are paid a base fee plus variable fees for committee membership and chairing responsibilities.
Board
Committee
Chair fee
Member fee
N/A
$10,000
$75,000
$5,000
All fees attract superannuation guarantee contributions. Mr Yencken’s fees are payable in US dollars and are grossed up to
reflect a pro forma superannuation guarantee contribution.
The current base fees were reviewed with effect from 1 July 2021 against a peer group of ASX technology companies. There
are no changes to Non-Executive director base fees for the FY23 financial year, the increases below relate to the 0.5%
increase in superannuation in FY23. Non-Executive Director fees (directors' fees and committee fees) (inclusive of
superannuation) are summarised as follows:
Name - Position
Drew Fairchild - Non-Executive Director
Morgan Hurwitz - Non-Executive Director
Simon Yencken - Non-Executive Director
Sara La Mela - Non-Executive Director
Fees per annum
1 Jul 22 – 30 Jun 23
Fees per annum
1 Jul 21 – 30 Jun 22
$93,925
$99,450
$93,925
$88,400
$93,500
$99,000
$93,075
$88,000
Effective 1 July 2022, the Non-Executive Directors' agreed to participate in a salary sacrifice arrangement whereby they
would sacrifice 20% of their Board fees, excluding Committee fees, in return for zero price options in the Company. This
arrangement was approved at the 2022 AGM. Current fees also include the increase in the superannuation guarantee
contribution to 10.5% which was effective from 1 July 2022.
Effective 1 August 2023, the Non-Executive Directors’ agreed to increase the % of salary sacrifice from 20% in FY23 to 100%
in FY24, subject to shareholder approval at the FY23 AGM.
Executive remuneration
The Group aims to reward executives based on their position and responsibility, with a level and mix of remuneration which
has both fixed and variable components.
The executive remuneration and reward framework has four components:
●
●
●
●
base pay and non-monetary benefits;
short-term performance incentives (STI);
long-term performance incentives (LTI); and
other remuneration such as superannuation and long service leave.
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the
NRC based on individual and business unit performance, the overall performance of the Group and comparable market
remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the Group and provides additional value to the executive.
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Damstra Holdings Limited
Directors' report
30 June 2023
Group performance and link to remuneration
The EIP’s purpose is to incentivise staff to achieve the Company and individual targets. Remuneration for Executives is
directly linked to the performance of the Group via the STI and LTI components on their variable remuneration. Variable
remuneration is dependent on various threshold hurdles and service conditions being met.
STI Program FY23
The STI program is designed to align the targets of the business with the performance hurdles of KMP and executives.
Key principles of the plan are as follows:
●
●
●
●
Financial measures account for 60% of the STI with free cash flow generation accounting for 25% and revenue being
35% to ensure executives are focused on sustainable growth;
Non-financial measures form 40% of the STI scorecard with a strong focus on clients and staff outcomes which drives
sustainable business outcomes;
There is Board discretion to defer 50% of any STI outcome into equity to align with the market expectations and provide
shareholder alignment; and
At the threshold level of performance there is only a 50% payout and as such the STI program does not over-reward
for below target performance.
STI outcomes are available to KMP executives based on achieving specific annual targets and key performance indicators
(‘KPI’s’). On achievement of KPI’s by executives, the STI is settled 50% in cash and 50% deferred and settled via the grant
of zero priced options which vest one year following the grant date, subject to continued employment.
On target performance will result in 100%% of the STI opportunity being paid. Threshold performance will be based on
achieving a minimum of 90% of the target level of performance (depending on the KPI), at which point 50% of the target
opportunity will be paid. Stretch performance is achieved based on achieving 110% of the target level of performance
(depending on the KPI), at which point 125% of the target opportunity will be paid.
In relation to the FY23 EIP, the NRC and the Board have reviewed Company performance and determined that given the
minimum requirement of 90% achievement of revenue target for the FY23 year was not achieved, no EIP is payable in
relation to STI program.
STI Program FY24
The STI FY24 program follows the same structure and principles of the FY23 program. The STI program is designed to align
the targets of the business with the performance hurdles of KMP and executives.
Key principles of the plan are as follows:
●
●
●
●
Financial measures account for 60% of the STI with free cash flow generation accounting for 25% and revenue being
35% to ensure executives are focused on sustainable growth;
Non-financial measures form 40% of the STI scorecard with a strong focus on clients and staff outcomes which drives
sustainable business outcomes;
There is Board discretion to defer 50% of any STI outcome into equity to align with the market expectations and provide
shareholder alignment; and
At the threshold level of performance there is only a 50% payout and as such the STI program does not over-reward
for below target performance.
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Damstra Holdings Limited
Directors' report
30 June 2023
Should the FY24 STI program targets be met, the cash component would be payable, and the options granted, following the
completion of the FY24 financial results, expected to be in August 2024. The options would vest one year later, expected to
be in August 2025. Where STI targets are achieved, the equity portion of the STI is settled at the discretion of the Board, by
the grant of zero priced options or Cash or a combination of the two.
The KPI’s and relative weightings included in for the STI program, are as follows:
Recognition of business turnaround
The business has undergone a signification turnaround during the financial year. Given the significance of this milestone, the
NRC and the Board approved the issue of Zero Priced Options to staff who contributed to this outcome which included
exceeding the cost reduction targets, rationalising of the technology platform and reinvigorating the sales function which all
resulted in the Company achieving positive free cashflow in the fourth quarter in FY23. The board approved the issue of
6,200,000 in the form of Zero Priced Options (ZEPOs) to staff who contributed to this outcome. As a result, the Chair and
CEO have each been awarded 1,000,000 ZEPOs, subject to shareholder approval at the FY23 AGM, and the CFO was
awarded 350,000 ZEPOs. A further 3,900,000 ZEPOs have been awarded to other staff that have meaningly contributed to
the turnaround.
The options vest over a three year period commencing on 1 July 2023 and the participants are required to remain employed
by the Group.
All awards are subject to continued service with the Company under the employee incentive plan rules.
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Damstra Holdings Limited
Directors' report
30 June 2023
LTI Program
The LTI program is designed to align the longer-term targets of the business with the performance hurdles of executives.
LTI outcomes are available to executives based on achieving a three-year compound annual growth rate (‘CAGR’) on prior
year revenue. For the FY23 LTI program, the target CAGR is tested at the completion of the 2025 financial year (‘FY25’).
CAGAR targets are approved by the Board and are adjusted annually based on market conditions and the Group’s long-
term business planning.
On target performance will result in 100% of the LTI opportunity being paid. Threshold performance will be based on
achieving 80% of the target level of performance, at which point 20% of the target opportunity will be paid. Stretch
performance is achieved based on achieving 125% of the target level of performance, at which point 125% of the target
opportunity will be paid. In addition to the CAGR target, the LTI is only paid to KMP's if a share price hurdle is achieved, for
the FY23 plan the share price hurdle is 34 cents at the end of the three year period.
The NRC, reviewed and determined that due to the current stage of the Group’s development, revenue was considered as
the key metric and most appropriate indicator of long term performance.
The three-year LTI performance period aligns with the market expectations, with FY23 being the first year of the LTI program
there is therefore no annual testing of achievement of the LTI incentive related to the FY23 financial year.
Where LTI targets are achieved, the LTI is settled at the discretion of the Board, by the grant of zero priced options or Cash
or a combination of the two.
All awards are subject to continued service with the Company under the employee incentive plan rules.
KMP FY24 Base Salaries
The current KMP salaries were reviewed against a peer group of ASX technology companies with effect from 1 July
2023. There are no changes to base KMP salaries. Superannuation increases from 10.5% to 11% in line with government
legislation.
Use of remuneration consultants
During the financial year ended 30 June 2023, the Group did not engage any remuneration consultants.
Voting and comments made at the Company's 2022 AGM
At the 2022 AGM, 88.1% of shareholders voted to approve the adoption of the remuneration report for the year ended 30
June 2022.
Following the 2022 AGM, Damstra consulted with shareholders and has received feedback from proxy advisors and other
stakeholders to understand their views and concerns with regards to the Group’s remuneration arrangements. The Group
has taken this feedback seriously and reflected this in the revised EIP plan in place for FY23 and remuneration outcomes
described above. After the extensive review flowing FY22, the EIP plan is now considered an appropriate ongoing framework
that will continue in FY24.
2. Details of remuneration
Amounts of remuneration
Details of the remuneration of KMP of the Group are set out in the following tables.
The KMP of the Group consisted of the following directors of Damstra Holdings Limited:
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●
●
●
●
Johannes Risseeuw - Executive Chairman
Christian Damstra - Chief Executive Officer
Drew Fairchild - Non-Executive Director
Morgan Hurwitz - Non-Executive Director
Simon Yencken - Non-Executive Director
Sara La Mela - Non-Executive Director
And the following persons:
●
●
Paul Burrows - Chief Financial Officer and Company Secretary (appointed on 28 November 2022)
Andrew Ford - Chief Financial Officer and Company Secretary (until 28 November 2022)
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Damstra Holdings Limited
Directors' report
30 June 2023
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Cash salary
and fees
Cash bonus
Movement in
leave
entitlements
Super-
annuation
Share-based
payments (4)
30 June 2023
$
$
$
$
$
Total
$
Non-Executive Directors:
Drew Fairchild
Morgan Hurwitz
Simon Yencken(1)
Sara La Mela
Executive Directors:
Johannes Risseeuw
Christian Damstra(5)
Other KMP:
Paul Burrows(2)
Andrew Ford(3)
70,000
75,000
77,350
65,000
405,105
466,114
188,098
172,111
1,518,778
-
-
-
-
-
-
-
-
-
-
-
-
-
7,350
7,875
-
6,825
16,575
16,575
16,575
16,575
93,925
99,450
93,925
88,400
46,532
6,344
25,292
25,292
253,538
252,728
730,467
750,478
11,310
-
64,186
16,295
12,646
101,575
33,310
-
605,876
249,013
184,757
2,290,415
(1)
(2)
(3)
(4)
(5)
Mr Yencken’s fees are paid in US dollars (US$51,999) and include a gross up to reflect a pro forma superannuation
guarantee contribution.
Mr Burrows was a KMP from 28 November 2022.
Mr Ford was a KMP until 28 November 2022, his leave entitlements were paid out in cash and included in salary and
fees on resignation.
Equity settled remuneration includes the fair value of options granted in relation to the current and previous financial
years.
Christian Damstra received $61,009 as back payment for unpaid superannuation related to the duration of his relocaton
to the USA between 31 March 2018 and February 2021.
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Cash salary
and fees
Cash bonus
Movement in
leave
entitlements
Super-
annuation
Share-based
payments (4)
30 June 2022
$
$
$
$
$
Total
$
Non-Executive Directors:
Drew Fairchild
Morgan Hurwitz
Simon Yencken(1)
Sara La Mela
Executive Directors:
Johannes Risseeuw
Christian Damstra
Other KMP:
Chris Scholtz(3)
Andrew Ford(2)
89,583
90,000
93,075
75,417
433,516
430,578
224,235
125,290
1,561,694
-
-
-
-
8,958
9,000
-
7,542
-
-
-
-
98,541
99,000
93,075
82,959
28,551
30,846
23,568
23,568
197,680
190,469
683,315
675,461
(5,978)
9,946
63,365
17,441
9,427
99,504
40,032
8,926
437,107
275,730
153,589
2,161,670
-
-
-
-
-
-
-
-
-
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Damstra Holdings Limited
Directors' report
30 June 2023
(1)
(2)
(3)
(4)
Mr Yencken’s fees are paid in US dollars (US$ 67,700) and include a gross up to reflect a pro forma superannuation
guarantee contribution.
Mr Ford was a KMP from 28 February 2022.
Mr Scholtz was a KMP from 1 July 2021 until 28 February 2022.
Equity settled remuneration includes the fair value of options granted in relation to previous financial years. No options
were granted in relation to the FY22 EIP.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Drew Fairchild
Morgan Hurwitz
Simon Yencken
Sara La Mela
Executive Directors:
Johannes Risseeuw
Christian Damstra
Other KMP:
Paul Burrows
Andrew Ford
Chris Scholtz
Fixed remuneration
At risk - STI
30 June 2023 30 June 2022 30 June 2023 30 June 2022 30 June 2023 30 June 2022
At risk - LTI
100%
100%
100%
100%
65%
66%
87%
100%
-
100%
100%
100%
100%
71%
72%
-
94%
85%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
35%
34%
13%
-
-
-
-
-
-
29%
28%
-
6%
15%
The proportion of the cash bonus paid/payable or forfeited is as follows:
Name
Executive Directors:
Johannes Risseeuw
Christian Damstra
Other Key Management Personnel:
Paul Burrows
Andrew Ford
Chris Scholtz
Cash bonus paid/payable
30 June 2023 30 June 2022 30 June 2023 30 June 2022
Cash bonus forfeited
-
-
-
-
-
-
-
-
-
-
100%
100%
100%
100%
-
100%
-
-
100%
100%
3. Service agreements
KMP are employed under individual employment agreements. The agreements are continuous (i.e. not of fixed duration)
unless otherwise stated. These agreements provide for a total compensation including a base salary, superannuation
contribution and incentive arrangements; variable notice and termination provisions and provisions for redundancy.
