DATADOT TECHNOLOGY LIMITED — Interim / Quarterly Report 2021

Feb 23, 2021

24 February 2021

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ASX Announcement

DataDot Technology Limited – December 2020 - Appendix 4D and Financial Report

DataDot Technology Limited attaches the following documents relating to the results for the half year ended 31 December 2020.

• Appendix 4D; and

• Financial Report

These reports have been authorised for release by the Board of Directors of DataDot Technology Limited.

For further details contact the undersigned.

Yours faithfully

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DataDot Technology Limited Patrick Raper

Company Secretary

E mail: praper@datadotid.com

About DataDot: DataDot Technology Limited provides world leading asset identification, management, protection and authentication solutions that deliver great value to customers. For more information please visit www.datadotdna.com.

P a g e 1

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APPENDIX 4D Half Year Report for the half year ended 31 December 2020

Contents	Page
Appendix 4D - Half Year Report	2
Financial Report	3

ABN : 54 091 908 726 8 Ethel Ave Brookvale NSW 2100 P : (02) 8977 4900 www.datadotdna.com

Half Year Report - December 2020

Page 1

DataDot Technology Limited

Appendix 4D Half Year Financial Report

DataDot Technology Limited

ABN : 54 091 908 726

Reporting period

Half year ended 31 December 2020

Previous reporting period Half year ended 31 December 2019

Results for announcement to the market	31 Dec 20	31 Dec 19	Change	Change
	$	$	$	%
Revenue	1,735,973	1,913,237	(177,264)	(9.27)%
Gross Profit	949,480	1,049,936	(100,456)	(9.57)%
Expenses	665,741	1,166,264	(500,523)	(42.92)%
EBITDA	369,971	(112,859)	482,830	427.82%
Profit / (Loss) from ordinary activities after tax attributable	256,730	(228,522)	485,252	212.34%
to members
Net Profit / (Loss) attributable to members	256,730	(228,522)	485,252	212.34%
Net tangible asset backing per ordinaryshare shown in cents	0.0018	0.0000	0.0018	n/a

Dividends

No dividends were paid or made payable during the half year ended or since 31 December 2020.

Commentary

Please refer to the attached Directors' report which does not form part of the financial report for the half year ended 31 December 2020.

Other information

Control gained over entities having a material effect N/A

Loss of control over entities having a material effect N/A

Dividend or distribution reinvestment plans N/A

Details of associates and joint venture entities N/A

Audit status

This report is based on accounts that have been subject to review.

Attachments

Additional disclosure requirements can be found in the notes to the attached half year financial report.

Signed By

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Ray Carroll - Chairman 24 February 2021

Half Year Report - December 2020

Page 2

DataDot Technology Limited

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Financial Report for the half year ended 31 December 2020

Contents	Page
Directors' Report	4
Auditor's Independence Declaration	6
Consolidated Statement of Profit or Loss	7
Consolidated Statement of Comprehensive Income	8
Consolidated Statement of Financial Position	9
Consolidated Statement of Changes in Equity	10
Consolidated Statement of Cash Flows	11
Notes to the Financial Statements	12
Directors' Declaration	19
Independent Auditor's Review Report	20

Half Year Report - December 2020

Page 3

DataDot Technology Limited

for the half year ended 31 December 2020

Directors’ Report

Your directors submit their report, together with the financial statements of the consolidated entity (“DataDot”) consisting of DataDot Technology Limited and the entities it controlled at the end of or during the half year ended 31 December 2020.

Directors

The directors of the Company at any time during or since the end of the half-year are as follows:

Mr Ray Carroll (Chairman)

Mr David Lloyd (Chairman of the Audit and Risk Management Committee) Mr Bradley Kellas (Managing Director)

Principal activities

The principal activities of DataDot during the half year were to develop, manufacture and distribute customisable asset identification solutions that include:

• i) DataDotID - polymer and metallic microdots containing etched data that is unique to the assets to which the microdots are attached;

• (ii) DataTraceID – a chemical fingerprint added to products to authenticate their identity and provenance; and

• (iii) Vault Asset Registers databases that record asset identification data and are accessible by law enforcement agencies and insurance investigators.

There has not been any significant change in the nature of these activities during the half year.

