27 August 2020
Company Announcements
For Immediate Release
ASX Code: CT1
APPENDIX 4E AND ANNUAL FINANCIAL REPORT
In accordance with the ASX Listing Rules, CCP Technologies Limited encloses for immediate release the
following information:
1. Appendix 4E; and
2. Annual Financial Report for the period ended 30 June 2020.
If you have a query about any matter covered by this announcement, please contact Ms Terri Bakos
Authorised for release by the Board.
ASX LISTING RULES – APPENDIX 4E
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDING 30 JUNE 2020
The following information is presented in accordance with ASX Listing Rule 4.2A.3.
1.
Details of the reporting year and the previous corresponding year
Current reporting year
- the year ended 30 June 2020
Previous corresponding
year
- the year ended 30 June 2019
2.
Results for announcement to the market
Year ended
2.1
Revenues from ordinary activities
30 June 2020
$
691,484
30 June 2019
$
578,990
Increase / (Decrease)
$
112,494
%
19.43
2.2
2.3
Loss from ordinary activities after tax
attributable to members
2,923,876*
2,177,277
746,599
34.29
Net loss for the year attributable to
members
2,923,876*
2,177,277
746,599
34.29
2.4
Dividends (distributions)
Nil
2.5
Record date for determining entitlements to the dividend
Nil
2.6
Commentary on “Results for Announcement to the Market”
A brief explanation of any of the figures in 2.1 to 2.4 above is contained in the attached Annual
Financial Report for the Year ended 30 June 2020.
*Unaudited normalised loss for the year $1,371,757. Refer page 9, 2020 Annual Report
3. Net tangible assets per security
Year ended
30 June 2020
cents
30 June 2019
cents
Increase / (Decrease)
cents
%
Net tangible assets per
security
0.33
(0.10)
0.43
428.44
The net tangible assets backing per ordinary security of 0.33 cents presented above is inclusive of right-
of-use assets and lease liabilities. The net tangible asset backing per security, as at 30 June 2020, would
reduce to 0.32 cents if right-of-use assets were excluded, and right-of-use liabilities were included in
the calculation.
4. Details of entities over which control has been gained or lost during the year
The only change in controlled entities during the period was the incorporation of the Group’s 100%
owned Chinese entity, Beijing Constellation Technologies Development Co. Ltd.
5. Details of individual and total dividends or distributions and dividend or distribution payments
Nil
6. Details of any dividend distribution reinvestment plans
Nil
7. Details of any associates and joint venture entities
Nil
8.
Foreign Entities, Accounting Standards used in compiling the report
Refer to Note 12 of the Annual Financial Report for details of investments in foreign subsidiaries.
9. Audit / Review of Accounts upon which this report is based and qualification of audit / review
The Annual Financial Report has been subject to an audit and is not subject to any dispute or
qualification.
Constellation Technologies Limited
Annual report
for the year ended 30 June 2020
ABN 58 009 213 754
Constellation Technologies Limited
(formerly CCP Technologies Limited)
ABN 58 009 213 754
Annual report - 30 June 2020
Contents
Corporate Directory .................................................................................................................................................................................. 1
Chairman’s Letter ....................................................................................................................................................................................... 2
CEO Report ................................................................................................................................................................................................... 4
Directors Report ......................................................................................................................................................................................... 8
Remuneration report (audited) ......................................................................................................................................................... 16
Auditors Independence Declaration ................................................................................................................................................ 29
Corporate governance statement .................................................................................................................................................... 30
Consolidated Statement of Profit or Loss and Other Comprehensive Income ............................................................... 31
Consolidated Statement of Financial Position ............................................................................................................................. 32
Consolidated Statement of Changes in Equity ............................................................................................................................ 33
Consolidated Statement of Cash Flows .......................................................................................................................................... 34
Notes to the Consolidated Statements .......................................................................................................................................... 35
Director’s Declaration ............................................................................................................................................................................ 73