Remuneration and other terms of employment for KMP are formalised in service agreements. Details of these agreements
are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Johannes Risseeuw
Executive Chairman
16 October 2017
Ongoing
Salary of $453,050 per annum inclusive of superannuation, but before any salary
sacrifice arrangement. Six months' notice by either party for termination of employment.
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Damstra Holdings Limited
Directors' report
30 June 2023
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Christian Damstra
Chief Executive Officer
15 March 2016
Ongoing
Salary of $453,050 per annum inclusive of superannuation, but before any salary
sacrifice arrangement. Six months' notice by either party for termination of employment.
Drew Fairchild
Non-Executive Director
1 April 2016
Ongoing
Director fees of $93,925 per annum inclusive of superannuation, but before any salary
sacrifice arrangement. The employment period is open until a written notice of
resignation is communicated by the director.
Morgan Hurwitz
Non-Executive Director
7 November 2016
Ongoing
Director fees of $99,450 per annum inclusive of superannuation, but before any salary
sacrifice arrangement. The employment period is open until a written notice of
resignation is communicated by the director.
Simon Yencken
Non-Executive Director
1 April 2019
Ongoing
Director fees of $93,925 per annum inclusive of superannuation, but before any salary
sacrifice arrangement. The employment period is open until a written notice of
resignation is communicated by the director.
Sara La Mela
Non-Executive Director
1 October 2020
Ongoing
Director fees of $88,400 per annum inclusive of superannuation, but before any salary
sacrifice arrangement. The employment period is open until a written notice of
resignation is communicated by the director.
Paul Burrows
Chief Financial Officer and Company Secretary
28 November 2022
Ongoing
Salary of $342,550 per annum inclusive of superannuation but before any salary
sacrifice arrangement. Six months' notice by either party for termination of employment.
Effective 1 July 2022, the Non-Executive Directors' agreed to participate in a salary sacrifice arrangement whereby they
would sacrifice 20% of their Board fees, excluding Committee fees, in return for zero price options in the Company. Also,
effective 1 July 2022, the Executive Directors’ agreed to participate in a salary sacrifice arrangement whereby they would
sacrifice 5% of their salary in return for zero price options in the Company. These arrangements are subject to shareholder
approval at the 2022 AGM. Current fees also include the increase in the superannuation guarantee contribution to 10.5%
which was effective from 1 July 2022.
For FY24, effective 1 August 2023, the Non-Executive Directors’ agreed to salary sacrifice 100% of their Board fees in return
of Zero priced options, subject to shareholder approval at the FY23 AGM. The Executive Directors have agreed to continue
to participate in the 5% salary sacrifice arrangement in FY24.
KMP have no entitlement to termination payments in the event of removal for misconduct.
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Damstra Holdings Limited
Directors' report
30 June 2023
4. Share-based compensation
Issue of shares
There were no shares issued to directors and other executives as part of compensation during the year ended 30 June 2023.
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other KMP in
this financial year or future reporting years are as follows:
Name
Number of
options
granted
Grant date
Vesting date
Expiry date
Exercise
price
Fair value
per option
at grant date
Johannes Risseeuw(1)
Johannes Risseeuw(1)
Johannes Risseeuw(2)
Johannes Risseeuw(1)
Johannes Risseeuw(1)
Christian Damstra(1)
Christian Damstra(1)
Christian Damstra(2)
Christian Damstra(1)
Christian Damstra(1)
Drew Fairchild(1)
Drew Fairchild(1)
Drew Fairchild(1)
Drew Fairchild(1)
Morgan Hurwitz(1)
Morgan Hurwitz(1)
Morgan Hurwitz(1)
Morgan Hurwitz(1)
Simon Yencken(1)
Simon Yencken(1)
Simon Yencken(1)
Simon Yencken(1)
Sara La Mela(1)
Sara La Mela(1)
Sara La Mela(1)
Sara La Mela(1)
Paul Burrows(2)
Paul Burrows(3)
34,531 30 November 22
40,450 30 November 22
1,562,500 30 November 22
46,996 1 January 23
75,306 19 April 23
34,531 30 November 22
40,450 30 November 22
1,562,500 30 November 22
46,996 1 January 23
75,306 19 April 23
25,267 30 November 22
29,600 30 November 22
34,390 1 January 23
55,106 19 April 23
25,267 30 November 22
29,600 30 November 22
34,390 1 January 23
55,106 19 April 23
25,267 30 November 22
29,600 30 November 22
34,390 1 January 23
55,106 19 April 23
25,267 30 November 22
29,600 30 November 22
34,390 1 January 23
55,106 19 April 23
344,576 17 October 22
100,000 28 November 22
4,541,594
30 November 22
31 December 22
31 August 25
31 March 23
30 June 23
30 November 22
31 December 22
31 August 25
31 March 23
30 June 23
30 November 22
31 December 22
31 March 23
30 June 23
30 November 22
31 December 22
31 March 23
30 June 23
30 November 23
31 December 23
31 March 23
30 June 23
30 November 23
31 December 23
31 March 23
30 June 23
31 August 25
28 November 24
30 November 37
30 November 37
30 November 37
25 January 38
19 April 38
30 November 37
30 November 37
30 November 37
25 January 38
19 April 38
30 November 37
30 November 37
25 January 38
19 April 38
30 November 37
30 November 37
25 January 38
19 April 38
30 November 37
30 November 37
25 January 38
19 April 38
30 November 37
30 November 37
25 January 38
19 April 38
17 October 37
28 November 37
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.164
$0.140
$0.124
$0.120
$0.075
$0.164
$0.140
$0.124
$0.120
$0.075
$0.164
$0.140
$0.120
$0.752
$0.164
$0.140
$0.120
$0.075
$0.164
$0.140
$0.120
$0.075
$0.164
$0.140
$0.120
$0.075
$0.120
$0.155
(1)
(2)
(3)
Represents salary sacrificed options granted.
Represents long term incentive options granted as part of the FY22 employee incentive program described above and approved by
shareholders at the FY22 AGM. These options will vest subject to performance conditions being satisfied in FY25.
Represents retention options granted.
Options granted carry no dividend or voting rights. Vesting of the options are subject to service condition (continuous
employment) and except for options issued under the employee incentives program, there are no performance conditions.
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Damstra Holdings Limited
Directors' report
30 June 2023
The number of options over ordinary shares granted to and vested by directors and other KMP as part of compensation
during the year ended 30 June 2023 are set out below:
Name
Drew Fairchild
Morgan Hurwitz
Simon Yencken
Sara La Mela
Johannes Risseeuw(1)
Christian Damstra(1)
Paul Burrows(2)
Chris Scholtz
Andrew Ford
Number of
Number of
Number of
Number of
options
granted
options
granted
options
vested
options
vested
during the
during the
during the
during the
year
year
year
year
30 June 2023 30 June 2022 30 June 2023 30 June 2022
144,363
144,363
144,363
144,363
2,759,783
2,759,783
794,576
-
-
-
-
-
-
251,413
197,053
-
161,970
324,675
144,363
144,363
144,363
144,363
197,283
197,283
-
-
-
-
-
-
-
62,854
49,263
-
27,472
-
The total fair value of options over ordinary shares granted, exercised and lapsed for directors and other key management
personnel as part of their compensation arrangements during the year ended 30 June 2023 are set out below. The options
granted in FY23 are subject to vesting conditions and options granted as part of the Employment Incentive Program are
subject to performance periods beyond FY23:
Options were granted in FY23 to the non executive directors as part of a salary sacrifice scheme. Of the options granted
197,283 options for Johannes Risseeuw and Christian Damstra were part of the salary sacrifice scheme.
(1)
(2)
1,000,000 of the ZEPO's granted by the NRC to Mr Risseeuw and Mr Damstra are subject to shareholder approval at
the FY23 AGM.
350,000 of the ZEPO's granted to Mr Burrows are in the process of being issued.
Name
Johannes Risseeuw
Christian Damstra
Drew Fairchild
Morgan Hurwitz
Simon Yencken
Sara La Mela
Paul Burrows
Value of
options
granted
during the
Value of
options
exercised
during the
Value of
options
lapsed
during the
year
$
year
$
year
$
Remuneration
consisting of
options
for the
year
%
356,402
356,402
16,575
16,575
16,575
16,575
112,849
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26%
25%
20%
20%
20%
20%
24%
Options were granted to other non-KMP executives and staff throughout the period to aid in the retention of key talent in the
Group.
Performance rights
There were no performance rights over ordinary shares issued to directors and other KMP as part of compensation that were
outstanding as at 30 June 2023.
18
Damstra Holdings Limited
Directors' report
30 June 2023
5. Additional information
The earnings of the Group for the five years to 30 June 2023 are summarised below:
2023
$'000
2022
$'000
2021
$'000
2020
$'000
2019
$'000
Sales revenue
Loss after income tax
29,463
(55,805)
28,989
(67,152)
27,053
(8,627)
19,577
(3,779)
15,278
(3,718)
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year end ($)
Basic loss per share (cents per share)
0.09
(21.75)
0.11
(28.92)
0.83
(5.00)
1.31
(3.05)
-
(4.14)
2023
2022
2021
2020
2019
6. Additional disclosures relating to KMP
Shareholding
The number of shares in the Company held during the financial year by each director and other members of KMP of the
Group, including their personally related parties, is set out below:
Balance at the
start of the
year
Issued on
exercise of
options
Additions
through on
market trades
Disposal
through on
market trades
Other
movements
Balance at the
end of the
year
Ordinary shares
Johannes Risseeuw
Christian Damstra
Drew Fairchild
Morgan Hurwitz
Simon Yencken
Sara La Mela
Paul Burrows*
Andrew Ford**
19,847,334
19,737,772
3,162,222
4,591,176
1,244,444
-
-
53,362
48,636,310
-
-
-
-
-
-
-
-
-
315,000
300,000
1,910,341
489,781
-
60,000
-
-
(760,869)
-
-
-
-
-
-
-
- 19,401,465
- 20,037,772
5,072,563
-
5,080,957
-
1,244,444
-
60,000
-
-
-
-
(53,362)
3,075,122
(760,869)
(53,362) 50,897,201
*
**
Mr Burrows commenced as a KMP on 28 November 2022 and as of this date his shareholding acquired prior to
becoming a KMP has been added to the table.
Mr Ford ceased to be a KMP on 28 November 2022 and as of this date his shareholding has been excluded from the
table on the basis he no longer holds shares in his capacity as a KMP.
19
Damstra Holdings Limited
Directors' report
30 June 2023
Option holding
The number of options over ordinary shares in the Company held during the financial year by each director and other
members of KMP of the Group, including their personally related parties, is set out below:
Options over ordinary shares
Johannes Risseeuw**
Christian Damstra**
Drew Fairchild
Morgan Hurwitz
Simon Yencken
Sara La Mela
Paul Burrows***
Andrew Ford*
Balance at
the start of
the year
Granted
Exercised
2,169,287
2,130,433
133,333
-
-
-
-
324,675
4,757,728
2,759,783
2,759,783
144,363
144,363
144,363
144,363
794,576
-
6,891,594
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
-
-
-
-
-
-
4,929,070
-
4,890,216
-
277,696
-
144,363
-
144,363
-
144,363
-
794,576
-
(324,675)
-
(324,675) 11,324,647
*
**
Mr Ford ceased being a KMP on 28 November 2022 and as of this date his option holding has been excluded from the
table on the basis he no longer holds options in his capacity as a KMP.
1,000,000 of the ZEPO's granted by the NRC to Mr Risseeuw and Mr Damstra are subject to shareholder approval at
the FY23 AGM.
