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ROCKETDNA LTD. Interim / Quarterly Report 2022
65709_rns_2022-07-24_7ad25007-ba0d-40e1-a1cf-abe60c7c05df.pdf
Interim / Quarterly Report
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ASX Announcement
DLT JUNE Q2 FY2022 QUARTERLY REPORT Delta Drone International grows its Australian Recurring Revenue base
HIGHLIGHTS
- Revenue from continuing operations A$1.442m in Q2 FY2022, up 7%, on Q1 FY2022, of which Annual Recurring Revenue (ARR) accounted for 29% of total revenue
- Cash receipts from customers A$1.334m in Q2 FY2022, down 26% on Q1 FY2022, impacted by timing of collections
- Annual Recurring Revenue (ARR) was A$1.710m at the end of the June quarter, up 30% on Q1 FY2022
- Total contract value (TCV) was A$3.822m at the end of the June quarter, up 27% on Q1 FY2022
- Australian operations revenue grew36% in the quarter
- Material contract signed with Red 5 (a leading Australian gold producer): 3-year contract with TCV A$1.01m and ARR of A$336k; plus non-material contracts signed during the quarter in South Africa with Seriti Coal and Exxaro
- Beyond Visual Line of Sight (BVLOS) drone operating license granted by the Civil Aviation Safety Authority (CASA) in Australia opening up significant business opportunity to tender for contracts
- Cash balance of A$3.185 million at 30 June 2022, excluding A$1.150m relating to the sale of ParaZero held in escrow until Late February 2023
25 July 2022 – Drone based data systems provider, Delta Drone International Limited or DLT (ASX: DLT) is pleased to provide the business update for the quarter ending 30 June 2022 (Q2 FY2022), along with its Appendix 4C quarterly cash flow report.
Delta Drone International CEO Christopher Clark said: "Off the back of signing our first long-term customer in Australia, Red 5, we have now set the baseline growth metrics for the business. These new key indicators not only display the maturity and robustness of our business and reporting today, but also give investors insight into how our commercial model is driven. By breaking up the growth drivers of our business, we believe shareholders will be able to derive the true value of the contracted recurring revenue (ARR) and our on-going total contract pipeline (TCV), as well as sizable nonrecurring revenue, some of which we have historically been able to keep rolling forward."
1. FINANCIAL OVERVIEW
Revenue from continuing operations (trade) (unaudited) for the June quarter was A$1.442m, up 7% on Q1 FY2022. Contracted annual recurring revenue (ARR) was 29% of total revenue. Growing the ARR component of overall revenue is a focus of the Company when tendering its services. Australian operations accounted for 37% of group revenue (trade) in the quarter, increasing by 36%.
Cash receipts from customers for the June quarter, Q2 FY2022, totalled A$1.334m, a 26% decrease on Q1 FY2022 and up 1% on Q2 FY2021 (Q2 FY2021 included ParaZero which was recently sold, if excluded, the increase would have been 28%). Trade receivables were A$0.93m at 30 June 2022, higher than at the end of the March quarter of A$0.65m.
Differences between quarterly cash receipts and revenue are due to the 1) cash collection cycle and 2) revenue recognition on contracts and projects including anniversary dates of when contracts started.
Revenue definitions by type:
(A) Revenue legally contracted and recurring: revenue from legal contracts with minimum original terms of 12 months, subject to normal termination provisions per each contract. The TCV and ARR measures set out in the section below contain only this type of contract.
(B) Revenue likely to re-occur: revenue which management have a reasonable expectation will reoccur in the future either because it has been historically demonstrated to re-occur or because we hold rolling short term purchase orders or legal contracts which are less than 12 months in original length.
(C) Revenue one-off: revenue which does not meet the above definitions (these are typically oneoff short projects)
TCV and ARR
Annual Recurring Revenue (ARR) is A$1.710m at the end of the June quarter, up 30% on Q1 FY2022, subject to normal termination provisions per each contract.