Review of operations

The Group has achieved a first half year profit of $256.7k compared to a loss of ($228.5k) for the prior comparable period (“pcp”).

The major contribution to this significant improvement in the bottom line result has been a decrease in expenses from $1,166.3k in the pcp to $660.8k in the current period. The overall cost base of the company in FY 2021 has been reset to approximately 50% - 60% of FY 2020 levels which in turn were 76% of FY 2019 levels.

These savings are sustainable and highlight the benefits of the major restructuring initiatives that were implemented in the first half of FY 2020.

The cost savings have been partially offset by a decline in Group Revenue from $1,913.2k to $1,736.0k (9.27%).

This is attributable to a number of factors including a slowdown in US sales activity and international Royalties due, in part, to Covid 19 impacts in those markets. On a more positive note, there has been pleasing growth in UK sales and TraceID.

Revenue generated from the USA market was $213.1k in H1 of FY 2021 compared to $312.7k in H1 of FY 2020. This decline however, has been entirely offset by the reduction in the cost base achieved through the closure of the US manufacturing site and supplying product from Australia. This has created a solid basis for higher levels of future profitability in the US business.

The decline in Royalties from $575.4k in H1 of FY 2020 to $474.4k is almost entirely attributable to activity in South Africa where the H1 FY 2020 royalty included some initial increase in stock levels to support new programs in Europe while H1 FY 2021 was also impacted by business shutdowns due to Covid 19.

Despite the impacts of Covid 19 in the UK the business achieved revenue growth of 21% from $495.3k to $594.4k.

Half Year Report - December 2020

DataDot Technology Limited

Page 4

Directors’ Report

for the half year ended 31 December 2020

In H1 of FY 2020, the Director’s advised that a number of restructuring initiatives had commenced. In particular these included:

• relocation of the manufacturing facility in Spokane USA to Sydney Australia,

• relocation of the Sydney manufacturing to smaller more efficient premises in Brookvale NSW,

• implementation of up to date and cost effective technologies, systems and processes,

• relocation of the senior management and accounting functions for the UK business to Sydney Australia,

• appointment of new professional distribution partners.

These initiatives have now been fully implemented and the business is operating on a substantially more efficient expense base. This will enable the business to maximise the achievable profit from future revenue growth.

At 31 December 2020, the company’s cash position and the balance sheet has been substantially improved through a combination of profitable operations, (two consecutive quarters of positive cash from operations in 1H FY2021), the capital restructure finalised in the second half of FY 2020, and greater attention to the management of debtors and inventories. Net assets at 31 December 2020 were $2,208.7k compared to $14.9k at 31 December 2019. Cash and cash equivalents at 31 December 2020 was $1,631.8k compared to $625.5k at 31 December 2019.

Outlook

The outlook for the Company remains positive.

Following the election of the new Board at the EGM in May 2019, the directors’ first priority was to secure the financial viability of the company and to create a more sustainable business model to support the growth plan that had been presented to shareholders. Despite the unexpected intervention of the Covid 19 pandemic for 12 of the 21 months since the EGM, the Directors are satisfied that we have achieved our aim of financial sustainability and our focus has now turned to growth through transforming the company from being simply a provider of identification technologies to providing full property management solutions in the anti- theft and counterfeiting markets.

Key to this growth is the integration of not only the PropertyVAULT online property management system with the company’s established identification products, but also the establishment of key partnerships with consumer product providers, insurers, security providers and police and crime related agencies.

As Australia and the world emerges from the influences of the current pandemic, the group is in a strong position to pursue these new product and growth opportunities.

Events After Reporting Period

In late January 2021 the company signed a Distribution Agreement for its bicycling related microdot and Property Vault products with a leading distributor to the cycling retail industry. The initial acceptance has been very encouraging and we are confident that this distribution model can be replicated for other consumer products and will lead to new opportunities for revenue growth in line with our overall growth plan.

Auditor’s independence declaration

The lead auditor's independence declaration in accordance with section 307C of the Corporations Act 2001 , for the half year ended 31 December 2020 has been received and can be found on page 6 of the financial report.

Signed in accordance with a resolution of the Board of Directors, pursuant to section 306(3)(a) of the Corporation Act 2001.