Independent Auditors Report ............................................................................................................................................................ 74
Shareholder Information ...................................................................................................................................................................... 79
Corporate Directory
Directors
Mr Adam Gallagher
Executive Director and Chief Executive Officer
Mr Leath Nicholson
Independent Non-Executive Chairman
Mr Anoosh Manzoori
Independent Non-Executive Director
Company Secretary
Ms Terri Bakos
Principal registered office and
principal place of business
Share register
Auditor
Solicitors
Bankers
Level 7, 420 Collins Street
Melbourne VIC 3000
Australia
Telephone: +61 (0)3 8592 4883
Advanced Share Registry Ltd
110 Stirling Highway
Nedlands WA 6909
Australia
Telephone: +61 (0)8 9389 8033
Facsimile: +61 (0)8 9262 3723
PKF Brisbane Audit
Level 6, 10 Eagle Street
Brisbane QLD 4000
Australia
Telephone: +61 (0)7 3839 9733
Facsimile: +61 (0)7 3832 1407
Nicholson Ryan Lawyers Pty Ltd
Level 7, 420 Collins Street
Melbourne VIC 3000
Australia
Telephone: +61 (0)3 9640 0400
Westpac Banking Corporation
150 Collins Street
Melbourne VIC 3000
Australia
Stock exchange listings
Constellation Technologies Limited shares are
listed on the Australian Securities Exchange
(ASX: CT1)
Website
https://www.ct1limited.com
1
Constellation Technologies Limited
Annual Report 2020
Chairman’s Letter
Mr Leath Nicholson
Independent Non-Executive
Chairman
Dear fellow shareholders,
I welcome you to the 2020 Annual Report for Constellation Technologies
Limited and its subsidiaries and I thank you for your interest and continued
support.
Our Company is ambitiously setting out on a grand journey to define the next
era of the Internet of Things that we have named ‘Constellation Technologies’.
The ability of software platforms to make best use of the proliferation of data is
central to enabling true digital transformation and underpins the rapidly
emerging Smart Cities theme.
While we are still at the very early stages of our plans, our market capitalisation
has already grown in excess of 1000% from our low point in 2019, and we were
very pleased to provide all shareholders who participated in our Q2 FY2020
rights issue, with this early upside. I particularly acknowledge and thank our two
underwriters that supported the rights issue and whose participation I am sure
gave many shareholders the confidence to invest alongside them.
In December 2019, we signed two strategic partnership agreements that
together contemplates new business revenues of $15m in cash by 31 December
2021. Our partners have extensive commercial and corporate experience as well
as international networks. They each also chose to subsequently further invest
in the Company at effectively double the price of the rights issue that was
completed in October 2019 when taking into account the value of the free
attaching option received by rights issue participants.
The investment and revenue targets of the strategic partners provides the
Board with the confidence to invest in the business to support this anticipated
growth that is in addition to, and complemented by our existing and future
growth initiatives.
Since establishing in China in recent months we are now seeing the initial
projects and momentum starting to materialise that gives us confidence in the
future achievement of the strategic partnership revenue targets. Our projects to
date have also given us an early glimpse of the enormous scale of the smart-
cities sector that is commencing its implementation phase in China with major
projects being developed across the country. We are doing all that we can to
be a major beneficiary of this sector.
2
Constellation Technologies Limited
Annual Report 2020
Chairman’s Letter continued…
Accordingly, we have invested in our team and added significant skillsets in
areas that we believe are important to our current and future growth such as AI,
camera technology, IoT architecture, project management and sensor
production. We have a phenomenal team working seamlessly across India,
Australia and China servicing clients and opportunities in each of these regions
as well as in the USA and the Middle East.
While COVID-19 restrictions have had an impact on new sales across the group
mainly in the form of project delays, we are see growing opportunities in the
global smart-city movement with the acceleration of the mainstream awareness
that the pandemic has fostered for the transition to a more digital economy in
every area.
Digital transformation occurs where our industries and the customers that they
serve incorporate technologies that can help them become more sustainable
and efficient as well as creating and enabling innovative new growth
opportunities. IoT is core to this movement and we have a broad vision, a
growing capability and the commercial distribution to be a significant enabler.
While our share capital has expanded considerably in the financial year it is
important to note that our register is now relatively tightly held with the Board,
management and our strategic partners together holding over 40% of shares on
issue on both an undiluted and a fully diluted basis. It is also worth noting that
the exercise of the current in-the-money options would realise an additional
$7.8m in cash that is potentially available to further accelerate our growth.