Total contract value (TCV) is A$3.822m at the end of the June quarter, up 27% on Q1 FY2022.TCV and ARR grew in the quarter due to signing of new contracts, in particular, with Red 5 and Seriti Coal.
TCV is the total value of all remaining contracts (only contracts that had a minimum of 12 months original duration are included) and is net of monthly contract depletion (i.e. the revenue remaining to be collected until end of contract life). Key contracts in the TCV include with Red 5, Seriti (multiple), Exxaro, South32 (multiple) and Newmont (multiple). ARR and TCV may be impacted by exchange rate fluctuations.
2. COMMERCIAL UPDATE
Material contracts signed during the period included:
Red 5 Limited
A 3-year contract was signed with Red 5 Limited via wholly owned subsidiary, Greenstone Resources (WA) Pty Ltd in Western Australia, to undertake frequent aerial surveying at King of The Hills Mine and Darlot Mine. The contract has a TCV of A$1.01m and ARR of A$336k. See ASX announcement 8 June 2022.
Red 5 Limited is an Australian ASX listed gold producer with established mines located in the Eastern Goldfields of Western Australia.
Key contracts during the period included (individually non-material, not previously announced):
Seriti Coal
A 3-year contract was signed with Seriti Coal in South Africa for drone services for the New Vaal coal mine to undertake safety and legal surveying, including using Beyond Visual Line of Sight services (BVLOS). The contract has a TCV of A$252k and ARR of A$112k.
Seriti Coal, operates three large-scale, opencast and underground thermal coal mines – the New Vaal, New Denmark and Kriel collieries, which respectively supply Eskom's Lethabo, Tutuka and Kriel power stations.
Exxaro
An 18-month contract extension was signed with Exxaro's Belfast mine in South Arica for drone services to undertake safety and legal surveying, blast monitoring and highwall mapping including LiDAR services. The contract extension has a TCV of A$278k and ARR of A$185k. The extension follows the Company initially signing a 3-year contract.
The Belfast Mine produces high grade thermal coal and has a capacity of 2.7 mtpa. Exxaro is a public company incorporated in South Africa and is listed on the JSE, a large South African-based diversified resources group, with interests in the coal, ferrous and energy markets.
3. OPERATIONAL UPDATE
BVLOS license granted
DLT was granted a Beyond Visual Line of Sight (BVLOS) drone operating license by the Civil Aviation Safety Authority (CASA) in Australia opening up significant business opportunity to tender for contracts with existing and new clients. See ASX announcement 9 May 2022.
4. CORPORATE
Board: A number of changes took place to the composition of the Board during the quarter, right sizing the board to the size of the current business. Resignations were received from Directors Eden Attias, Stephen Gorenstein and Clive Donner. Executive Director Christopher Clark was appointed Executive Chairman and Chief Financial Officer Paul Williamson was appointed Executive Director. See ASX announcements 24 May 2022, 20 June 2022 and 23 June 2022.
AGM: The Company held its FY2021 Annual General Meeting (AGM) on 31 May 2022. Results of the meeting can be viewed here. The AGM presentation can be viewed here.
Market engagement
- AusBiz Interview: Chris Clark was interviewed following signing of a material contract with ASX listed Red 5 (10 June 2022). View here.
- E&MJ mining article: DLT appeared in an article written by E&MJ on developments in the drone sector. View here.
Auditor: Post quarter end, the Company changed auditors to Hall Chadwick Audit (WA) Pty Ltd from BDO Audit (WA) Pty Ltd (ASX announcement 5 July 2022).
Cash: The cash balance at 30 June 2022 was A$3.185m. This balance excludes A$1.150m, currently held in escrow, which is subject to potential warranties, claims and withholding tax agreements, related to the ParaZero divestment, to be settled by late February 2023.
5. APPENDIX 4C
Major cash outflows from operating payments comprised:
- A$432K on continuing business operating costs
- A$940K on continuing business staff costs
- A$647K on continuing business administration and corporate costs.