*** 350,000 of the ZEPO's granted to Mr Burrows are in the process of being issued.
Options over ordinary shares
Johannes Risseeuw*
Christian Damstra*
Drew Fairchild
Morgan Hurwitz
Simon Yencken
Sara La Mela
Paul Burrows**
Vested and
exercisable
Vested and
unexercisable
Not yet vested
Balance as at
end of the year
1,945,857
1,934,183
277,696
144,363
144,363
144,363
-
4,590,825
-
-
-
-
-
-
-
-
2,983,213
2,956,033
-
-
-
-
794,576
4,929,070
4,890,216
277,696
144,363
144,363
144,363
794,576
6,733,822 11,324,647
*
**
1,000,000 of the ZEPO's granted by the NRC to Mr Risseeuw and Mr Damstra are subject to shareholder approval at
the FY23 AGM.
350,000 of the ZEPO's granted to Mr Burrows are in the process of being issued.
Loans to KMP and their related parties
There is an outstanding loan to Johannes Risseeuw amounting to $134,011 as at 30 June 2023 (2022: $123,741). The loan
has no agreed term and is repaid at the request of the Board of Directors. Interest is charged on the outstanding balance at
8% per annum amounting to $10,270 for the year ended 30 June 2023 (2022: $9,484).
A relative of Christian Damstra has been employed by the Company and provided contracting services during the financial
year on an arms-length basis. Payments made to the related party during the year ended 30 June 2023 amounted to $46,291
(2022: $58,526).
Amount due as at 30 June 2023 included as part of trade payables was $12,400 (2022: $nil).
This concludes the remuneration report, which has been audited.
Shares under option
There were 23,041,520 unissued ordinary shares of Damstra Holdings Limited under option outstanding at the date of this
report. These options are exercisable at a weighted average exercise price of $0.59 per share.
20
Damstra Holdings Limited
Directors' report
30 June 2023
Grant date
16/10/2019
16/10/2019
30/09/2020
30/09/2020
30/09/2020
19/10/2020
16/12/2020
9/04/2021
1/09/2021
1/09/2021
8/12/2021
31/03/2022
01/10/2022
17/10/2022
30/11/2022
01/01/2023
19/04/2023
24/10/2022
28/11/2022
Expiry date
16/10/2034
16/10/2025
30/09/2035
30/09/2026
30/09/2026
30/09/2023
16/12/2035
9/04/2036
1/09/2036
1/09/2027
8/12/2036
31/03/2037
01/10/2037
17/10/2037
30/11/2037
30/11/2037
30/11/2037
24/10/2037
28/11/2037
Exercise
price
Number
under option
$0.00
$1.52
$0.00
$3.24
$3.24
$0.86
$0.00
$0.00
$0.00
$1.70
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
599,998
1,964,284
730,561
1,686,439
982,146
862,070
19,724
29,001
971,912
755,034
284,721
3,406,250
2,590,000
3,837,362
3,494,430
231,552
371,036
125,000
100,000
23,041,520
The total shares under option includes those issued to Non-Executive Directors, KMP, other non-KMP executives and other
staff under prior year EIP’s and in relation to the retention of key talent in the Group.
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the
Company or of any other body corporate.
Shares issued on the exercise of options
There were no ordinary shares of Damstra Holdings Limited issued on the exercise of options during the year ended 30 June
2023 and up to the date of this report.
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a director
or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of the
Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
To the extent permitted by law, Damstra Holdings Limited has agreed to indemnify its auditors, William Buck Audit (Vic) Pty
Ltd, as part of its audit engagement agreement against claims by third parties arising from the audit arising from the
Company’s breach of their agreement. The indemnity stipulates that the Company will meet the full amount of any such
liabilities including a reasonable amount of legal costs. No payment has been made to indemnify PricewaterhouseCoopers
during the financial year and up to the date of this report.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility
on behalf of the Company for all or part of those proceedings.
Non-audit services
There were no non-audit services provided during the financial year by the auditor.
21
Damstra Holdings Limited
Directors' report
30 June 2023
Officers of the Company who are former partners of William Buck Audit (Vic) Pty Ltd
There are no officers of the Company who are former partners of William Buck Audit (Vic) Pty Ltd.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that
Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this directors' report.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Johannes Risseeuw
Executive Chairman
24 August 2023
___________________________
Drew Fairchild
Director
22
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001 TO THE DIRECTORS OF DAMSTRA HOLDINGS
LIMITED
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2023 there have
been:
— no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in
relation to the audit; and
— no contraventions of any applicable code of professional conduct in relation to the audit.
William Buck Audit (VIC) Pty Ltd
ABN 59 116 151 136
A. A. Finnis
Director
Melbourne, 24 August 2023
Level 20, 181 William Street, Melbourne VIC 3000
+61 3 9824 8555
vic.info@williambuck.com
williambuck.com
William Buck is an association of firms, each trading under the name of William Buck
across Australia and New Zealand with affiliated offices worldwide.
Liability limited by a scheme approved under Professional Standards Legislation.
2(cid:22)
Damstra Holdings Limited
Contents
30 June 2023
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors' declaration
Independent auditor's report to the members of Damstra Holdings Limited
Shareholder information
Corporate directory
25
26
27
28
29
65
66
73
78
24
Damstra Holdings Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2023
Revenue from operations
Other income
Interest revenue
Expenses
Employee benefits expenses
Depreciation and amortisation expenses
Impairment of goodwill and other assets
Share of losses of joint ventures accounted for using the equity method
Other expenses
Finance costs
Loss before income tax expense
Income tax expense
Loss after income tax expense for the year attributable to the owners of
Damstra Holdings Limited
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive loss for the year attributable to the owners of Damstra
Holdings Limited
Consolidated
Note 30 June 2023 30 June 2022
$'000
$'000
5
6
7
7
7
7
8
29,463
28,989
636
151
1,619
43
(13,197)
(16,213)
(39,800)
(109)
(11,931)
(4,805)
(16,016)
(16,281)
(42,336)
(38)
(16,330)
(2,064)
(55,805)
(62,414)
-
(4,738)
(55,805)
(67,152)
8
8
(86)
(86)
(55,797)
(67,238)
Cents
Cents
Basic loss per share
Diluted loss per share
34
34
(21.75)
(21.75)
(28.92)
(28.92)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
25
Damstra Holdings Limited
Consolidated statement of financial position
As at 30 June 2023
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Total current assets
Non-current assets
Investments accounted for using the equity method
Property, plant and equipment
Right-of-use assets
Intangible assets
Term deposits
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Contract liabilities
Borrowings
Lease liabilities
Employee benefits
Deferred consideration on acquisition
Deferred research and development income
Provisions
Total current liabilities
Non-current liabilities
Contract liabilities
Borrowings
Lease liabilities
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Consolidated
Note 30 June 2023 30 June 2022
$'000
$'000
9
10
11
12
13
10
14
15
16
17
18
20
19
15
16
17
18
7,140
4,162
-
1,209
12,511
112
4,550
2,164
59,535
306
469
67,136
9,738
5,039
395
1,430
16,602
221
5,194
2,848
105,214
357
187
114,021
79,647
130,623
4,361
5,679
1,458
1,100
2,426
-
-
1,157
16,181
168
15,750
1,218
114
17,250
6,586
4,565
-
1,057
1,969
3,500
458
817
18,952
149
10,055
1,949
187
12,340
33,431
31,292
46,216
99,331
21
22
173,351
15,778
(142,913)
173,351
13,088
(87,108)
46,216
99,331
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
26
Damstra Holdings Limited
Consolidated statement of changes in equity
For the year ended 30 June 2023
Consolidated
Balance at 1 July 2021
Loss after income tax expense for the year
Other comprehensive loss for the year, net of tax
Total comprehensive loss for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 21)
Vesting charge for share-based payments (note 35)
Issue of warrants (note 22)
Issued
capital
$'000
Reserves
$'000
Accumulated
losses
$'000
Total equity
$'000
143,716
11,604
(19,956)
135,364
-
-
-
-
(86)
(67,152)
-
(67,152)
(86)
(86)
(67,152)
(67,238)
29,635
-
-
-
1,551
19
-
-
-
29,635
1,551
19
Balance at 30 June 2022
173,351
13,088
(87,108)
99,331
Consolidated
Balance at 1 July 2022
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income/(loss) for the year
Transactions with owners in their capacity as owners:
Vesting charge for share-based payments (note 35)
Issue of warrants (note 22)
Issued
capital
$'000
Reserves
$'000
Accumulated
losses
$'000
Total equity
$'000
173,351
13,088
(87,108)
99,331
-
-
-
-
-
-
8
8
(55,805)
-
(55,805)
8
(55,805)
(55,797)
2,147
535
-
-
2,147
535
Balance at 30 June 2023
173,351
15,778
(142,913)
46,216
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
27
Damstra Holdings Limited
Consolidated statement of cash flows
For the year ended 30 June 2023
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Other revenue
Consolidated
Note 30 June 2023 30 June 2022
$'000
$'000
33,833
(26,745)
151
-
27,900
(31,803)
43
340
Net cash from/(used in) operating activities
33
7,239
(3,520)
Cash flows from investing activities
Payment for purchase of subsidiary, net of cash acquired
Payments for property, plant and equipment
Payments for intangibles
Proceeds from disposal of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue transaction costs
Interest and other finance costs paid
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year (including Term
deposits)
31
21
(3,500)
(1,150)
(6,873)
-
(2,240)
(1,151)
(6,705)
3
(11,523)
(10,093)
-
-
(1,788)
5,000
(571)
(1,006)
20,020
(1,408)
(1,410)
9,000
(11,497)
(831)
1,635
13,874
(2,649)
261
10,095
9,834
Cash and cash equivalents at the end of the financial year (including Term deposits)
7,446
10,095
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
28
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 1. General information
The financial statements cover Damstra Holdings Limited as a Group consisting of Damstra Holdings Limited and the entities
it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Damstra
Holdings Limited's functional and presentation currency.
Damstra Holdings Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business is:
Suite 3, Level 3
299 Toorak Road
South Yarra VIC 3141
A description of the nature of the Group's operations and its principal activities are included in the directors' report, which is
not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 24 August 2023. The
directors have the power to amend and reissue the financial statements.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board ('AASB') that are mandatory for the current reporting period. The adoption of these Accounting
Standards and Interpretations did not have any significant impact on the financial performance or position of the Group.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Going Concern
The financial statements have been prepared on a going concern basis, which contemplates the continuity of normal
business activity, and the realisation of assets and the settlement of liabilities in the ordinary course of business.
The Group has net current liabilities of $3,670,000 as at 30 June 2023 (2022: $2,350,000), and net assets of $46,216,000
(2022: $99,331,000). The Group has cash and cash equivalents of $7,140,000 as at 30 June 2023 (2022: $9,738,000). The
Group recently achieved its fifth quarter of being Operating Cashflow positive and achieved being free cashflow positive in
the last quarter of the financial year (Net of acquisitions, drawdown and repayment of debts, other funding transactions and
one-off restructuring costs).
In assessing the Group’s ability to continue as a going concern, the directors have considered the Group’s financial forecasts,
available funds, and that they are in compliance with all banking covenants at 30 June 2023, having recently completed a
refinancing of the banking facility to November 2026. The Group's forecasts reflect the generation of free Cashflow resulting
from the achieved cost reduction program and recent new client wins. The directors are satisfied that these actions are
practical and achievable and are therefore satisfied that there are reasonable grounds to conclude the Group can continue
as a going concern.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate
for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention.
29
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements, are disclosed in note 3.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in note 30.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Damstra Holdings Limited
('Company' or 'parent entity') as at 30 June 2023 and the results of all subsidiaries for the year then ended. Damstra Holdings
Limited and its subsidiaries together are referred to in these financial statements as the 'Group'.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to
the Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable
to the parent.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling
interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises
the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in
profit or loss.
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision
Maker (CODM). The CODM, who is responsible for allocating resources and assessing performance of the operating
segments, has been identified as the CEO and Chairman of the Group.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Damstra Holdings Limited's functional and presentation
currency.
Foreign currency transactions
Foreign currency transactions are translated into the entity's functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting
date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange
rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences
are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
30
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
Revenue recognition
The Group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in exchange
for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the contract with a
customer; identifies the performance obligations in the contract; determines the transaction price which takes into account
estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance
obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and
recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer
of the goods or services promised.
In addition, the Group considers whether: the parties to the contract have approved the contract and are committed to perform
their respective obligations; each party’s rights regarding the goods or services to be transferred can be identified; the
payment terms for the goods or services to be transferred can be identified; the contract has commercial substance; and it
is probable that the entity will collect the consideration to which it will be entitled to, evaluating the collectability by considering
the customer’s ability and intention to pay.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts,
rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates
are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration
is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues
until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject
to the constraining principle are recognised as a refund liability.