I thank my fellow directors and our management team for staying the course
through a difficult period in the 2019 calendar year, several of whom worked
without payment for an extended period and even invested their monies to
support the Company before we turned the corner late last calendar year. While
we’re still only on the launchpad we are now in a strong overall position
technically, commercially and corporately to pursue our high growth agenda.
Leath Nicholson
Independent Non-Executive Chairman
3
Constellation Technologies Limited
Annual Report 2020
CEO Report
Mr Adam Gallagher
Chief Executive Officer
Dear fellow shareholders,
The 2020 financial year has been a formation period for the Company as it
transitioned from a niche IoT solution provider to adopting an expansive
vision which involves supporting a wide range of IoT and software
applications.
The Smart cities theme is receiving a rapidly increasing amount of mainstream
attention and awareness with many countries now moving from conceptual
pondering to practical application. ‘Smart Cities’ to us is an umbrella term
under which all IoT applications can fit. Our existing applications in cold
storage monitoring as well as our more recent projects in city infrastructure
monitoring and operational management are each examples of smart city
applications.
In Australia, we are seeing an increasing amount of market enquiry from all
levels of government and infrastructure operators for technology vendors
that can provide smart city applications which is a first practical step for these
groups to understand what might be possible in terms of new technologies
and who they should work with to develop them. The next stage will be
tendering for smart city applications and we have positioned the Company to
participate in this evolving process.
The market of IoT vendors is highly fragmented with most major technology
groups watching the smaller innovators emerge and themselves
concentrating on the services side to implement and support hardware
networks or provide software platforms on which innovators can create new
applications. The innovators normally focus on their domain expertise and
offer solutions within an industry niche such as healthcare, environment,
transport or energy.
CT1 was originally just another example of a domain innovator with its
temperature monitoring solution and the Company experienced a similar
commercialisation journey to many in the IoT space, where achieving large-
scale rollouts with major groups takes a long time. While continuing to
progress with this application we have sought to both reduce inherent
business model risk and increase opportunity by building out our backend IoT
platform to position the Company to support all types of IoT applications,
including our own as well as third party solutions.
4
Constellation Technologies Limited
Annual Report 2020
CEO Report continued…
An IoT platform has three basic functions: to receive data, process that data
and deliver it to the user. This seems simple, though in practice there is a
myriad of data flows that need to be intelligently integrated and processed in a
way that is practical, viable and ultimately useful, which to a user means timely
and intuitive. We have hired and incentivised some of the best minds in IoT
with broad experience in developing and supporting applications across a
broad number of industries to complement and build out our existing team
with a view to becoming a key supporting participant to the IoT industry. On
the hardware side sensors are becoming increasing smaller, smarter and
cheaper with domain knowledge experts from all fields clamouring to create
and implement their own particular IoT solution.
We want to help industry to innovate through providing a robust back-end IoT
platform which we have named the ‘MeridianCT Platform’ on which innovators
can develop, launch and maintain their IoT solutions. To do this we help
customers to ensure that their hardware networks are optimised by
incorporating the best available sensors, augmenting existing hardware, or
even creating new sensors through our design and production capabilities. We
then connect their data streams, add their AI or assist customers to source or
develop new AI and then design, implement and support their front-end user
interfaces across all devices from control rooms to smartphones.
We work closely with research, services and hardware partners to incorporate
expertise, finance, ‘boots on the ground’ for large-scale deployments and other
inputs as necessary to deliver the customer outcomes.
Notably in Q4 FY20, we were the first company in Australia to be accredited
with Panasonic to load algorithms into their new smart camera. We are
working with the University of NSW and Monash University as well as other
research groups to ensure that our solutions carry the latest innovations
available.
After a delay with COVID-19 restrictions we formally opened our office in
China in mid-June. We have a small team of seven that work in concert on a
daily basis with our Australian and Indian teams to address the starting
opportunities that our strategic partners have assisted us to procure to gain
initial traction in the China market.