Pursuant to ASX Listing Rule 4.7C.2, the Company provides the below table as a comparison of actual expenditure against the "use of funds" table as disclosed in the Prospectus dated 10 November 2020 ("Prospectus") (ASX announcement of 10 November 2020):
| Use of Funds Under Prospectus | Budgeted ExpenditureAmount ($M) | Actual ExpenditureAmount ($M) |
|---|---|---|
| Costs to establish an Australian HeadOffice | (0.57) | (0.35) |
| Expenditure on Australian Sales and MarketingActivities | (0.86) | (0.63) |
| Costs associated with Expansion of South Africanoperations | (0.41) | (1.93) |
| R&D Expenses | (1.81) | (2.01) |
| Working capital | (0.60) | (5.57) |
| Transaction Fees and Expenses | (0.75) | (0.79) |
| TOTAL | (5.00) | (11.28) |
| Less: Working capital for Arvista (newly acquired)1 | (0.68) | |
| Add: Opening cash prior to IPO | 0.22 | |
| Add: Proceeds from IPO | 5.00 | |
| Add: Receipts fromCustomers | 9.15 | |
| Add: Cash received from divestiture of ParaZero | 4.06 | |
| Less: Product Manufacturing and Direct OperatingCosts | (2.62) | |
| Remaining cash at 30 June 2022 as disclosed in Appendix4C | 3.85 |
Explanation of material variances in the use of funds:
- Includes costs associated with newly acquired Arvista Pty Ltd. These costs were not budgeted when the Prospectus was announced.
As per item 6 of the attached Appendix 4C cash flow report for the quarter, payments to related parties and their associates of A$332k comprised of:
-
Dan Arazi: $60k for director fees
-
Paul Williamson: $55k for CFO services provided under his executive agreement, noting that Paul is not being paid additional fees for his director duties and $1k to a related party of Paul for office building maintenance
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Chris Clark: $50k for director fees and $18k paid in employment fees to a related party of Chris
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Stephen Gorenstein: $22k (inc GST) as director fees (resigned 20 June 2022) and $22k (inc GST) in termination fees
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Clive Donner: $11k (inc GST) for director fees (resigned 24 May 2022)
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Eden Attias: $46k for director fees (resigned 20 June 2022) and $46k in termination fees (partial payment only)
This announcement has been authorised for release by the Board of Delta Drone International Limited.
-ENDS-
For more information, please contact:
Corporate Chris Clark, Chief Executive Officer E: [email protected]
Investors and Media Glen Zurcher P: +61 (0)420 249 299 E: [email protected]
Stephen Buckley, Company Secretary P: +61 (0)8 6189 1155
About Delta Drone International www.dlti.com.au
Delta Drone International is a ASX listed (ASX: DLT) multi-national drone-based data service and technology solutions provider for the mining, agricultural and engineering industries.
Services are aerial surveying and mapping, security and surveillance, and blast monitoring and fragment analysis through a fully-outsourced service with AI and fast data turnaround that allows enterprise customers to focus on operations on the ground while Delta Drone International takes care of everything in the air.
Revenues are generated through multi-year recurring revenue contracts and short projects which also have the potential to be recurring. Key customer contracts include with tier 1 and tier 2 miners, South32, Newmont Mining, Red 5 and Seriti Coal.
DLT's operations are focused on Australia and Africa with regional offices in Perth, Johannesburg & Accra.
