Damstra : Appendix 4D and FY22 Half Year Financial Report

Damstra Holdings Limited

Appendix 4D

Half-year report

	1. Company details
	Name of entity:	Damstra Holdings Limited
	ABN:	74 610 571 607
	Reporting period:	For the half-year ended 31 December 2021
	Previous period:	For the half-year ended 31 December 2020
	2. Results for announcement to the market
only				$'000
up	9.1%	to	13,191
	Revenues from ordinary activities
	Loss from ordinary activities after tax attributable to the owners of
	Damstra Holdings Limited	up	920.5%	to	(55,997)
	Lo for the half-year attributable to the owners of Damstra Holdings
	Limited	up	920.5%	to	(55,997)
	Dividends
use
	There were no dividends paid, recommended or declared during the current financial period.

Comments

The loss for the Group after providing for income tax amounted to $55,997,000 (31 December 2020: $5,487,000). Refer to Directors' report for further commentary on the results.

3. Net tangible assets
	Reporting		Previous
	period		period
	Cents		Cents
Net tangible assets per ordinary security	(3.63)	0.50
N t tangible assets calculations exclude right-of-use assets but include lease liabilities.
personal

The net tangible assets per ordinary security for the reporting period is calculated based on 256,820,355 (30 June 2021: 185,209,615) ordinary shares on issue (excluding 876,033 (30 June 2021: 1,603,515) treasury shares).

For4. Control gained over entities

On 15 October 2021, the Group acquired 100% of the ordinary shares in TIKS Solutions Pty Ltd ('TIKS'). Refer note 17 of the financial statements for further details.

Damstra Holdings Limited

Appendix 4D

Half-year report

5. Details of associates and joint venture entities
only	Reporting entity's	Contribution to profit/(loss)
percentage holding	(where material)
Reporting	Previous	Reporting	Previous
	period	period	period	period
Name of associate / joint venture	%	%	$'000	$'000
SkillPASS Trust	50.00%	-	(39)	-
Gr up's aggregate share of associates and joint venture
entities' profit/(loss) (where material)
Profit/(loss) from ordinary activities before income tax			(39)	-
use			-	-
Income tax on operating activities

6. Audit qualification or review

Details of audit/review dispute or qualification (if any):

The financial statements were subject to a review by the auditors and the review report is attached as part of the Interim

personalReport.

7. Attachments

Details of attachments (if any):

The Interim Report of Damstra Holdings Limited for the half-year ended 31 December 2021 is attached.

8. Signed

As authorised by the Board of Directors

Signed ___________________________	Date: 28 February 2022
For
J hannes Risseeuw
Executive Chairman
Melbourne

onlyDamstra Holdings Limited

ABN 74 610 571 607

useInterim Report - 31 December 2021 personalFor

Damstra Holdings Limited Directors' report

31 December 2021

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 half-year ended 31 December 2021.

onlyDirectors

The following persons were directors of Damstra Holdings Limited during the whole of the financial half-year and up to the date of this report, unless otherwise stated:

Johannes Risseeuw

Christian Damstra

Drew Fairchild

M rgan Hurwitz

Simon Yencken

Sara La Mela

usePrincipal activities

The Group is an Australian-based provider of integrated workplace management solutions to multiple industry segments across the globe. The Group develops, sells and implements integrated hardware and software-as-a-service (SaaS) solutions in industries where compliance and safety are of utmost importance. These solutions assist the Group's clients to better track, manage and protect their staff, contractors and their organisations and to reduce the risks associated with worker health, safety and regulatory compliance.

The Group has been operating since 2002 and has grown from providing an Australian mining contractor management personalso ution to an integrated workplace management solutions provider with a growing client base in international markets.

Significant changes in the state of affairs

On 15 October 2021, the Group acquired 100% of the ordinary shares of TIKS Solutions Pty Ltd ('TIKS') for the total co sideration of $23,883,000. 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 payment of cash of $2,703,000. Refer to note 17 of the notes to the financial statements for further details.

During the financial half-year, the Company successfully completed capital raising of $20,020,000 (before costs) resulting in the issue of 58,883,258 ordinary shares. Refer to note 14 of the notes to the financial statements for further details.

There were no other significant changes in the state of affairs of the Group during the financial half-year.