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Ray Carroll

Chairman

Sydney 24 February 2021

Half Year Report - December 2020

DataDot Technology Limited

Page 5

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Audit Only ABN 59 288 963 259 Level 7 91 Phillip Street Parramatta NSW 2150

Tel: +61 2 8893 1214 Fax: +61 2 9084 2297 www.auditonly.com.au

The Directors DataDot Technology Limited 8 Ethel Avenue BROOKVALE NSW 2086

24 February 2021

Dear Directors

DataDot Technology Limited

As lead auditor for the review of DataDot Technology Limited for the half-year ended 31 December 2020, I declare that, to the best of my knowledge and belief, there have been:

• a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• b. No contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of DataDot Technology Limited and the entities it controlled during the period.

Yours sincerely

Andrew Hunt Principal

Liability limited by a scheme approved under Professional Standards Legislation.

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Half Year Report – December 2020

Page 6

DataDot Technology Limited

Consolidated Statement of Profit or Loss for the half year ended 31 December 2020

Notes Revenue Sale of goods Service and licence fees Royalties Cost of sales Gross Profit Other income 2 Expenses Administrative expenses Marketing expenses Occupancy expenses Restructuring Expenses Travel expenses EBITDA Depreciation, Amortisation and Impairment Finance costs Profit / (Loss) before income tax expense Income tax expense 6 Profit / (Loss) after income tax expense for the period Profit / (Loss) for the period attributable to :- Owners of DataDot Technology Limited Basic profit / (loss) per share (cents per share) Diluted profit / (loss) per share (cents per share)	31 Dec 2020 31 Dec 2019 $ $ 1,196,922 1,265,689 64,699 72,137 474,352 575,411
	1,735,973 1,913,237 786,493 863,301
	949,480 1,049,936
	86,232 3,469
	628,562 857,813 3,170 44,150 33,862 162,925 - 12,066 147 89,310
	665,741 1,166,264 369,971 (112,859)
	99,279 58,012 10,532 50,316 260,160 (221,187)
	3,430 7,335
	256,730 (228,522)
	256,730 (228,522)
	0.02 (0.03)
	0.02 (0.03)

The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.

Half Year Report - December 2020

DataDot Technology Limited

Page 7

Consolidated Statement of Comprehensive Income

	for the half year ended 31 December 2020	for the half year ended 31 December 2020
	31 Dec 2020	31 Dec 2019
	$	$
Profit / (Loss) after income tax expense for the period	256,730	(228,522)
Other comprehensive income :-
Items that may be classified subsequently to profit or loss :-
Exchange difference on translation of foreign operations	862	(24,458)
Total comprehensive income for the period net of tax	257,592	(252,980)
Total comprehensive income attributable to :-
Owners of DataDot Technology Limited	257,592	(252,980)

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

Half Year Report - December 2020

Page 8

DataDot Technology Limited

Consolidated Statement of Financial Position Notes Current Assets Cash and cash equivalents 5 Trade and other receivables Inventories Prepayments Total Current Assets Non Current Assets Plant and equipment Investments Total Non Current Assets Total Assets Current Liabilities Trade and other payables Employee benefits Provisions Other current liabilities Total Current Liabilities Non Current Liabilities Employee benefits Other non-current liabilities Total Non Current Liabilities Total Liabilities Net Assets Equity Issued capital 7 Accumulated losses Reserves Total Equity	as at 31 December 2020 31 Dec 2020 30 Jun 2020 $ $ 1,631,838 1,005,325 597,066 892,492 284,841 262,027 84,735 214,394
	2,598,479 2,374,238
	475,702 616,487 2,948 2,948
	478,650 619,435
	3,077,129 2,993,673
	306,055 446,980 94,309 78,735 7,105 7,105 66,727 126,973
	474,196 659,793
	11,674 10,161 382,538 411,856
	394,212 422,017
	868,408 1,081,810
	2,208,721 1,911,863
	41,596,795 41,557,528 (37,384,168) (37,640,893) (2,003,906) (2,004,772)
	2,208,721 1,911,863