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Appendix 4C
Quarterly cash flow report for entities subject to Listing Rule 4.7B
Name of entity
DELTA DRONE INTERNATIONAL LIMITED
17 618 678 701 30 June 2022
ABN Quarter ended ("current quarter")
| Consolidated statement of cash flows | Current quarter$A'000 | Year to date(6months)$A'000 | |
|---|---|---|---|
| 1.Cash flows from operating activities | |||
| 1.1 | Receipts from customers | 1,334 | 3,134 |
| 1.2 | Payments for | ||
| (a)research and development | - | - | |
| (b)product manufacturing and operatingcosts | (302) | (660) | |
| (c)advertising and marketing | (89) | (139) | |
| (d)leased assets | (41) | (93) | |
| (e)staff costs | (940) | (1,916) | |
| (f)administration and corporate costs | (647) | (1,184) | |
| 1.3 | Dividends received (see note 3) | - | - |
| 1.4 | Interest received | 4 | 7 |
| 1.5 | Interest and other costs of finance paid | - | (1) |
| 1.6 | Income taxes (paid)/received | (5) | 27 |
| 1.7 | Government grants and tax incentives | - | - |
| 1.8 | Other (provide details if material) | 2 | 9 |
| 1.9 | Net cash from / (used in) operatingactivities | (684) | (816) |
| 2. | Cash flows from investing activities | ||
|---|---|---|---|
| 2.1 | Payments to acquire or for: | ||
| (a)entities | - | - | |
| (b)businesses | (274) | (274) | |
| (c)property, plant and equipment | (300) | (460) | |
| (d)investments | - | - | |
| (e)intellectual property | - | - | |
| (f)other non-current assets | - | - | |
| 2.2 | Proceeds from disposal of: | ||
| (a)entities | - | - | |
| (b)businesses | - | 4,057 | |
| (c)property, plant and equipment | 69 | 69 | |
| (d)investments | 20 | 20 | |
| (e)intellectual property | - | - | |
| (f)other non-current assets | - | - | |
| 2.3 | Cash flows from loans to other entities | (2) | (2) |
| 2.4 | Dividends received (see note 3) | - | - |
| 2.5 | Other (equipment deposits) | 13 | 9 |
| 2.6 | Net cash from / (used in) investingactivities | (474) | 3,419 |
| 3. | Cash flows from financing activities | ||
|---|---|---|---|
| 3.1 | Proceeds from issues of equity securities(excluding convertible debt securities) | ||
| 3.2 | Proceeds from issue of convertible debtsecurities | - | - |
| 3.3 | Proceeds from exercise of options | - | - |
| 3.4 | Transaction costs related to issues ofequity securities or convertible debtsecurities | - | |
| 3.5 | Proceeds from borrowings | 40 | 40 |
| 3.6 | Repayment of borrowings | (380) | |
| 3.7 | Transaction costs related to loans andborrowings | - | - |
| 3.8 | Dividends paid | - | - |
| 3.9 | Other (provide details if material) | - | - |
| 3.10 | Net cash from / (used in) financingactivities | 16 | (340) |
| 4. | Net increase / (decrease) in cash andcash equivalents for the period | ||
|---|---|---|---|
| 4.1 | Cash and cash equivalents at beginning ofperiod | 4,330 | 955 |
| 4.2 | Net cash from / (used in) operatingactivities (item 1.9 above) | (684) | (816) |
| 4.3 | Net cash from / (used in) investing activities(item 2.6 above) | (474) | 3,419 |
| 4.4 | Net cash from / (used in) financing activities(item 3.10 above) | 16 | (340) |
| 4.5 | Effect of movement in exchange rates oncash held | (3) | (33) |
| 4.6 | Cash and cash equivalents at end ofperiod | 3,185 | 3,185 |
The cash balance excludes A$0.25m held in escrow to meet potential Israeli withholding tax obligations, as well as excluding an expected A$0.9m held in escrow for 12 months following completion of the sale of Parazero (until end January 2023).