Software service
Software service revenue primarily consists of fees that give customers access to the Group's workforce management
system, which also includes related customer support and maintenance. The software service revenue is recognised over
time as they are delivered and consumed concurrently over the service period, beginning on the date that the services are
made available to the customer. Software services typically have a term of 12 months and are subject to penalties for early
termination by the customer. Subscription services represent a single obligation to provide continuous access to the software,
maintenance and support including upgrades on and when available basis.
Rental of hardware equipment
Revenue from the rental of hardware equipment consists of fees that give customers access to hardware and includes
(among other hardware) Alcolizers, Biometric technology login terminals and handheld devices. The hardware rental revenue
is recognised over time as customers derive the benefit from the hardware, beginning on the date that the service is made
available to the customers.
Implementation and other support services
Revenue from training and other support services is recognised at a point in time following the delivery and completion of
the agreed services with the Group.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate,
which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the
net carrying amount of the financial asset.
Other income
Other income is recognised when it is received or when the right to receive payment is established.
31
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
Government grants
Grants from the government are recognised at their fair value when there is reasonable assurance that the grant will be
received and the Group will comply with all attached conditions. Research and development ('R&D') tax incentives are
recognised in the statement of profit or loss and other comprehensive income to the extent that they relate to costs that have
been expensed. For costs that have been capitalised to intangible assets, the government grants income is initially
recognised as 'deferred income' and is subsequently credited to the statement of profit or loss and other comprehensive
income on a straight-line basis over the expected lives of the related assets. Only the portion of the incentive that is
incremental to the Company tax rate is accounted for as a government grant.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
when the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
●
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor
taxable profits; or
when the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
●
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the
carrying amount to be recovered.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
Damstra Holdings Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax
consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated group
continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate
taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of the tax
consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax
consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the
intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a
contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.
The Group is entitled to claim special tax deductions in relation to qualifying Research & Development ('R&D') expenditure.
The Group accounts for such allowances as tax credits, which means that the allowance reduces income tax payable and
current tax expense. A deferred tax asset is recognised for unclaimed tax credits that are carried forward as deferred tax
assets.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
32
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group's
normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability
for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30
days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss
allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Customer fulfilment costs
Customer fulfilment costs are capitalised as an asset when all the following are met: (i) the costs relate directly to the contract
or specifically identifiable proposed contract; (ii) the costs generate or enhance resources of the Group that will be used to
satisfy future performance obligations; and (iii) the costs are expected to be recovered. Customer fulfilment costs are
amortised on a straight-line basis over the term of the contract.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and those overheads
that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the
weighted average cost method.
Net realisable value represents the estimated selling price, less all estimated costs of completion and costs to be incurred in
marketing, selling and distribution.
Joint ventures
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net
assets of the arrangement. Investments in joint ventures are accounted for using the equity method. Under the equity method,
the share of the profits or losses of the joint venture is recognised in profit or loss and the share of the movements in equity
is recognised in other comprehensive income. Investments in joint ventures are carried in the statement of financial position
at cost plus post-acquisition changes in the Group's share of net assets of the joint venture. Goodwill relating to the joint
venture is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment.
Income earned from joint venture entities reduce the carrying amount of the investment.
Property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
33
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment over
their expected useful lives as follows:
Leasehold improvements
Plant and equipment
Motor vehicles
4-5 years
3-5 years
5 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the assets,
whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
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.
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 to profit or loss as
incurred.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at
the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising
from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying
amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in
the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or
period.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment,
or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less
accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed.
Acquired software
Significant costs associated with the software are deferred and amortised on a straight-line basis over the period of their
expected benefit, being their finite life of 3 years.
Product development
Research costs are expensed in the period in which they are incurred. Development costs are capitalised when: it is probable
that the project will be a success considering its commercial and technical feasibility; the Group is able to use or sell the
asset; the Group has sufficient resources and intent to complete the development; and its costs can be measured reliably.
Capitalised development costs are amortised on a straight-line basis over the period of their expected benefit, being their
finite life of 3 years.
34
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
Customer relationships and Brands
Customer relationships acquired in a business combination are amortised on a straight-line basis over the period of their
expected benefit, being their finite useful life of between 5 to 15 years.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-
financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial
year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within 30 days of recognition.
Contract liabilities
Contract liabilities represent the Group's obligation to transfer goods or services to a customer and are recognised when a
customer pays consideration, or when the Group recognises a receivable to reflect its unconditional right to consideration
(whichever is earlier) before the Group has transferred the goods or services to the customer.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method. Borrowing costs are capitalised when they
are directly attributable to the acquisition, construction or production of a qualifying asset, otherwise they are expensed as
incurred.
Derecognition
A borrowing is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing
financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing
liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability
and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of
profit or loss and other comprehensive income.
Lease liabilities
Leases are assessed to determine if they are an operating or finance lease based on the substance of the underlying
transaction. Consideration is given to the transfer of ownership at the end of the lease, options to purchase the underlying
asset, duration of the lease, and values paid during the lease. Where assets are considered an operating lease income or
expense is recognised in the profit and loss statement. Where leases are assessed as finance leases the Right of Use Asset
and Lease liability are calculated and recognised in the Balance Sheet.
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at 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 incentives receivable, variable lease payments that depend on an index or a rate, amounts expected
to be paid under residual value guarantees, 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. If a rental agreement contains a substantive substitute right, it
is not accounted for as a lease.
35
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
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.
Finance costs
Finance costs are expensed in the period in which they are incurred.
Provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is
probable the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of
money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision
resulting from the passage of time is recognised as a finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be
settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities
are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
measured at the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and
periods of service. Expected future payments are discounted using market yields at the reporting date on high quality
corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled 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 of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using
either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option,
the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine
whether the Group receives the services that entitle the employees to receive payment. No account is taken of any other
vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate
of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit
or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous
periods.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value
of the share-based compensation benefit as at the date of modification.
36
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period,
any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award
is treated as if they were a modification.
If an employee is rendering services for the award beginning at a date earlier than the grant date, the entity estimates the
cost of the award and recognises such cost over a period starting with that earlier date. The entity then adjusts the cost
estimate to the grant date fair value when approval is given and the grant date is set.
Warrants
Share warrants issued by the Company, classified as equity instruments, are taken directly to the share warrants
reserve. Once the share warrants are exercised, the amount recognised in the reserve is transferred to share capital on
issue of shares. If the share warrants are forfeited, or they expire, the amounts recognised in the reserve will be transferred
to accumulated losses.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair
value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the principal
market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming
they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and
best use. Valuation techniques used to measure fair value are those that are appropriate in the circumstances and which
maximise the use of relevant observable inputs and minimise the use of unobservable inputs.
Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments
or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest
in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value
or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit
or loss.
On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions, the Group's operating or
accounting policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the Group remeasures its previously held equity interest in the
acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is
recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.
37
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Significant accounting policies (continued)
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest
in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the
acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value
of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly
in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement
of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's
previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional
amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new
information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends
on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
Loss per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit or loss attributable to the owners of Damstra Holdings Limited,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted
average number of additional ordinary shares that would have been outstanding assuming conversion of all dilutive potential
ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
Comparatives
Certain comparatives have been reclassified to conform with current year presentation. This has not had any material impact
on the financial position of the Group as at 30 June 2022 or the results for the year then ended.
Rounding of amounts
The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that
Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the Group for the annual reporting period ended 30 June 2023. The adoption of these
Accounting Standards and Interpretations is not expected to have any significant impact on the Group’s financial statements.
38
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors, including expectations of future events, management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
Revenue recognition
In addition to the accounting policy in note 2, judgement has been exercised by the Group when evaluating whether
collectability of consideration is probable, by assessing the customer’s ability and intention to pay at the time contracts are
entered into.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-Scholes
model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and
assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and
liabilities within the next annual reporting period but may impact profit or loss and equity.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the
lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit
loss rate for each group. These assumptions include recent sales experience, historical collection rates, the impact of the
Coronavirus (COVID-19) pandemic and forward-looking information that is available. The allowance for expected credit
losses, as disclosed in note 9, is calculated based on the information available at the time of preparation. The actual credit
losses in future years may be higher or lower.
Estimation of useful lives of assets
The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant
and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations
or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously
estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written
down.
Goodwill and other indefinite life intangible assets
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill
and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in
note 2. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These
calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and
growth rates of the estimated future cash flows. Refer to note 13 for further information.
Recovery of deferred tax assets
Deferred tax assets including those from unrecouped tax losses are recognised for deductible temporary differences only if
the Group considers it is probable that future taxable amounts will be available to utilise those temporary differences and
losses. The Group has concluded that a proportion of the deferred tax asset balance will be recoverable using estimated
future taxable income based on the board approved forecasts in the relevant tax jurisdictions. Judgment and assumptions
about the generation of future taxable profits depends on management's estimates of future cashflows. These assumptions
are consistent with the modelling used to support the carrying value of non-current assets. They depend on estimates of
future predications Judgements are also required about the application of income tax legislation. These judgments and
assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter
expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognised and the amounts
of other tax losses and temporary differences not yet recognised.
39
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 3. Critical accounting judgements, estimates and assumptions (continued)
Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement
is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the underlying
asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods to be included
in the lease term. In determining the lease term, all facts and circumstances that create an economical incentive to exercise
an extension option, or not to exercise a termination option, are considered at the lease commencement date. Factors
considered may include the importance of the asset to the Group's operations; comparison of terms and conditions to
prevailing market rates; incurrence of significant penalties; existence of significant leasehold improvements; and the costs
and disruption to replace the asset. The Group reassesses whether it is reasonably certain to exercise an extension option,
or not exercise a termination option, if there is a significant event or significant change in circumstances.
Warrants
The Group has classified the share warrants as an equity instrument, on the basis that a fixed amount of cash is delivered
in exchange for a fixed amount of shares. The warrants are settled using the Company's own equity instruments (ordinary
shares) in exchange for a fixed price i.e. the exercise price. There is no obligation for the Company to purchase its own
equity for cash. Please refer to note 22 for details of the key estimates used in valuing the instruments.
Note 4. Operating segments
Identification of reportable operating segments
The Group is organised into one operating segment, being workforce management solutions. The determination of the
operating segment is based on the information provided to the Board of Directors (who are identified as the Chief Operating
Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources.
Consideration has been given to the manner in which services are provided to the customers, the organisation structure and
the nature of the Group's customer base.
Major customers
During the year ended 30 June 2023, two customers individually contributed more than 10% of the total external revenue
generated by the Group (2022: two).
Geographical information
Australia
New Zealand
United States of America
International operations
Sales to external customers
30 June 2023 30 June 2022 30 June 2023 30 June 2022
Geographical non-current
assets
$'000
$'000
$'000
$'000
23,180
3,830
1,916
537
25,347
2,361
777
504
65,800
454
246
330
112,449
510
480
4
29,463
28,989
66,830
113,443
Geographical non-current assets excludes Investments accounted for using the equity method.
Note 5. Revenue from operations
Sales revenue
Consolidated
30 June 2023 30 June 2022
$'000
$'000
29,463
28,989
40
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 5. Revenue from operations (continued)
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Major product lines
Software services
Rental and hardware equipment sales
Implementation and other support services
Timing of revenue recognition
Revenue recognised over time
Revenue recognised at a point in time
Consolidated
30 June 2023 30 June 2022
$'000
$'000
22,048
4,963
2,452
21,656
5,030
2,303
29,463
28,989
21,501
7,962
24,203
4,786
29,463
28,989
Revenue from external customers by geographic regions is set out in note 4 operating segments.
Note 6. Other income
Research and development tax incentives
Government grants (COVID-19)*
Other income
Other income
Consolidated
30 June 2023 30 June 2022
$'000
$'000
459
-
177
636
1,189
82
348
1,619
*
In previous year, the Group has received JobKeeper and other support payments amounting to $82,000 from the
Australian and NZ Government which were passed on to eligible employees. The amount received was recognised as
government grants in the financial statements and recorded as other income over the period in which the related
employee benefits were recognised as an expense.