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

Half Year Report - December 2020

Page 9

DataDot Technology Limited

for the half year ended 31 December 2020

Consolidated Statement of Changes in Equity

Balance at 1 July 2019 Share based payments Share Issues Share Issue Costs Balance at 31 December 2019 Balance at 1 July 2020 Share Issue Costs Balance at 31 December 2020 Other comprehensive income for the period, net of tax Loss after income tax expense for the period Total comprehensive income for the period Total comprehensive income for the period Transactions with owners in their capacity as owners :- Profit after income tax expense for the period Other comprehensive income for the period, net of tax Convertible Note Reserve Rounding Adjustments

Attributable to equity holders of the parent Foreign Employee currency equity Issued Accumulated translation benefit Other Total capital $ losses $ reserve $ reserve $ reserve $ equity $ 39,692,526 (37,670,096) (1,730,988) 398,220 (583,454) 106,208 - (228,522) - - - (22,822) - - (28,181) - - (28,181) - (228,522) (28,181) - - (256,703) - - - - 103,821 103,821 - - - 2,690 - 2,690 60,078 - - - - 60,078 (1,241) - - - - (1,241) 39,751,363 (37,898,618) (1,759,169) 400,910 (479,633) 14,853 41,557,528 (37,640,893) (1,729,745) 403,596 (678,623) 1,911,863 1 (5) 2 2 - - - 256,730 - - - 256,730 - - 862 - - 862 - 256,730 862 - - 257,592 39,266 39,266 41,596,795 (37,384,168) (1,728,881) 403,598 (678,623) 2,208,721

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Half Year Report - December 2020

Page 10

DataDot Technology Limited

Consolidated Statement of Cash Flows

for the half year ended 31 December 2020

Notes Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest paid Income tax paid Receipt of government grant Net cash flows (used in) / received from operating activities Cash flows from investing activities Interest received Purchase of plant and equipment Net cash flows used in investing activities Cash flows from financing activities Proceeds from capital raising Proceeds from convertible notes issued Proceeds from Borrowings Net cash flows from financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial period Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of period 5	31 Dec 2020 31 Dec 2019 $ $ 2,093,152 2,156,253 (1,591,836) (2,182,088) (10,544) (52,254) (3,430) 8,967 119,576 -
	606,917 (69,121)
	301 - 7,861 (160,758)
	8,162 (160,758)
	40,128 58,840 - 600,000 - 1,818
	40,128 660,658
	655,208 430,780 1,005,325 194,752 (28,454) -
	1,632,079 625,532

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

Half Year Report - December 2020

Page 11

DataDot Technology Limited

Notes to the Financial Statements

for the half year ended 31 December 2020

1 Summary of significant accounting policies

The financial statements cover DataDot Technology Limited as a consolidated entity consisting of DataDot Technology Limited and its subsidiaries. The financial statements are presented in Australian dollars, which is DataDot Technology's functional and presentation currency.

DataDot Technology Limited is a listed public company limited by shares, incorporated and domiciled in Australia.

A description of the nature of the consolidated entity'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 February 2021.

Basis of preparation

These general purpose financial statements for the interim half-year reporting period ended 31 December 2020 have been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Act 2001, as appropriate for forprofit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'.

These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2020 and any public announcements made by the Company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, unless otherwise stated.

Going Concern

The financial statements of the company have been prepared on a going concern basis, which indicates continuity of business activities and the realisation of assets and settlement of liabilities in the normal course of business.

During the half-year ended 31 December 2020, the company experienced a decline in revenue of $177k (9.3%) against the prior corresponding period, incurred an operating profit before tax of $260,160 (2019: loss of $228,522), and had net current assets of $2,124,283 (2019: $631,161) and positive operating cash flows of $606,917 (2019: negative operating cash flows of $69,121).

These performance measures show an improving financial performance and position for the group consistent with the plan agreed by shareholders in May 2019 and the company plan approved by the Directors in August 2020. The benefits from cost reduction strategies and plans already implemented have been substantially realised. Our customers that have the capacity to grow revenue have indicated, notwithstanding the current Covid 19 pandemic, that growth is likely to return in 2H FY 2021 and beyond. There remain untapped revenue growth opportunities from the licence agreement with Property Vault. These positive developments and the continuing pursuit of other pipeline opportunities indicate that , additional external funds are unlikely to be required to continue to support the operations of the Company and its controlled entities.