| 5. | Reconciliation of cash and cashequivalentsat the end of the quarter (as shown in theconsolidated statement of cash flows) to therelated items in the accounts | Current quarter$A'000 | Previous quarter$A'000 |
|---|---|---|---|
| 5.1 | Bank balances | 3,166 | 4,239 |
| 5.2 | Call deposits | 19 | 106 |
| 5.3 | Bank overdrafts | - | (15) |
| 5.4 | Other (provide details) | - | - |
| 5.5 | Cash and cash equivalents at end ofquarter (should equal item 4.6 above) | 3,185 | 4,330 |
| 6. | Payments to related parties of the entity and theirassociates | Current quarter$A'000 |
|---|---|---|
| 6.1 | Aggregate amount of payments to related parties and theirassociates included in item 1 | 332 |
| 6.2 | Aggregate amount of payments to related parties and theirassociates included in item 2 | - |
| Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of, and anexplanation for, such payments. |
| 7. | Financing facilitiesNote: the term "facility' includes all forms of financingarrangements available to the entity.Add notes as necessary for an understanding of thesources of finance available to the entity. | Total facilityamount at quarterend$A'000 | Amount drawn atquarter end$A'000 |
|---|---|---|---|
| 7.1 | Loan facilities | 2,580 | 80 |
| 7.2 | Credit standby arrangements | 117 | 23 |
| 7.3 | Other (see note below) | 136 | 136 |
| 7.4 | Total financing facilities | 2,833 | 239 |
| 7.5 | Unused financing facilities available at quarter end | 2,594 | |
| 7.6Include in the box below a description of each facility above, including the lender, interestrate, maturity date and whether it is secured or unsecured. If any additional financingfacilities have been entered into or are proposed to be entered into after quarter end,include a note providing details of those facilities as well. | |||
| 7.1: Unsecured loan facility of $2,500K from Delta Drone SA (France) bearing interest of 2.5% perannum on all drawn amounts. As at 30 June 2022, none of this was drawn down. Unsecured andinterest free shareholder loan of $80K from Entech Pty Ltd.7.2: Unsecured credit card (A$2K) bearing interest 17.25%, unsecured loan from Nedbank (A$6K)bearing interest 18.50%, unsecured loan from Sasfin bank (A$89K) bearing interest 14.25% andunsecured credit card (A$20k) bearing interest of 20.24%. | |||
| 7.3: Motor vehicle financing of ($55K) and ($57K) from Toyota Finance bearing interest of 2.90% and4.54% respectively. Insurance funding of ($24K) from QPR Limited bearing interest of 3.39%. |
| 8. | Estimated cash available for future operating activities | $A'000 | |
|---|---|---|---|
| 8.1 | Net cash from / (used in) operating activities (item 1.9) | (684) | |
| 8.2 | Cash and cash equivalents at quarter end (item 4.6) | 3,185 | |
| 8.3 | Unused finance facilities available at quarter end (item 7.5) | 2,594 | |
| 8.4 | Total available funding (item 8.2 + item 8.3) | 5,779 | |
| 8.5 | item 8.1) | Estimated quarters of funding available (item 8.4 divided by | 8.45 |
| Note: if the entity has reported positive net operating cash flows in item 1.9, answer item 8.5 as "N/A". Otherwise, afigure for the estimated quarters of funding available must be included in item 8.5. | |||
| 8.6 | If item 8.5 is less than 2 quarters, please provide answers to the following questions: | ||
| 8.6.1Does the entity expect that it will continue to have the current level of net operatingcash flows for the time being and, if not, why not?N/A8.6.2Has the entity taken any steps, or does it propose to take any steps, to raise furthercash to fund its operations and, if so, what are those steps and how likely does itbelieve that they will be successful? | |||
| N/A | |||
| 8.6.3Does the entity expect to be able to continue its operations and to meet its businessobjectives and, if so, on what basis? | |||
| N/A | |||
| Note: where item 8.5 is less than 2 quarters, all of questions 8.6.1, 8.6.2 and 8.6.3 above must be answered. |
Compliance statement
- 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.
- 2 This statement gives a true and fair view of the matters disclosed.
Date: 25 July 2022
Authorised by: .By the board (Name of body or officer authorising release – see note 4)
Notes
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- This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity's activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.
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- If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report.
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- Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.
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- If this report has been authorised for release to the market by your board of directors, you can insert here: "By the board". If it has been authorised for release to the market by a committee of your board of directors, you can insert here: "By the [name of board committee – eg Audit and Risk Committee]". If it has been authorised for release to the market by a disclosure committee, you can insert here: "By the Disclosure Committee".
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- If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations, the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.