Review of operations

The loss for the Group after providing for income tax amounted to $55,997,000 (31 December 2020: $5,487,000).

Included in the loss is an impairment of goodwill and other assets of $41,300,000. This equates in quantum to the additional goodwill of $40,507,000 recognised from the Vault acquisition in 2021 from the increase in share price from the date of announcement to the date of completion.

ForP o forma EBITDA, pro forma EBITDA %, gross margin and pro forma operating expenses used in the review of operations VHFWLRQEHORZDUHILQDQFLDOPHDVXUHVWKDWDUHQRWSUHVFULEHGE$XVWUDOLDQ$FFRXQWLQJ6WDQGDUGVµ$$6¶DQGUHSUHVHQWWKH statutory loss under AAS adjusted for certain items. The directors consider loss before tax excluding other items (being the impact of impairment, acquisition costs and share-basedpayments expenses) to reflect the core earnings of the Group. Pro IRUPD (%,7'$ UHIHUV WR (DUQLQJV %HIRUH ,QWHUHVW 7D[ 'HSUHFLDWLRQ DQG $PRUWLVDWLRQ µ(%,7'$¶) adjusted for non-cash share-basedpayments, acquisition costs and other costs and impairment expenses. A reconciliation between adjusted pro forma EBITDA and statutory loss is provided below.

For the half-year ended 31 December 2021, the Group reported revenue from operations of $13,191,000 (31 December 2020: $12,091,000).

1

Damstra Holdings Limited Directors' report

31 December 2021

Key operational and financial metrics for the half-year ended 31 December 2021:	31 Dec 2021	31 Dec 2020
Key financial metrics1
only	9.1%	19.4%
Revenue growth vs previous corresponding period ('pcp')
Gross margin	73.4%	75.1%
Research and development expenses as a % of revenue	(27.7%)	(32.9%)
Sales and marketing expenses as a % of revenue	(36.4%)	(31.5%)
Ge eral and administration expenses as a % of revenue	(42.9%)	(24.7%)
Proforma EBITDA margin	(1.6%)	20.9%

N te 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 and acquisition and other costs.

A r conciliation between loss before tax and proforma EBITDA is provided below.	31 Dec 2021		31 Dec 2020
	$'000	$'000
Loss before tax based on statutory accounts	(51,259)	(6,450)
Impairment of goodwill and other assets	41,300	-
use	737	2,417
Share-based payments
Acquisition and other costs	455	1,302
Depreciation and amortisation expenses	7,712	5,090
Net finance costs	850		171
Pro forma EBITDA	(205)	2,530
personalcosts associated with revenue earned.

Revenue:

The growth in revenue during the financial half-year was driven by:

Ɣ The impact of the Vault acquisition in October 2020, and TIKS acquired in October 2021;

Ɣ The loss of a major client, Newmont with reduced revenue recognised in the half compared to the prior corresponding

period;

Ɣ Improved performance from construction customers driven by new projects and increased site activity due to the

relaxing of COVID restrictions;

Ɣ The acquisition of a number of new smaller clients during the period.

Gross margin:

For the half-year ended 31 December 2021, the Group reported a gross margin of $9,685,000 (31 December 2020:

$9,086,000) or 6.6% up on the prior period. The gross margin percentage was 73.4%, marginally down on the 75.1% from

the revious corresponding period. Gross margin is calculated based on the revenue from operations less directly attributable

ForP o forma operating expenses:

The NHGULYHUIRURSHUDWLQJH[SHQVHVZDVWKHLPSDFWRIDFTXLVLWLRQVLQFUHDVLQJWKHFRVWEDVHDQGWKH*URXS¶VFRQWLQXHG investment in future growth, in particular in the US and UK markets.

Ɣ The Group's sales and marketing function, reported pro forma expenses of $4,798,000 which represents 36.4% of revenue;

Ɣ Research and development of a total of $3,649,000 (excluding capitalised costs), primarily due to the development of new modules and the enhancement of existing modules, which represents 27.7% of revenue; and

Ɣ General and administrative expenses of $5,656,000, which represent 42.9% of revenue.

Pro forma operating expenses exclude impairment of goodwill and other assets, share-based payment and acquisition and other costs included in the reconciliation between loss before tax and pro forma EBITDA.

2