5
Constellation Technologies Limited
Annual Report 2020
CEO Report continued…
As we complete these early projects and pass through their revenue hurdle we
anticipate that we will establish a track record that allows us to pursue
increasingly larger smart city projects. A key strategic objective is to provide
our shareholders with positive exposure to the enormous smart city market in
China.
As we are developing solutions for universal industry problems and
opportunities, we are already seeing some positive cross-sell in the Australian
market from prospective customers in government and industry that are
looking at our China successes as they seek to similarly digitise their
operations.
With the movement restrictions in place at this point, we have been a little
hamstrung in our capacity to be able to pursue new local opportunities as
aggressively as we otherwise would have liked. Our US new business has also
stalled though we believe that we’ll see some positive movement by the end of
the calendar year.
In the last twelve months we have more than doubled the number of
temperature monitoring tags and we expect to do better than that in the
coming twelve months. While this side of the business has not delivered to
expectations in the past, it certainly remains an ongoing part of our growing
product suite and we are steadily approaching the larger rollouts that the
Company has always anticipated would land at some point.
While we pursue these opportunities, we have added several other irons in the
fire in regard to innovative industry IoT solutions and we will continue to
broaden our market offering that is being progressively developed on a project
basis.
We have an excellent team of people and in recent months we have bedded
down our internal systems to provide for sustained scalability to ensure that
there are no operational or resourcing impediments to our continued growth.
Our vision of ‘making data, make sense’ sums up the objective of where the IoT
sector as a whole needs to be heading to enable business and government to
continue to digitise effectively, without drowning in an ever-increasing sea of
data and the associated communications costs from the streaming of that data
across their organisations.
6
Constellation Technologies Limited
Annual Report 2020
CEO Report continued…
We are living our name’s sake of ‘Constellation Technologies’ that solve this
mounting global challenge by embracing, collating, learning from and
practically applying the expanding cosmos of data for the tailored benefit of
our customers and their stakeholders.
Adam Gallagher
Chief Executive Officer
7
Constellation Technologies Limited
Annual Report 2020
Directors Report
The directors are pleased to present their report on the consolidated entity consisting of Constellation
Technologies Limited (the ‘Company’) and the entities it controls (the ‘Consolidated entity’ or ‘Group’) for the
year ended 30 June 2020.
Directors and Company Secretary
The following persons were directors of Constellation Technologies Limited during the whole of the financial
year and up to the date of this report:
Mr Adam Gallagher, Executive Director and Chief Executive Officer
Mr Leath Nicholson, Independent Non-Executive Chairman
Mr Anoosh Manzoori, Independent Non-Executive Director
The following persons held office as Company Secretary of Constellation Technologies Limited during the
financial year and up to the date of this report or their date of resignation as noted:
Ms Terri Bakos – appointed 17 December 2019
Mr Adam Gallagher – resigned 17 December 2019
Mr Phillip Hains – resigned 17 December 2019
Principal activities
The principal activities of the Group are to bring innovative solutions to market which leverage cloud, internet
of things (IoT), edge-computing sensors, big data, analytics, machine learning (ML), artificial intelligence (AI)
and other advanced technologies.
Review of operations
Financial results
Reported revenue for the year has increased 19.43% to $691,484 (2019: $579,990) as a result of the Group’s
expansion into China. The Group however recorded a loss for the year of $2,923,876 (2019: $2,177,277), a
34.29% increase over the prior year. During the year, the Group did however incur several large abnormal
expenses which impacted its result. Adjusting for these abnormal items and share based payments made to
employees and contractors for the year (and corresponding year) results in an unaudited normalised loss for
the year, before tax of $1,371,757 – an improvement of 19.7% over the prior year normalised result.
8
Constellation Technologies Limited
Annual Report 2020
Directors Report continued…
2020
$
2019
$
Loss before income tax (audited)
(2,923,876)
(2,177,277)
Share-based payments (non-cash)
Settlement to previous management & suppliers
Legal and mediation
Capital raising associated costs
China project
Normalised Loss before income tax (unaudited)
1,231,492
121,067
60,209
45,095
94,256
(1,371,757)
437,236
-
36,621
-
-
(1,703,420)
During the past 18 months, the Group had been involved in protracted negotiations with previous
management and suppliers which has resulted in settlements and costs in the vicinity of $180k during the
current year.