The Board and management continues to pursue the re-invigoration of relationships in the motor vehicle, crime prevention and anticounterfeiting industries including with our customers and distributors in South Africa, North America and Europe, and there has been growth from some of these relationships in the six months to December 2020 over the prior period.

As a result of these matters, the material uncertainty related to events or conditions that may have cast some doubt two years ago on whether the Company will continue as a going concern and, therefore, whether it will realise its assets and settle its liabilities and commitments in the normal course of the business and at the amounts stated in the financial report has significantly diminished.

At the date of this report, the directors are of the opinion that there are reasonable grounds to expect that the Company will be able to continue as a going concern.

As such the financial report is prepared on a going concern basis.

Half Year Report - December 2020

Page 12

DataDot Technology Limited

for the half year ended 31 December 2020

Notes to the Financial Statements

1 Summary of significant accounting policies (continued)

Accordingly, no adjustments have been made to the financial report relating to the recoverability and classification of the asset carrying amounts or the amounts and classification of liabilities that might be necessary should the company not continue as a going concern.

Amended Standards Adopted by the Group

The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current half-year.

New and revised Standards and amendments thereof and Interpretations effective for the current year that are relevant to the Group are:

• AASB 2018-6 Amendments to Australian Accounting Standards - Definition of Material

• AASB 2019-1 Amendments to Australian Accounting Standards - References to the Conceptual Framework

• AASB2020-4 Amendments to Australian Accounting Standards - COVID-19- Related Rent Concessions

AASB 2018-6 and 2019-1 does not have a material impact on the Group's financial statements.

In the current half-year, the Group has applied the below amendment to Australian Accounting Standard issued by the Australian Accounting Standards Board (the Board) that are effective for the Group’s annual reporting period that began on 1 July 2020. The adoption has had a material impact on the disclosures and/or amounts reported in these financial statements.

AASB 2020-4 Amendments to Australian Accounting Standards - COVID-19-Related Rent Concessions

The amendments introduce a practical expedient into AASB 16. The practical expedient permits a lessee to elect not to assess whether a COVID-19-related rent concession is a lease modification. A lessee that makes this election does account for any change in lease payments resulting from the COVID-19-related rent concession the same way it would account for the change applying AASB 16 if the change were not a lease modification.

The practical expedient applies only to rent concessions occurring as a direct consequence of COVID-19 and only if all of the following conditions are met:

• The change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change

• Any reduction in lease payments affects only payments originally due on or before 30 June 2021 (a rent concession would meet this condition if it results in reduced lease payments on or before 30 June 2021 and increased lease payments that extend beyond 30 June 2021)

• There is no substantive change to other terms and conditions of the lease.

Impact on accounting for changes in lease payments applying the exemption

The Group has applied the practical expedient retrospectively to all rent concessions that meet the conditions in AASB 16.46B, and has not restated prior period figures.

The Group has benefited from a $10,663 monthly lease payment holiday on its premise at 8 Ethel Avenue Brookvale. The payment holiday reduces payments in the period to 30 June 2021 by $ 176,130 , and increases in payments in the period to 31 December 2022 by $ 176,130. The Group has remeasured the lease liability using the revised lease payments and the discount rate originally applied to the lease. The Group continued to recognise interest expense on the lease liability.

Half Year Report - December 2020

Page 13

DataDot Technology Limited

Notes to the Financial Statements

for the half year ended 31 December 2020

Government Grants

During the half-year, the Group became eligible for certain government support in response to the coronavirus pandemic, as explained in Note 9. The Group’s accounting policy for government grants is explained below.

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Specifically, wage subsidies received under the JobKeeper scheme are presented as other income in profit or loss. Government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets (including property, plant and equipment) are recognised as deferred income in the consolidated statement of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable

2 Other Income Interest income Government grant* Profit /(Loss) on Disposal of Assets	31 Dec 2020 31 Dec 2019 $ $ 301 384 119,576 - (33,645) 3,085
	86,232 3,469

• There are no unfulfilled conditions or contingencies attached to the grant.