Note 7. Expenses
Loss before income tax includes the following specific expenses:
Depreciation
Leasehold improvements
Plant and equipment
Motor vehicles
Buildings right-of-use assets
Total depreciation
41
Consolidated
30 June 2023 30 June 2022
$'000
$'000
3
2,348
-
1,110
12
3,354
13
915
3,461
4,294
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 7. Expenses (continued)
Amortisation
Customer contracts
Software and website cost
Customer fulfilment costs
Brand
Total amortisation
Total depreciation and amortisation
Impairment of goodwill and other assets
Impairment of goodwill
Impairment of receivables and other assets
Total impairment of goodwill and other assets
Other expenses include the following:
Outsourced services
IT and administration expenses
Materials and hardware expenses
Acquisition costs (excluding employee benefits expenses)
Advisory fees and consultant fees
Movement in expected credit loss provision
Other expenses
Contractor expenses
Total other expenses
Finance costs
Interest and finance charges paid/payable on borrowings
Interest and finance charges paid/payable on lease liabilities
Fees on extension of loans
Interest and finance charges paid/payable on others
Net foreign exchange loss
Finance costs expensed
Superannuation expense
Defined contribution superannuation expense
Share-based payments expense
Share-based payments expense
42
Consolidated
30 June 2023 30 June 2022
$'000
$'000
1,803
10,163
234
552
1,524
10,129
334
-
12,752
11,987
16,213
16,281
39,800
-
40,000
2,336
39,800
42,336
4,183
5,029
572
-
1,053
148
435
511
5,054
5,710
1,976
137
1,612
327
970
544
11,931
16,330
3,837
164
734
28
42
1,795
59
-
114
96
4,805
2,064
1,135
1,203
2,147
1,551
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 8. Income tax
Income tax expense
Current tax
Deferred tax - origination and reversal of temporary differences
Adjustment recognised for prior periods
Aggregate income tax expense
Consolidated
30 June 2023 30 June 2022
$'000
$'000
-
-
-
-
-
4,445
293
4,738
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense
(55,805)
(62,414)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Tax at the statutory tax rate of 25%
Impairment of goodwill
Share-based payments
Non-assessable R&D boost
Other non-deductible expenses
Prior year deferred tax asset derecognised
Current year tax losses not brought to account
Adjustment recognised for prior periods
Income tax expense
Tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 25%
(13,951)
9,950
562
(115)
240
(3,314)
-
3,314
-
(15,604)
10,000
388
(295)
290
(5,221)
4,445
5,094
420
-
4,738
Consolidated
30 June 2023 30 June 2022
$'000
$'000
59,428
46,172
14,857
11,543
The above potential tax benefit has not been recognised in the statement of financial position due to uncertainty as to whether
future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised. These tax
losses can only be utilised in the future if the continuity of ownership test is passed, or failing that, the same business test is
passed.
43
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 9. Trade and other receivables
Current assets
Trade receivables
Less: Allowance for expected credit losses
Other receivables
Receivables from related parties
Consolidated
30 June 2023 30 June 2022
$'000
$'000
4,505
(484)
4,021
7
134
5,289
(524)
4,765
150
124
4,162
5,039
Allowance for expected credit losses
The Group has recognised a loss of $148,000 (2022: $1,863,000) in profit or loss in respect of the expected credit losses for
the year ended 30 June 2023.
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Expected credit loss rate
Carrying amount
30 June 2023 30 June 2022 30 June 2023 30 June 2022 30 June 2023 30 June 2022
Allowance for expected
credit losses
Consolidated
%
%
$'000
$'000
$'000
$'000
Not overdue
1 to 2 months overdue
2 to 3 months overdue
3 to 4 months overdue
Over 4 months overdue
-
1.40%
2.31%
19.92%
81.30%
1.23%
2.10%
34.04%
56.05%
52.30%
2,127
1,291
303
291
493
3,334
1,008
209
127
611
4,505
5,289
-
18
7
58
401
484
41
21
71
71
320
524
Movements in the allowance for expected credit losses are as follows:
Opening balance
Additional provisions recognised
Receivables written off during the year as uncollectable
Closing balance
Consolidated
30 June 2023 30 June 2022
$'000
$'000
524
148
(188)
484
500
1,863
(1,839)
524
44
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 10. Other assets
Current assets
Prepayments
Security deposits
Other current assets
Non-current assets
Customer fulfilment costs
Consolidated
30 June 2023 30 June 2022
$'000
$'000
1,061
89
59
1,081
65
284
1,209
1,430
469
187
1,678
1,617
Reconciliation of customer fulfilment costs:
Reconciliations of the written down values at the beginning and end of the current financial year are set out below:
Consolidated
30 June 2023 30 June 2022
$'000
$'000
187
516
(234)
469
426
95
(334)
187
Consolidated
30 June 2023 30 June 2022
$'000
$'000
154
(136)
18
13,612
(9,080)
4,532
138
(138)
-
152
(133)
19
11,982
(6,807)
5,175
138
(138)
-
4,550
5,194
Opening balance
Additions
Amortisation expense
Note 11. Property, plant and equipment
Non-current assets
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Motor vehicles - at cost
Less: Accumulated depreciation
45
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 11. Property, plant and equipment (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2021
Additions
Additions through business combinations
Exchange differences
Depreciation expense
Balance at 30 June 2022
Additions
Depreciation expense
Balance at 30 June 2023
Note 12. Right-of-use assets
Non-current assets
Right-of-use assets
Less: Accumulated depreciation
Leasehold
improve-
ments
$'000
Plant and
equipment
$'000
Motor vehicles
$'000
Total
$'000
21
10
-
-
(12)
19
2
(3)
18
7,364
1,144
22
(1)
(3,354)
5,175
1,705
(2,348)
4,532
2
-
11
-
(13)
-
-
-
-
7,387
1,154
33
(1)
(3,379)
5,194
1,707
(2,351)
4,550
Consolidated
30 June 2023 30 June 2022
$'000
$'000
4,504
(2,340)
4,646
(1,798)
2,164
2,848
The Group leases land and buildings for its offices, warehouses and retail outlets under agreements of between one to five
years with, in some cases, options to extend. Refer to note 2 for accounting policy on right-of-use assets.
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2021
Additions
Additions through business combinations
Exchange differences
Depreciation expense
Balance at 30 June 2022
Additions
Exchange differences
Depreciation expense
Balance at 30 June 2023
46
Properties
$'000
2,611
971
201
(20)
(915)
2,848
469
(43)
(1,110)
2,164
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 12. Right-of-use assets (continued)
For other AASB 16 lease-related disclosures refer to the following:
●
●
●
●
note 7 for details of interest on lease liabilities and other lease expenses;
note 17 and note 33 for details of lease liabilities at the beginning and end of the reporting period;
note 24 for the maturity analysis of lease liabilities; and
consolidated statement of cash flows for repayment of lease liabilities.
Note 13. Intangible assets
Non-current assets
Goodwill - at cost
Less: Impairment
Software and website costs - at cost
Less: Accumulated amortisation
Customer relationships - at cost
Less: Accumulated amortisation
Brand
Less: Accumulated amortisation
Consolidated
30 June 2023 30 June 2022
$'000
$'000
79,999
(39,800)
40,199
48,542
(33,858)
14,684
9,113
(4,944)
4,169
1,035
(552)
483
119,999
(40,000)
79,999
41,908
(23,700)
18,208
9,113
(3,141)
5,972
1,035
-
1,035
59,535
105,214
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2021
Additions
Additions through business combinations
Impairment of goodwill
Amortisation expense
Balance at 30 June 2022
Additions
Impairment of goodwill
Exchange differences
Amortisation expense
Goodwill
$'000
Software and
website
costs
$'000
Customer
relationships
$'000
Brand
$'000
Total
$'000
106,971
-
13,028
(40,000)
-
79,999
-
(39,800)
-
-
19,104
6,367
2,866
-
(10,129)
18,208
6,640
-
(1)
(10,163)
4,710
-
2,786
-
(1,524)
5,972
-
-
-
(1,803)
1,035
-
-
-
-
1,035
-
-
-
(552)
131,820
6,367
18,680
(40,000)
(11,653)
105,214
6,640
(39,800)
(1)
(12,518)
Balance at 30 June 2023
40,199
14,684
4,169
483
59,535
With the exclusion of Goodwill, intangible assets have finite useful lives. The current amortisation charges for intangible
assets are included under depreciation and amortisation expense in the Consolidated Statement of Profit or Loss and Other
Comprehensive Income.
47
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 13. Intangible assets (continued)
Impairment testing for goodwill
In accordance with the Group’s accounting policies, indefinite life assets are allocated to CGUs in order to determine the
recoverable amount for the annual impairment test.
As at 30 June 2023, the Group had one CGU which was the whole of its consolidated operations, being the Damstra
Workforce Management Solutions CGU.
An assessment of indicators and subsequent testing of impairment was completed as at year end which resulted in an
impairment loss of $39,800,000 being recognised during the year ended 30 June 2023.
The testing assessed the recoverable amount of the Damstra Workforce Management Solutions CGU’s assets by a value-
in-use ('VIU') calculation using a discounted cash flow model, based on a 5 year projection period approved by management.
The impairment loss resulted principally from a 34% increase in the discount rate used in the value-in-use model reflecting
changing global market conditions. Compound annual revenue growth rates have been set based on expected market
outcomes. It should be noted that these conservative assumptions generate sustainable increasing profits and cash
outcomes to support the business.
Key assumptions - Damstra Workforce Management Solutions CGU
Key assumptions are those to which the recoverable amount of an asset or cash-generating unit is most sensitive. The
following key assumptions were used in the discounted cash flow model in relation to Damstra Workforce Management
Solutions CGU:
(a) Implied pre-tax discount rate 18.1% (2022: 13.1%);
(b) Post-tax discount rate of 14.75% (2022:11.0%);
(c) Revenue growth was projected at an average of 12.5% (2022: 18.1%) ; and
(d) Terminal growth rate 2.5% (2022: 2.5%).
The discount rate was estimated based on the CGU’s weighted average cost of capital, which was calculated by a third party
independent valuation expert.
The revenue growth rate reflects forecast conservative growth rates over a 5 year period after consideration for changing
market conditions. The terminal growth rate was determined based on management’s estimate of a conservative long term
compound growth rate, consistent with what a market participant would make.
Based on the above, an impairment charge of $39,800,000 has been applied as the carrying amount of Damstra Workforce
Management Solutions CGU exceeded its recoverable amount.
Sensitivity analysis - Damstra Workforce Management Solutions CGU
Management believes that the growth rates disclosed above over the five-year forecast period are realistic and achievable
based on the organic growth prospects and significant existing investment in the Group’s workplace management software
and as such Management believes that the carrying amount is fairly stated.
The calculation of value in use is most sensitive to the following assumptions:
(a) Discount rate: the post-tax discount rate in the model is 14.75% (a 1% increase in the discount rate with all other factors
remaining consistent in the model increases the impairment by $5,700,000).
(b) Revenue growth rate: the projected growth rate for recurring revenue in the model is an average of 12.5%.
If there are any negative changes in the key assumptions on which the recoverable amount of goodwill is based, this would
result in a further impairment charge of goodwill.
48
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 14. Trade and other payables
Current liabilities
Trade payables
Accruals and other payables
Refer to note 24 for further information on financial instruments.
Note 15. Contract liabilities
Current liabilities
Contract liabilities
Non-current liabilities
Contract liabilities
Reconciliation
Reconciliation of the written down values at the beginning and end of the current and
previous financial year are set out below:
Opening balance
Payments received in advance
Additions through business combinations
Revenue recognised in current year
Closing balance
Unsatisfied performance obligations
There were no unsatisfied performance obligations as at 30 June 2023 and 30 June 2022.
Note 16. Borrowings
Current liabilities
Back-end fee payable
Non-current liabilities
Loan from Partners for Growth VI, L.P. ('PFG')
Back-end fee payable
Capitalised borrowing costs
49
Consolidated
30 June 2023 30 June 2022
$'000
$'000
1,660
2,701
2,664
3,922
4,361
6,586
Consolidated
30 June 2023 30 June 2022
$'000
$'000
5,679
4,565
168
149
5,847
4,714
4,714
10,875
-
(9,742)
5,910
10,202
552
(11,950)
5,847
4,714
Consolidated
30 June 2023 30 June 2022
$'000
$'000
1,458
-
15,000
750
-
10,000
354
(299)
15,750
10,055
17,208
10,055
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 16. Borrowings (continued)
Refer to note 24 for further information on financial instruments.
Movement in the carrying value of the PFG facility was as follows:
Opening balance at 1 July
Drawdowns in the year
Derecognition of borrowing on modification
Recognition of new borrowing on modification
Recognition of back-end fees on modification
Carrying value at 30 June
Consolidated
30 June 2023
$'000
10,055
5,000
(15,055)
15,000
2,208
17,208
Loan from Partners for Growth VI, L.P. ('PFG facility')
On 5 June 2023, the Group renewed and extended its loan facility. The PFG facility is now a $17,500,000 (FY22
$15,000,000), three and a half year secured debt facility with a redemption date of 30 November 2026. As at 30 June 2023,
$15,000,000 of the facility was drawn. The interest rate on the facility is 8.6% above BBSW per annum, payable monthly in
arrears.