With the Group’s move into the Asian region, specifically China, the Group undertook several capital raising
activities and incurred specific formation costs that were one-off in nature.
The Group had net assets of $4,426,941 as at 30 June 2020 (2019: net deficiency of assets of $550,540). As at 30
June 2020, the Group had cash reserves of $4,405,173 (2019: $40,854). Noting the additional cash raised
during the year, the directors are of the view that the Group will continue to be able to pay its debts as and
when they fall due and have prepared the financial report on a going concern basis.
Operations
On 27 May 2020, shareholders resolved to change the Company’s name from CCP Technologies Limited to
Constellation Technologies Limited.
Information on the operations of the Group and its business strategies and prospects is set out in the
Chairman’s Letter CEO Report section of this annual report.
Dividends
No dividends have been paid or proposed by the Group during or since the end of the financial year (2019: nil).
Significant changes in the state of affairs
Other than the information set out in the Chairman's letter, CEO’s Report and activities section of this annual
report, there are no significant changes in the state of affairs that the Group has not disclosed.
Event since the end of the reporting period
On 29 July 2020, the Company announced that ASIC had consented to the resignation of BDO Audit Pty Ltd as
the Group’s auditors. PKF Brisbane Audit commenced as the Group’s auditors for the FY20 audit. The Board
intends to seek confirmation of PKF Brisbane Audit as the Group’s auditors at the 2020 Annual General
Meeting.
9
Constellation Technologies Limited
Annual Report 2020
Directors Report continued…
No other matter or circumstance has occurred subsequent to year end that has significantly affected, or may
significantly affect, the operations of the Group, the results of those operations or the state of affairs of the
Group or economic entity in subsequent financial years.
Likely developments and expected results of operations
Other than the information set out in the Chairman's letter and review of operations and activities section of
this annual report, there are no likely developments or details on the expected results of operations that the
Group has not disclosed.
Environmental regulation
The Group is not affected by any significant environmental regulation in respect of its operations.
Our Board
The names of directors in office at any time during or since the end of the financial year are:
Mr Adam Gallagher
Executive Director and Chief Executive Officer
Experience:
Adam is a technology leader in IoT and digitalisation with a corporate
focus on creating sustained, rapid growth through innovation and
commercialisation complemented by strategic corporate transactions.
As a director of Envirosuite Limited for 8 years, he was instrumental in
building, funding, and transitioning the Company across a series of
acquisitions and corporate transactions from a $2.5m Australian
environmental consulting business with a pilot IoT platform, to a $200m
international technology company with 500 clients across more than a
dozen countries.
Adam has previously worked in corporate finance, funds management,
stock exchanges, digital media in public companies with a focus on
creating and managing catalytic growth opportunities.
Qualifications:
Date of appointment:
- Bachelor of Economics
- Master in Commerce
- Graduate Diploma in
Information Systems
- Graduate Diploma in
Applied Corporate
Governance
Other current directorships:
Former directorships in last 3
years:
Committees:
CT1 Ordinary Shares:
CT1 Options:
1 June 2015
None
Envirosuite Limited (ASX:EVS),
until 31 July 2020
None
26,482,360
24,729,747
10
Constellation Technologies Limited
Annual Report 2020
Directors Report continued…
Mr Leath Nicholson
Independent Non-Executive Chairman
Experience:
Leath was a corporate partner at a leading Melbourne law firm, gaining
experience with a breadth of ASX listed entities, before co-founding
Foster Nicholson (now Nicholson Ryan) in 2008. Leath's principal clients
continue to be ASX listed companies and high net worth individuals.
Leath has particular expertise in mergers and acquisitions, IT based
transactions, and corporate governance.