3 Expenses

The consolidated statement of profit or loss includes the following specific expenses :-

Cost of sales Stock obsolescence Administrative expenses Net gain / (loss) on foreign currency Employee benefits Employee share based expenses Superannuation expenses Depreciation Amortisation Occupancy expenses Outgoings / Minimum lease payments Finance costs Convertible Notes and Bank loans and overdrafts Finance charges payable under finance leases and hire purchase contracts	79,157 17,136
	(19,452) (5,016) 330,579 500,597 - 2,688 23,257 40,258 25,956 38,461 73,323 19,528
	433,663 596,516
	33,862 107,199
	- 49,056 10,532 -
	10,532 49,056

Half Year Report - December 2020

Page 14

DataDot Technology Limited

Notes to the Financial Statements

for the half year ended 31 December 2020

4 Fair values of financial instruments

Unless otherwise stated, carrying amounts of financial instruments reflect their fair value. The carrying amounts of trade receivables and trade payables assume to approximate their fair values due to their short term nature. The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is available for similar financial instruments.

5	Cash and cash equivalents			31 Dec 2020	30-Jun-20
	Reconciliation of cash			$	$
	Cash at the end of the financial period shown in the consolidated statement of cash flows is		reconciled as
	follows
	Cash at bank and on hand			1,631,838	1,005,325
	Bank overdraft			-	-
	Balance as per statement of cash flows			1,631,838	1,005,325
6	Income Tax			31 Dec 2020	31 Dec 2019
	Major components of tax expense			$	$
	Current income tax expense			-	-
	Withholding Tax			3,430	7,335
	Income tax expense			3,430	7,335
7	Equity - Contributed equity	31 Dec 2020	30-Jun-20	31 Dec 2020	30-Jun-20
		Shares	Shares	$	$
	Ordinary shares	1,241,869,466	1,260,709,351	41,596,795	41,557,528
		Date	No of Shares	$
	Balance 1 July 2020	1-Jul-20	1,260,709,351	41,557,528
	Cancellation of Employee Share and Loan Scheme Shares	26-Nov-20	(12,094,809)	-
	Cancellation of Employee Share and Loan Scheme Shares	26-Nov-20	(12,094,809)	-
	Issue of Shares	26-Nov-20	5,349,733	39,267
			1,241,869,466	41,596,795
	Share Issue transactions costs			-
	Balance 31 December 2020		1,241,869,466	41,596,795

Half Year Report - December 2020

Page 15

DataDot Technology Limited

Notes to the Financial Statements

for the half year ended 31 December 2020

8 Segment Information

Segment descriptions

DataDot has identified its operating segments based on the internal reports that are reviewed and used by the executive management team (the chief operating decision makers) in assessing performance and in determining the allocation of resources.

Management has reviewed the segments and determined the group is organised into business units based on their product and services and accordingly has two reportable segments. Discrete financial information about each of these operating businesses is reported to the executive management team on at least a monthly basis.

Products and services by segment

Two reportable segments have been identified as follows:

DataDotID polymer and metallic microdots containing etched data that is unique to the assets to which the microdots are attached plus other anti theft products.

DataTraceID – a high speed, high security, machine readable system for authenticating materials, products and assets.

Accounting policies and intersegment transactions

The accounting policies used by DataDot in reporting segments internally is the same as those contained in the prior period with the exception of the new policies adopted as disclosed in Note 1. The adoption of these policies did not have a material impact on segment reporting. Intersegment pricing is determined on an arm’s length basis. Intersegment transactions are eliminated on consolidation.

The following tables present the revenue, profit/(loss) before tax, assets and liabilities information regarding operating segments for half years ended 31 December 2019 and 31 December 2018.