As part of the new arrangement the following additional conditions were agreed between the Group and PFG:
●
●
●
An establishment fee of $200,000;
An additional backend fee of $750,000 payable on 30 June 2026; and
The issue of warrants, for a total value of $535,000, which are based on fixed exercise prices of $0.071, $0.102 and
$0.118 exercisable before 30 June 2030. As these warrants are under a fixed for fixed arrangement they have been
classified as equity, please refer to note 22 for further details.
The Group consider these additional terms to be a substantial modification to the original agreements and therefore the
original borrowings have been derecognised with the new borrowing recognised as a new liability. In accordance with the
Groups’ accounting policy and accounting standards the difference in the carrying amounts has been recognised in the
statement of profit or loss and other comprehensive income in the current year as a finance cost. In addition, the back-end
fees from the original agreement with PFG have been fully recognised in the carrying value of the new loan and the additional
back-end fees as per the new finance arrangement were expensed in the statement of profit or loss and other comprehensive
income as a finance cost. The original back-end fees are consistent with the original loan agreement and are noted below:
Fee calculated at 30 June 2024 in respect of a fee of 7.75% of the average outstanding borrowing across the initial
●
facility term;
A fee ranging from $nil to $465,000 depending on the Damstra share price at 30 June 2024, noting that the Group has
provided for the full $465,000 as the amount payable would only vary if the share price of the Group closes higher than
$0.40 at 30 June 2024; and
The issue of warrants, for a total consideration of $19,000, with fixed exercise prices of $1.05 and $1.32 per share. As
these warrants are under a fixed for fixed arrangement they have been classified as equity.
●
●
These fees are payable on 30 June 2024.
Bank Covenants
The Group was in compliance with all bank covenants as at 30 June 2023.
50
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 16. Borrowings (continued)
Financing arrangements
As at the reporting date, the following lines of credit were in place:
Total facilities
Loan from Partners for Growth VI, L.P. (PFG)
Used at the reporting date
Loan from Partners for Growth VI, L.P. (PFG)
Unused at the reporting date
Loan from Partners for Growth VI, L.P. (PFG)
Note 17. Lease liabilities
Current liabilities
Lease liability
Non-current liabilities
Lease liability
Refer to note 24 for maturity analysis of lease liabilities.
Note 18. Employee benefits
Current liabilities
Annual leave
Long service leave
Other employee benefits
Non-current liabilities
Long service leave
51
Consolidated
30 June 2023 30 June 2022
$'000
$'000
17,500
15,000
15,000
10,000
2,500
5,000
Consolidated
30 June 2023 30 June 2022
$'000
$'000
1,100
1,057
1,218
1,949
2,318
3,006
Consolidated
30 June 2023 30 June 2022
$'000
$'000
1,442
575
409
1,595
277
97
2,426
1,969
114
187
2,540
2,156
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 19. Provisions
Current liabilities
Other provisions
Consolidated
30 June 2023 30 June 2022
$'000
$'000
1,157
817
Other provisions
These provisions represent residual take on liabilities from recent acquisitions relating to research & development and other
claims.
Movements in provisions
Movements in other provisions during the current financial year are set out below:
Consolidated - 30 June 2023
Carrying amount at the start of the year
Additional provisions recognised
Carrying amount at the end of the year
Note 20. Deferred consideration on acquisition
Current liabilities
Deferred consideration
Other
provisions
$'000
817
340
1,157
Consolidated
30 June 2023 30 June 2022
$'000
$'000
-
3,500
The Group acquired 100% of the ordinary shares of TIKS Solutions Pty Ltd ('TIKS') for the total consideration of $16,883,000
during the year ended 30 June 2022. The consideration was partly settled by the issue of 12,000,000 ordinary shares in the
Company at an issue price of $0.89 per share and cash payment of $6,203,000. The deferred consideration amount of
$3,500,000 was settled during the year ended 30 June 2023.
Note 21. Issued capital
Ordinary shares - fully paid
Less: Treasury shares
Add back: Treasury shares allocated
Consolidated
30 June 2023 30 June 2022 30 June 2023 30 June 2022
Shares
Shares
$'000
$'000
257,696,388 257,696,388
(2,060,948)
1,434,176
(2,060,948)
1,928,573
173,638
(4,462)
4,175
174,708
(4,462)
3,105
257,564,013 257,069,616
173,351
173,351
52
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 21. Issued capital (continued)
Movements in ordinary share capital
Details
Date
Shares
Issue price
$'000
Balance
Issue of shares on the acquisition of TIKS Solutions
Pty Ltd (note 31)
Issue of shares
Issue of shares
Share transaction costs
1 July 2021
186,813,130
14 October 2021
10 December 2021
22 December 2021
12,000,000
40,467,598
18,415,660
-
$0.89
$0.34
$0.34
$0.00
Balance (including Treasury shares allocated)
30 June 2022
257,696,388
Balance (including Treasury shares allocated)
30 June 2023
257,696,388
148,178
10,680
13,760
6,260
(1,065)
177,813
177,813
Movements in treasury shares
Details
Date
Shares
Issue price
$'000
Balance
Less: allocation of shares on exercise of options
Less: allocation of shares on exercise of options
Less: allocation of shares on exercise of options
Less: allocation of shares on exercise of options
Less: allocation of shares on exercise of options
Less: allocation of shares on exercise of options
Less: allocation of shares on exercise of options
Less: allocation of shares on exercise of options
Balance
Less: allocation of shares on exercise of options
Less: allocation of shares on exercise of options
Less: allocation of shares on exercise of options
Less: allocation of shares on exercise of options
Less: allocation of shares on exercise of options
Less: allocation of shares on exercise of options
Less: allocation of shares on exercise of options
Less: allocation of shares on exercise of options
Less: allocation of shares on exercise of options
Less: allocation of shares on exercise of options
Balance
1 July 2021
July 2021
September 2021
October 2021
November 2021
December 2021
March 2022
April 2022
May 2022
30 June 2022
July 2022
Aug 2022
September 2022
October 2022
November 2022
December 2022
March 2023
April 2023
May 2023
June 2023
30 June 2023
(1,603,515)
23,030
15,486
25,440
596,859
66,667
22,387
107,201
119,673
(626,772)
26,389
20,833
4,400
40,634
160,070
65,972
13,964
19,768
115,022
27,345
(132,375)
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
(4,462)
-
-
-
-
-
-
-
-
(4,462)
-
-
-
-
-
-
-
-
-
-
(4,462)
Ordinary shares
Ordinary shares entitle the holder to participate in any dividends declared and any proceeds attributable to shareholders
should the Company be wound up, in proportions that consider both the number of shares held and the extent to which those
shares are paid up. The fully paid ordinary shares have no par value and the Company does not have a limited amount of
authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Treasury shares
Treasury shares comprise of 2,060,948 shares issued to the Employee Share Trust ('EST'). Treasury shares have been
reallocated to issued and allocated. There is no overall change in the share capital position.
53
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 21. Issued capital (continued)
The Company has established the EST to deliver long-term incentives to eligible employees. The trustee of the Share Trust
is controlled by the Company. The acquisition of the shares under the EST is fully funded by the Group. These shares are
recorded as treasury shares representing a deduction against issued capital. The shares issued to EST is allocated to
employees on successful vesting of options/awards. As at 30 June 2023, EST held 132,375 (2022: 626,772) shares that
were unallocated. Refer to note 35 'Share-based payments' for further details.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide
returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost
of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated
as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce debt.
The Group would look to raise capital when an opportunity to invest in a business or company was seen as value adding
relative to the current Company's share price at the time of the investment.
The Group is subject to certain covenants on its financing arrangements and meeting these is given priority in all capital risk
management decisions. There are no events of default on the financing arrangements as at the end of the financial year.
The capital risk management policy remains unchanged from the 30 June 2022 Annual Report.
Note 22. Reserves
Foreign currency reserve
Share-based payments reserve
Warrants equity reserve
Consolidated
30 June 2023 30 June 2022
$'000
$'000
(105)
15,329
554
(113)
13,182
19
15,778
13,088
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
Warrants equity reserve
Warrants have previously been classified as financial liabilities, with the new issue of warrants in 2023, classification has
been re-assessed in accordance with the substance of the contractual arrangement. Existing and new warrants are now
classified as equity.
54
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 22. Reserves (continued)
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2021
Foreign currency translation
Share-based payments
Balance at 30 June 2022
Foreign currency translation
Share-based payments
Warrants issued
Balance at 30 June 2023
Foreign
currency
reserve
$'000
Share-based
payments
reserve
$'000
Warrants
equity reserve
$'000
Total
$'000
(27)
(86)
-
(113)
8
-
-
11,631
-
1,551
13,182
-
2,147
-
(105)
15,329
19
-
-
19
-
-
535
554
11,623
(86)
1,551
13,088
8
2,147
535
15,778
In 2023, the Group as part of the facility extension has issued PFG Nominees warrants, for a total value of $535,000.
The value of the warrants included in the warrants equity reserve was calculated by an independent valuation expert using
trinomial valuation model that considers strike price, share price at grant date, expiry date, volatility, risk free rate, dividend
yield to determine the value per warrant which is calculated by the total number of warrants issued to determine the value of
the warrants.
The assumptions used in the valuation are as follows:
Tranche 1 Tranche 2 Tranche 3
Strike price ($)
Share price at grant date ($)
Grant date
Expiry date
Volatility
Risk free rate
Dividend yield
Value per warrant ($)
Total number of warrants issued
Note 23. Dividends
$0.102
$0.085
$0.071
$0.085
$0.118
$0.085
30-June-23 30-June-23 30-June-23
30-June-30 30-June-30 30-June-30
77%
3.8%
0%
$0.038
10,337,553 1,533,593 1,329,114
77%
3.8%
0%
$0.041
77%
3.8%
0%
$0.039
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Franking credits
Franking credits available for subsequent financial years based on a tax rate of 25%
1,172
1,172
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
●
●
●
franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date
Consolidated
30 June 2023 30 June 2022
$'000
$'000
55
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 24. Financial instruments
Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and
interest rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability
of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group
uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis
in the case of interest rate and foreign exchange risks and ageing analysis for credit risk.
Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors
('the Board'). These policies include identification and analysis of the risk exposure of the Group and appropriate procedures,
controls and risk limits. Finance identifies, evaluates and hedges financial risks within the Group's operating units. Finance
reports to the Board on a monthly basis.
Market risk
Foreign currency risk
The Group is growing its operations in the United States of America with revenues in USD now material to its operations, as
the Group’s subsidiary operates a business in the United States with exposure to both revenue and expense currency
movements the group has a natural hedge against major currency fluctuations. Apart from USD, the Group is not exposed
to any significant foreign currency risk, except for the translation of financial assets and liabilities of foreign subsidiaries into
the presentation currency.
Price risk
The Group is not exposed to any significant price risk.
Interest rate risk
The Group's main interest rate risk arises from its borrowings. Borrowings issued at variable rates expose the Group to
interest rate risk. Borrowings issued at fixed rates expose the Group to fair value risk.
The Group recently renegotiated its debt facility with interest rates now BBSW+8.6% with a minimum rate of 11.75%. A 1%
increase/decrease in the BBSW from the minimum rate of 11.75% on the $15,000,000 balance will increase/decrease the
interest payable by $150,000.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group has a strict code of credit, including obtaining agency credit information, confirming references and setting
appropriate credit limits. The Group obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to
credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of
those assets, as disclosed in the statement of financial position and notes to the financial statements. The Group does not
hold any collateral.
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through
the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative
across all customers of the Group based on recent sales experience, historical collection rates and forward-looking
information that is available.
The Group has a credit risk exposure to two major customers (2022: two major customers) due to the size of the customer
relationship. These customers are tier 1 construction and mining customers with low risk of credit default. Management
closely monitors the receivable balances of these customers on a monthly basis and is in regular contact with the customer
to mitigate risk.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include
the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual
payments for a period greater than 1 year.
Liquidity risk
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents)
and available borrowing facilities to be able to pay debts as and when they become due and payable.
56
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 24. Financial instruments (continued)
The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously
monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Financing arrangements
Unused borrowing facilities at the reporting date:
Loan from Partners for Growth VI, L.P. (PFG)
Consolidated
30 June 2023 30 June 2022
$'000
$'000
2,500
5,000
Under the revised facility agreement, the undrawn tranche 3 is available based on prior written approval of PFG.