Qualifications:
Date of appointment:
14 October 2016
- Bachelor of Economics
Other current directorship:
(Honours)
- Bachelor of Laws (Honours)
- Master of Laws
(Commercial Law)
Former directorships in last 3
years:
AMA Group Limited (ASX:AMA),
since 23 December 2015
Money3 Corporation Limited
(ASX:MNY) until 15 November
2019
Committees:
CT1 Shares:
CT1 Options:
Chair – Remuneration &
Nomination Committee
Member – Audit & Risk
Committee
17,930,084
17,033,613
11
Constellation Technologies Limited
Annual Report 2020
Directors Report continued…
Mr Anoosh Manzoori
Independent Non-Executive Director
Experience:
Anoosh has over 20 years’ experience as an entrepreneur, investor, board
member and advisor, specialising in helping fast growth technology
companies. Following the completion of his tertiary studies Anoosh
founded several technology companies including one of Australia’s largest
cloud-hosting platforms that he exited via a highly successful trade sale. He
is also a director of investment and corporate advisory firm Shape Capital
Pty Ltd.
Anoosh leverages his experience and strong international network in the
technology sector in both corporate and capital markets to help shape and
optimise CT1’s continued growth.
Qualifications:
Date of appointment:
14 October 2016
- Bachelor of Science
- Graduate Diploma in
Business Enterprise,
Business
Other current directorships:
First Growth Funds Ltd, since 14
December 2017. Company delisted
from the ASX on 4 December 2019
and joined the Canadian Stock
Exchange.
Former directorships in last 3
years:
YPB Group Limited (ASX:YPB), until
4 June 2019
Committees:
Chair – Audit & Risk Committee
Member – Remuneration &
Nomination Committee
CT1 Shares:
CT1 Options:
10,260,506
9,201,682
12
Constellation Technologies Limited
Annual Report 2020
Directors Report continued…
Our management team
Ms Terri Bakos
Company Secretary & Chief Financial Officer
Experience:
Terri has over 20 years’ experience providing company secretarial,
financing accounting and compliance services to ASX Listed and unlisted
public companies in the technology, financial services, automotive,
mining and biotech sectors. She holds a Bachelor of Business in
Accounting, is a Chartered Accountant and Chartered Secretary.
Mr Kartheek Munigoti
General Manager
Experience:
Kartheek Munigoti is an IoT expert with 18 years’ experience in creating
and managing technology products and businesses and combines a deep
knowledge of IoT solutions with experience running technology
businesses.
Kartheek’s experience and skill-set covers software, firmware and
hardware development. Kartheek has been directly involved and/or
responsible for the commercialisation of innovative products and services.
This includes concept, design, product development and deployment.
Meetings of directors
The numbers of meetings of the Group's board of directors and of each board committee held during the year
ended 30 June 2020, and the numbers of meetings attended by each director were:
Mr Adam Gallagher
Mr Leath Nicholson
Mr Anoosh Manzoori
Full meetings of
directors
Meetings of committees
Audit
Remuneration
A
8
8
7
B
8
8
8
A
-
2
2
B
-
2
2
A
-
1
1
B
-
1
1
A = Number of meetings attended
B = Number of meetings held during the time the director held office or was a member of the committee during the year
13
Constellation Technologies Limited
Annual Report 2020
Directors Report continued…
Shares under option
Unissued ordinary shares
Unissued ordinary shares of Constellation Technologies Limited under option at the date of this report are as
follows:
Options
Grant Date Recipients
18/11/2016 Director
Director
8/11/2016
15/12/2016
Consultants
10/11/2017 Director
11/12/2018
14/11/2019
29/05/2020
29/05/2020 Directors
19/06/2020
Investors - free attaching
Rights Issue - free attaching
Employees
Sophisticated Investor
Performance Rights
Grant Date
Recipients
13/01/2020
13/01/2020
1/02/2020
Employees
Employees
Employees
Expiry Date
15/12/2020
15/12/2020
15/12/2019
25/10/2021
10/12/2020
14/11/2022
29/05/2023
29/05/2023
18/06/2023
Exercise
Price
$0.100
$0.100
$-
$0.100
$0.030
$0.015
$0.015
$0.015
$0.015
30 June 2020
30 June 2019
2,000,000
2,000,000
-
1,446,550
19,890,191
426,582,657
19,285,714
39,142,858
16,800,000
527,147,970
2,000,000
2,000,000
1,533,000
1,446,550
43,062,350
-
-
-
-
50,041,900
Vesting Date Expiry Date 30 June 2020
3,000,000
13/04/2022
13/01/2021
3,000,000
13/04/2022
13/01/2022
375,592
1/05/2021
1/02/2021
6,375,592
30 June 2019
-
-
-
-
No option holder has any right under the options to participate in any other share issue of the Company or any
other entity.