Half Year Report - December 2020

Page 16

DataDot Technology Limited

Notes to the Financial Statements

for the half year ended 31 December 2020

8 Segment Information (continued)

Segment Performance Period ended 31 December 2020 Revenue from external customers Total revenue Gross profit Finance revenue Finance costs Income tax expense Net (loss) / profit after income tax Segment assets Segment liabilities Period ended 31 December 2019 Revenue from external customers Total revenue Gross profit Finance revenue Finance costs Net profit / (loss) after income tax Segment assets Segment liabilities Intersegment revenue Intersegment revenue Depreciation, amortisation and disposals Depreciation and amortisation	DataDot DataTraceID Eliminations Total $ $ $ $
	1,574,204 161,770 - 1,735,973 6,679 93 (6,773) -
	1,580,883 161,863 (6,773) 1,735,973
	899,511 49,969 - 949,480
	(99,279) - - (99,279) 301 - - 301 10,532 - - 10,532 3,430 - - 3,430
	218,051 38,678 - 256,729.70
	3,000,411 76,718 - 3,077,129
	837,970 30,438 - 868,408
	DataDot DataTraceID Eliminations Total $ $ $ $
	1,788,249 124,988 - 1,913,237 79,895 1,575 (81,470) 0
	1,868,143 126,564 (81,470) 1,913,237
	1,727,926 100,552 (778,542) 1,049,936
	(53,103) (4,909) - (58,012) 383 - - 383 (50,316) - - (50,316)
	(66,479) (162,043) - (228,522)
	3,321,703 511,945 (1,691,938) 2,141,709
	1,147,917 1,740,960 (762,020) 2,126,856

Half Year Report - December 2020

Page 17

DataDot Technology Limited

Notes to the Financial Statements

for the half year ended 31 December 2020

9 Government grants and government assistance

The Group has benefited from the following significant government support packages as a result of COVID-19 during the

Support received - JobKeeper Scheme (Australia)

Due to the impact of COVID-19 on the Group's turnover, government subsidies of $126,000 (2019:Nil) were received under the Australian Federal Government's jobkeeper scheme. The Group became eligible for the scheme from its inception in March 2020 to 30 September 2020. The Group were not eligible for the extended jobkeeper to 28 March 2021.

The amounts were paid to employees in line with government’s objectives of helping businesses to continue paying employees to keep them in their jobs so that businesses can re-start when business conditions improve.

The amounts received have been recognised as other income in the statement of profit or loss.

Support received - Cash flow boost Australia

Due to the impact of COVID-19, temporary government grant of $100,000 (2019:Nil) were received under the Australian Federal Government's cash flow boost. $50,000 were received for the period from March to June 2020 and the remaining $50,000 were received from July to September 2020.

The temporary cash flow boosts were provided to support small and medium size businesses during the economic downturn associated with COVID-19.

The amounts received have been recognised as other income in the statement of profit or loss.

10 Events after the reporting period

On 1 February 2021 the company signed a Distribution Agreement with a Sydney based company to distribute the company's anti-theft products to bike shops in Australia. Sales from this arrangement will commence in 2HY of FY 2021.

Subsequent to the Half Year end on 31 December 2020 and up to the date of this report there have been no other material events.

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for the half year ended 31 December 2020

Directors' Declaration

In the directors' opinion:

• the attached financial statements and notes thereto 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 thereto comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 1 to the financial statements;

• the attached financial statements and notes thereto give a true and fair view of the consolidated entity's financial position as at 31 December 2020 and of its performance for the financial half year ended on that date;

• there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and

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

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Ray Carroll - Chairman 24th February 2021 Sydney

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DataDot Technology Limited

Audit Only ABN 59 288 963 259 Level 7 91 Phillip Street Parramatta NSW 2150

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Tel: +61 2 8893 1214 Fax: +61 2 9084 2297 www.auditonly.com.au

Independent Auditor’s Review Report to the Members of DataDot Technology Limited

Conclusion

We have reviewed the half-year financial report of DataDot Technology Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 31 December 2020, the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the half-year then ended, notes comprising a statement of accounting policies and other explanatory information, and the directors’ declaration.

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of the Group is not in accordance with the Corporations Act 2001 including:

• (i) Giving a true and fair view of the Group’s financial position as at 31 December 2020 and of its financial performance for the half-year ended on that date; and

• (ii) Complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001 .

Directors’ responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year 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 halfyear financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the halfyear financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Group’s financial position as at 31 December 2020 and its financial performance for the halfyear ended on that date and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of the Group, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

Liability limited by a scheme approved under Professional Standards Legislation.

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A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 .

Andrew Hunt Principal

Parramatta, 24 February 2021

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Liability limited by a scheme approved under Professional Standards Legislation.

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DataDot Technology Limited