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial
liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual
maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Consolidated - 30 June 2023
Non-derivatives
Non-interest bearing
Trade payables
Accruals and other payables
Interest-bearing - fixed and
variable rate
Lease liability
Loan from Partners for Growth
VI, L.P.
Total non-derivatives
Consolidated - 30 June 2022
Non-derivatives
Non-interest bearing
Trade payables
Accruals and other payables
Interest-bearing - fixed rate
Lease liability
Loan from Partners for Growth
VI, L.P.
Total non-derivatives
1 year or less
$'000
Between 1 and
2 years
$'000
Between 2 and
5 years
$'000
Over 5 years
$'000
Remaining
contractual
maturities
$'000
-
-
1,660
2,701
-
-
-
-
4.44%
1,175
806
472
11.25%
3,358
8,894
3,000
3,806
12,750
13,222
-
-
-
-
-
1,660
2,701
2,453
19,108
25,922
1 year or less
$'000
Between 1 and
2 years
$'000
Between 2 and
5 years
$'000
Over 5 years
$'000
Remaining
contractual
maturities
$'000
-
-
2,664
3,922
-
-
-
-
4.44%
1,136
882
1,239
11.25%
1,125
8,847
12,520
13,402
-
1,239
-
-
-
-
-
2,664
3,922
3,257
13,645
23,488
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
57
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 25. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set out
below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Note 26. Remuneration of auditors
Consolidated
30 June 2023 30 June 2022
$
$
1,582,964
101,575
605,876
1,625,059
99,504
437,107
2,290,415
2,161,670
During the financial year the following fees were paid or payable for services provided by William Buck Audit (Vic) Pty Ltd,
the auditor of the Company, and unrelated firms:
Audit services - William Buck Audit (Vic) Pty Ltd
Audit or review of the financial statements
Total fees - William Buck Audit (Vic) Pty Ltd
Audit services - PricewaterhouseCoopers
Audit or review of the financial statements
Other services - PricewaterhouseCoopers
Employee share trust
Total fees - PricewaterhouseCoopers
Note 27. Contingent liabilities
Consolidated
30 June 2023 30 June 2022
$
$
159,000
159,000
-
-
-
539,480
-
-
9,584
549,064
The Group had no contingent assets or liabilities as at 30 June 2023 and 30 June 2022.
Note 28. Commitments
The Group had no capital commitments as at 30 June 2023 and 30 June 2022.
Note 29. Related party transactions
Parent entity
Damstra Holdings Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 32.
Key management personnel
Disclosures relating to key management personnel are set out in note 25 and the remuneration report included in the
directors' report.
58
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 29. Related party transactions (continued)
Transactions with related parties
The following transactions occurred with related parties:
Consolidated
30 June 2023 30 June 2022
$
$
Other income:
Interest on outstanding loan to key management personnel
Rental income and outgoings of office premises from related party of key management
personnel
10,270
9,483
120,470
103,290
Receivable from and payable to related parties
A relative of Christian Damstra has been employed by the Company and provided contracting services during the financial
year on an arms-length basis. Payments made to the related party during the year ended 30 June 2023 amounted to $46,291
(2022: $58,526).
Amount due as at 30 June 2023 included as part of trade payables was $12,400 (2022: $nil).
Loans to/from related parties
The following balances are outstanding at the reporting date in relation to loans with related parties:
Current receivables:
Loan to key management personnel
Consolidated
30 June 2023 30 June 2022
$
$
134,012
123,741
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 30. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive loss
Parent
30 June 2023 30 June 2022
$'000
$'000
(5,354)
(1,304)
(5,354)
(1,304)
59
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 30. Parent entity information (continued)
Statement of financial position
Parent
30 June 2023
30 June 2022
(restated)
$'000
$'000
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Reserves
Accumulated losses
Total equity
40,316
43,765
192,858
191,416
-
3,416
17,208
13,416
173,351
15,861
(13,562)
173,351
12,857
(8,208)
175,650
178,000
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2023 and 30 June 2022.
Restatement of prior year comparatives
The prior year balances have been restated due to the omission of certain liability and equity balances which should have
been included in the parent entity note for the year ended 30 June 2022. The total impact of these adjustment has increased
net assets and total equity by $5,396,000.
There was no change in the loss after income tax or other comprehensive income for the year. The impact of these
adjustments had no effect on the presentation of the results of the Group for the year ended 30 June 2022.
Contingent liabilities
The group had no contingent liabilities at 30 June 2023 with the exception of term deposits pledged as security for rental
properties.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2023 and 30 June 2022.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the
following:
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
Note 31. Business combinations
Acquisition in the previous year ended 30 June 2022
On 15 October 2021, the Group acquired 100% of the ordinary shares of TIKS Solutions Pty Ltd ('TIKS'), a Sydney-based
software-as-a-service business. The acquisition was finalised during the current year. There were no changes to the fair
value of assets acquired and liabilities assumed as part of the business combination.
60
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 32. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in note 2:
Name
Applied Project Experience Pty Ltd
Damstra Technology LLC
Damstra Technology Pty Ltd
Damstra Technology Pty Ltd
Damstra Technology UK Limited
EIFY Pty Limited
NGB Industries Pty Limited
Vault Intelligence Proprietary Limited
Vault IQ Australia Pty Limited
Vault IQ NZ Limited
Vault IQ SG Pte Ltd
TIKS Solutions Pty Ltd
Damstra Technology Incorporated
Vault Asia Technology (HK) Limited*
Principal place of business /
Country of incorporation
Ownership interest
30 June 2023 30 June 2022
%
%
Australia
United States of America
Australia
New Zealand
United Kingdom
Australia
Australia
Australia
Australia
New Zealand
Singapore
Australia
Philippines
Hong Kong
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
100%
*
Entity deregistered during the current financial year.
The proportion of ownership interest is equal to the proportion of voting power held.
Note 33. Cash flow information
Reconciliation of loss after income tax to net cash from/(used in) operating activities
Loss after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Impairment of goodwill, receivables and other assets
Share of loss - associates
Share-based payments
Foreign exchange differences
Finance costs
Interest revenue
Other
Change in operating assets and liabilities:
Decrease in trade and other receivables
Decrease in other assets
Decrease in tax balances (net)
Decrease in trade and other payables
Increase/(decrease) in contract liabilities
Decrease in provisions
Decrease in other liabilities
Consolidated
30 June 2023 30 June 2022
$'000
$'000
(55,805)
(67,152)
16,213
40,343
109
2,147
(90)
4,805
(151)
(387)
729
(62)
-
(2,215)
1,133
724
(254)
16,281
40,000
38
1,551
(43)
1,968
(43)
-
2,994
63
4,900
(577)
(1,748)
(294)
(1,458)
Net cash from/(used in) operating activities
7,239
(3,520)
61
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 33. Cash flow information (continued)
Non-cash investing and financing activities
Additions to the right-of-use assets
Shares issued in relation to business combinations
Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2021
Net cash used in financing activities
Acquisition of leases
Changes through business combinations (note 31)
Lease termination and other changes
Back end fee amortisation
Establishment fee amortisation and other
Balance at 30 June 2022
Net cash from/(used in) financing activities
Acquisition of financing and leases
Lease termination and other changes
Back end fee amortisation
Fee amortisation and other
Balance at 30 June 2023
Note 34. Loss per share
Consolidated
30 June 2023 30 June 2022
$'000
$'000
469
-
971
10,680
469
11,651
Loan
facility
$'000
Lease
liabilities
$'000
Total
$'000
11,553
(2,000)
-
-
-
354
148
10,055
5,000
-
-
1,854
299
2,550
(1,280)
2,180
207
(651)
-
-
3,006
(1,557)
944
(75)
-
-
14,103
(3,280)
2,180
207
(651)
354
148
13,061
3,443
944
(75)
1,854
299
17,208
2,318
19,526
Consolidated
30 June 2023 30 June 2022
$'000
$'000
Loss after income tax attributable to the owners of Damstra Holdings Limited
(55,805)
(67,152)
Weighted average number of ordinary shares used in calculating basic earnings per share
256,604,609 232,211,499
Weighted average number of ordinary shares used in calculating diluted earnings per share 256,604,609 232,211,499
Number
Number
Basic loss per share
Diluted loss per share
Cents
Cents
(21.75)
(21.75)
(28.92)
(28.92)
Due to the Group's loss position, options have been excluded from the above calculations as their inclusion would be anti-
dilutive.
62
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 35. Share-based payments
The share-based payment expense for the financial year ended 30 June 2023 was $2,147,000 (2022: $1,551,000).
A share option plan has been established by the Group and approved by shareholders at a general meeting, whereby the
Group may, at the discretion of the Nomination and Remuneration Committee, grant options over ordinary shares in the
Company to the employees of the Group. The options are issued for nil consideration and are granted in accordance with
performance guidelines established by the Nomination and Remuneration Committee.
Set out below are summaries of options granted under the plan:
Outstanding at the beginning of the financial year
Granted
Forfeited
Exercised
Expired
Outstanding at the end of the financial year
Number of options
30 June 2023 30 June 2022
14,984,657 10,017,910
7,931,085
11,703,681
(1,472,719)
(2,594,719)
(976,743)
(494,397)
(514,876)
(344,042)
23,255,180 14,984,657
Exercisable at the end of the financial year
6,869,482
4,888,662
The 23,255,180 unissued ordinary shares outstanding at the end of the financial year (2022: 14,984,657) are exercisable at
a weighted average exercise price of $0.59 per share (2022: $0.96 per share).
On 1 October 2022, the Group issued 2,825,000 options that vest over 2 years, relate to staff retention for critical roles. The
options are subject to service conditions and will be dependent on the participants satisfying employment service conditions
of 2 years.
On 10 October 2022, the Group issued 100,000 options that vest over 2 years, relate to staff retention for critical roles. The
options are subject to service conditions and will be dependent on the participants satisfying employment service conditions
of 2 years. These options were subsequently forfeited due to the employee termination in this financial year.
On 17 October 2022, the Group issued 4,446,228 options that vest over 3 years. The options relate to the Employee Incentive
Plan and are subject to service conditions, including a hurdle rate of the share price being at 34c and KPI target performance
obligation. Vesting is also dependent on the participants satisfying employment service conditions of 3 years.
On 24 October 2022, the Group issued 125,000 options that vest over 1 year, relate to staff retention for critical roles. The
options are subject to service conditions and will be dependent on the participants satisfying employment service conditions
of 1 year.
On 28 November 2022, the Group issued 100,000 options that vest over 2 years, relate to staff retention for critical roles.
The options are subject to service conditions and will be dependent on the participants satisfying employment service
conditions of 2 years.
On 30 November 2022, the Group issued 3,125,000 options that vest over 3 years. The options relate to the Employee
Incentive Plan and are subject to service conditions, including a hurdle rate of the share price being at 34c and KPI target
performance obligation. Vesting is also dependent on the participants satisfying employment service conditions of 3 years.
On 30 November 2022, the Group issued 369,430 options for Director’s and CEO’s salary sacrifice that vested on the quarter
ended 31 December 2022.
On 1 January 2023, the Group issued 231,552 options for Director’s and CEO’s salary sacrifice that vested during the quarter
ended 31 March 2023.
On 20 February 2023, the Group issued 1,739 options for two employees that vested on the same day they were issued.
63
Damstra Holdings Limited
Notes to the consolidated financial statements
30 June 2023
Note 35. Share-based payments (continued)
On 19 April 2023, the Group issued 371,036 options for Director’s and CEO’s salary sacrifice that vested during the quarter
ended 30 June 2023.
The weighted average share price during the financial year was $0.136 (2022: $0.541).
The weighted average remaining contractual life of options outstanding at the end of the financial year was 13.20 years
(2022: 12.34 years).
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the
grant date, are as follows:
Grant date
Expiry date
Share price at
grant date
Exercise price
Expected
volatility
Dividend yield
interest rate
Risk-free
Fair value at
grant date
01/10/2022
10/10/2022
17/10/2022
24/10/2022
28/11/2022
30/11/2022
01/01/2023
20/02/2023
19/04/2023
01/10/2037
10/10/2037
17/10/2037
24/10/2037
28/11/2037
30/11/2037
30/11/2037
20/02/2038
30/11/2037
$0.18
$0.14
$0.15
$0.14
$0.16
$0.16
$0.12
$0.12
$0.08
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
-
-
-
-
-
-
-
-
-
Note 36. Events after the reporting period
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$0.18
$0.14
$0.15
$0.14
$0.16
$0.16
$0.12
$0.12
$0.08
The following matters have arisen since 30 June 2023 that may have a significant affect on groups operations and
performance in the future financial year:
(a) On 14 July 2023 and 17 July 2023 Damstra signed contract expansions with multiple clients with an estimated ARR of
$800,000.
(b) On 18 July 2023 Damstra extended is loan facility with PFG via committed terms finalised on the 5 June 2023. The
long-form documents were executed in July extending the facility until November 2026.
(c) On 1 August 2023 Damstra’s Non-Executive Directors agreed to salary sacrifice all of their director's fees for Zero priced
Options for FY24 with an annual positive cash flow impact of $500,000. This is subject to shareholder approval at the
FY23 AGM.
(d) On 2 August 2023 Damstra issued 81,285 ordinary shares following the exercise of options on this date.
Other than the matters described above no other matters or circumstance has arisen since 30 June 2023 that has significantly
affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in
future financial years.
64
Damstra Holdings Limited
Directors' declaration
30 June 2023
In the directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June
2023 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Johannes Risseeuw
Executive Chairman
24 August 2023
___________________________
Drew Fairchild
Director
65
Damstra Holdings Limited
Independent auditor’s report to members
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Damstra Holdings Limited (the Company and its subsidiaries (the
Group)), which comprises the consolidated statement of financial position as at 30 June 2023, 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 other explanatory
information, 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 2023 and of its financial
performance for the year ended on that date; 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 (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Level 20, 181 William Street, Melbourne VIC 3000
+61 3 9824 8555
vic.info@williambuck.com
williambuck.com.au
William Buck is an association of firms, each trading under the name of William Buck
across Australia and New Zealand with affiliated offices worldwide.
Liability limited by a scheme approved under Professional Standards Legislation.
6(cid:25)
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.
RECOGNITION OF REVENUE UNDER SERVICE CONTRACTS
How our audit addressed it
Our audit procedures included:
— Examining management’s revenue recognition
model to ensure compliance with AASB 15
Revenue from Contracts with Customers;
— Testing a sample of customer invoicing under
the contract and receipt of payment;
— Testing of deferred revenue recognised as at
year end to ensure appropriate cut off of
revenue recognised during the year; and
— Tracing a sample of customers through to new
service contracts to understand material terms
and conditions, including any particular seller
warranties or indemnities given and their
potential impact upon the revenue recognition
model.
We also considered the adequacy of the Group’s
disclosures in the notes to the financial report.
Area of focus
Refer also to notes 2, 3, 5 and 15
The Group has service contracts with its
customers. These service contracts have invoicing,
and payment milestones included within their
terms, which may or may not be directly aligned
with the performance of services under the
contract in accordance with AASB 15 Revenue
from Contracts with Customers (‘AASB 15’).
In order to accrue revenue appropriately in the
correct accounting period, management has
developed a model to recognise revenue when the
performance obligation is satisfied in each
contract. This includes identifying the specific
performance obligations within each customer
agreement on commencement.
There is a requirement for judgement in
determining the period to which the revenue should
be attributed. In designing the model management
has considered:
— Compliance with AASB 15 – Revenue from
contracts with customers;
— When the performance obligation is identified
and satisfied in respect to each component of
each contract; and
— The potential for any post-contract servicing
work to be performed at the conclusion of the
contract and whether an additional performance
obligation exists.
The accounting treatment to determine that
revenue has been appropriately recognised is
complex and requires significant judgment and has
been a key area of focus for our audit.
6(cid:26)
ASSESSMENT OF CARRYING VALUE OF GOODWILL AND INTANGIBLE ASSETS
Area of focus
Refer also to notes 2, 3 and 13
Included on the statement of financial position is an
intangible asset balance of $59.5 million as at 30
June 2023, which relates to goodwill of $40.2
million and other intangible assets totaling $19.3
million.
In accordance with AASB 136 – Impairment of
assets the Group is required to, at least annually,
perform an impairment assessment of goodwill and
intangible assets that have an indefinite useful life.
For intangible assets with finite useful lives, the
Group is required to review these for impairment
whenever events or changes in circumstances
indicate that their carrying amounts may not be
recoverable, and at least annually, review whether
there is any change in their expected useful lives.
Impairment is recognized when the carrying
amount of the Cash Generating Unit (‘CGU”)
exceeds its recoverable amount. As at 30 June
2023, the Group recorded an impairment charge of
$39.8 million against the goodwill balance with a
corresponding expense in the consolidated
statement of profit or loss and other
comprehensive income.
The accounting treatment to determine the carrying
value of intangible assets is complex and requires
significant judgment and has been a key area of
focus for our audit.
How our audit addressed it
Our audit procedures included:
— A detailed evaluation of the Group’s budgeting
procedures upon which the forecast is based
and testing the principles and integrity of the
discounted future cash flow models;
— Assessing the appropriateness of the Cash
Generating Unit (‘CGU’) in line with how the
Board and Chief Financial Decision Makers
evaluate the performance of the Group;
— Testing the accuracy of the calculation derived
from the forecast model and assessing key
inputs to the calculations such as revenue
growth, terminal growth, gross margins, and
working capital assumptions;
— Performing a review of the discount rate
recommended by an independent expert to
confirm that the methodology used by the expert
was appropriate and that the expert was
appropriately qualified to undertake the task;
— Performing sensitivity analysis on the model
noting that any change in the assumptions used
would change the impairment charge recorded
by the Group; and
— Performing market cross checks on revenue
multiples used in the industry that the Group
operates in and comparing the Group’s market
capitalisation relative to its net asset position as
at 30 June 2023.
We also considered the adequacy of the Group’s
disclosures in the notes to the financial report.
6(cid:27)
How our audit addressed it
Our audit procedures included:
— Evaluation of the directors’ assessment of the
Group’s ability to continue as a going concern;
— Reviewing cash flow forecasts and reviewing the
directors’ assumptions including future sales and
projected expenses; and
— Reviewing the renewal and extension of the debt
facility agreement entered into with Partners for
Growth VI L.P.
We also considered the adequacy of the Group’s
disclosures in the notes to the financial report.
CONTINUATION OF BUSINESS
Area of focus
Refer also to note 2
As disclosed in Note 2, the Group made a loss
after tax of $55.8 million and the net cash from
operating activities was $7.2 million.
In consideration of these results and other factors,
the financial statements have been prepared on
the assumption that the Group is a going concern
for the following reasons:
— The Group has a working capital surplus of $2.0
million as at 30 June 2023 (being current assets
less current liabilities excluding contract
liabilities); and
— The Group is expected to continue to generate
positive operational cashflows over the course
of the next 12 months due to growth in top line
revenue and also through a reduction of its cost
base.
The Group’s use of the going concern basis of
accounting and the associated extent of
uncertainty is a key audit matter due to the high
level of judgement required by the Directors and
Management in evaluating the Group’s
assessment of going concern and the events or
conditions that may cast doubt on the Group’s
ability to continue as a going concern. These are
outlined in the going concern disclosures in the
financial statements.
The Directors have determined that the use of the
going concern basis of accounting is appropriate in
preparing the financial report. Their assessment of
going concern was based on cash flow projections.
The preparation of these projections incorporated a
number of assumptions and significant judgement
and thus has been a key area of focus for our
audit.
6(cid:28)
MODIFICATION OF DEBT
Area of focus
Refer also to note 2, 3, 7, 16 and 22
On 5 June 2023 a binding term sheet was signed
between the Group and Partners for Growth VI L.P
(‘PFG”) resulting in the existing debt facility's
maturity date being reset to 30 November 2026.
The documentation was finalised in July 2023 with
no principal repayments required in the financial
year ending 30 June 2024.
As a result of the modification of the debt,
borrowing costs were incurred including the
issuance of warrants to PFG as part of the
agreement.
The accounting treatment to determine the
borrowing costs to be incurred during the year, and
the valuation of the warrants issued requires
significant judgment and has been a key area of
focus for our audit.
How our audit addressed it
Our audit procedures included:
— Reviewing the signed renewal and extension
agreement to understand the key terms that
have been entered into;
— Performing testing on the covenant calculations
to ensure compliance;
— Obtaining a 3rd party confirmation from PFG as
to the outstanding balance as at 30 June 2023
and it’s non-current classification;
— Assessing the treatment of the back-end fees
and warrants incurred as a result of the
modification in line with AASB 9- Financial
Instruments, noting that these costs have been
fully expensed in the year ended 30 June 2023;
— Assessing the treatment of the warrants issued
under AASB 132 Financial Instruments, noting
that the conversion feature of the warrants is
assessed to be for a fixed number of shares at a
fixed price resulting in the warrants being
accounted for through equity; and
— For the specific application of the tri-nominal
model to value the warrants, we assessed the
expertise of the independent expert used to
calculate the value of the warrants. We also
assessed the reasonableness of the
assumptions detailed in their report.
We also considered the adequacy of the Group’s
disclosures in the notes to the financial report.
Other Matter
The financial report of the Group for the year ended 30 June 2022 was audited by another auditor who
expressed an unmodified opinion on the financial report on 25 August 2022.
Other Information
The directors are responsible for the other information. The other information comprises the information in
the Group’s annual report for the year ended 30 June 2023, but does not include the financial report and
the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report, or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
(cid:26)(cid:19)
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.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has 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 these financial statements is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our independent auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2023.
In our opinion, the Remuneration Report of Damstra Holdings Limited, for the year ended 30 June 2023,
complies with section 300A of the Corporations Act 2001.
(cid:26)(cid:20)
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
William Buck Audit (VIC) Pty Ltd
ABN 59 116 151 136
A. A. Finnis
Director
Melbourne, 24 August 2023
(cid:26)(cid:21)
Damstra Holdings Limited
Shareholder information
30 June 2023
The shareholder information set out below was applicable as at 3 August 2023.
Substantial holders
The following holders are registered by the Company as a substantial holder, having declared a relevant interest in
accordance with the Corporations Act 2001 (Cth), in the voting shares below:
Number of Security Holders
Voting Rights
73
Damstra Holdings Limited
Shareholder information
30 June 2023
Distribution schedule
Holders of Non-Marketable Parcels
74
Damstra Holdings Limited
Shareholder information
30 June 2023
Top 20 Shareholders
Restricted securities
There are no shares on issue that are subject to mandatory escrow restrictions under ASX Listing Rules Chapter 9.
The following securities are subject to voluntary escrow restrictions:
75
Damstra Holdings Limited
Shareholder information
30 June 2023
Unquoted Securities - options
The following unlisted options are on issue (which are subject to vesting conditions):
There are no holders outside of the Company’s employee incentive plan that hold more than 20% of the Options on issue.
Unquoted Securities - warrants
The following unlisted warrants are on issue:
76
Damstra Holdings Limited
Shareholder information
30 June 2023
The following holder holds more than 20% of Warrants in the Company:
Share buy-backs
There is no current on-market buy-back scheme.
77
Damstra Holdings Limited
Corporate directory
30 June 2023
Directors
Company secretaries
Registered office and
Principal place of business
Share register
Auditor
Solicitors
Johannes Risseeuw
Christian Damstra
Drew Fairchild
Morgan Hurwitz
Simon Yencken
Sara La Mela
Paul Burrows
Carlie Hodges
Suite 3, Level 3
299 Toorak Road
South Yarra VIC 3141
Telephone: 1300 722 801
Automic Registry Services,
Level 5, 477 Collins Street,
Melbourne, VIC 3000
Telephone: 1300 288 664
William Buck Audit (Vic) Pty Ltd
20/181 William Street,
Melbourne, VIC 3000
Cottel & Co
Level 31, 120 Collins St
Melbourne, VIC 3000
Stock exchange listing
Damstra Holdings Limited shares are listed on the Australian Securities Exchange
(ASX code: DTC)
Website
https://www.damstratechnology.com
Business objectives
Corporate Governance Statement
In accordance with Listing Rule 4.10.19, the Company confirms that the Group has
been utilising the cash and assets in a form readily convertible to cash that it held at
the time of its admission to the Official List of ASX since its admission to the end of
the reporting period in a way that is consistent with its business objectives.
The directors and management are committed to conducting the business of Damstra
Holdings Limited in an ethical manner and in accordance with the highest standards
of corporate governance. Damstra Holdings Limited has adopted and has
substantially complied with the ASX Corporate Governance Principles and
Recommendations (Fourth Edition) ('Recommendations') to the extent appropriate to
the size and nature of the Group’s operations.
The Corporate Governance Statement, which sets out the corporate governance
practices that were in operation during the financial year and identifies and explains
any Recommendations that have not been followed, which is approved at the same
time as the Annual Report can be found at:
http://www.damstratechnology.com/investors
The Corporate Governance Statement can be found at
https://www.damstratechnology.com/investors
78