Shares issued on the exercise of options or rights
57,410,886 ordinary shares of Constellation Technologies Limited were issued during the year ended 30 June
2020 on the exercise of options granted.
Insurance of officers and indemnities
Insurance of officers
During the financial year, the Group paid a premium in respect of a contract to insure the directors and
executives of the Group against a liability to the extent permitted by the Corporations Act 2001. The contract of
insurance prohibits disclosure of the nature of liability and the amount of the premium.
14
Constellation Technologies Limited
Annual Report 2020
Directors Report continued…
Indemnity of auditor
Constellation Technologies Limited has not, during or since the financial year, indemnified or agreed to
indemnify the auditor of the Group or any related entity against a liability incurred by the auditor. During the
financial year, the Group has not paid a premium in respect of a contract to insure the auditor of the Group or
any related entity.
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 Group is a party, for
the purpose of taking responsibility on behalf of the Group for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Group with leave of the Court under
section 237 of the Corporations Act 2001.
Non-audit services
During the year ended 30 June 2020, the Group did not engage the external auditor to provide non-audit
services.
Rounding of amounts
The Group is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the 'rounding off' of
amounts in the directors' report. Amounts in the directors' report have been rounded off in accordance with
the instrument to the nearest dollar.
15
Constellation Technologies Limited
Annual Report 2020
Remuneration report (audited)
The directors present the Constellation Technologies Limited 2020 Remuneration Report, outlining key aspects
of our remuneration policy and framework, and remuneration awarded this year.
The report is structured as follows:
a) Principles used to determine the nature and amount of remuneration
b) Details of remuneration
c) Service agreements
d) Share-based compensation
e) Relationship between the remuneration policy and group performance
f) Key management personnel disclosures
(a) Principles used to determine the nature and amount of remuneration
Remuneration policy
The performance of the Group depends upon the quality of its directors and executives. To prosper, the Group
must attract and retain highly skilled directors and executives.
Remuneration committee
The Board has a Remuneration Committee comprising the following members:
• Mr Leath Nicholson, Non-Executive Director (chair)
• Mr Anoosh Manzoori, Non-Executive Director
Mr Adam Gallagher, CEO has a standing invitation to attend Committee meetings, however he is not allowed to
vote.
The Committee assesses the appropriateness of the nature and amounts of emoluments of such officers on a
periodic basis by reference to relevant employment market conditions with the overall objective of ensuring
maximum stakeholder benefit from the retention of a high-quality board and executive team.
Officers are given the opportunity to receive their base emoluments in a variety of forms including cash, salary
sacrifice and fringe benefits. It is intended that that the manner of payments chosen will be optimal for the
recipient without creating undue cost for the Group.
Remuneration structure
It is the Group's objective to provide maximum stakeholder benefit from the retention of a high-quality board
and executive team by remunerating directors and other key management personnel (KMP) fairly and
appropriately with reference to relevant employment market conditions.
16
Constellation Technologies Limited
Annual Report 2020
Remuneration report continued…
To assist in achieving this objective, the Committee considers the nature and amount of executive directors’
and officers’ emoluments alongside the Group's financial and operational performance. The expected
outcomes of the remuneration structure are the retention and motivation of key executives, the attraction of
quality management to the Group and performance incentives, which allow executives to share the rewards of
the success of the Group.
In accordance with best practice corporate governance, the structure of executive and non-executive director
remuneration is separate and distinct.
Non-executive directors
The Board seeks to set aggregate remuneration at a level which provides the Group with the ability to attract
and retain directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.
The constitution of Constellation Technologies Limited and the ASX Listing Rules specify that the non-executive
directors are entitled to remuneration as determined by the Group in a General Meeting to be apportioned
amongst them in such manner as the directors agree and, in default of agreement, equally. The maximum
aggregate remuneration currently approved by shareholders for directors' fees is for a total of $400,000 per
annum. This amount was approved at the 2020 General Meeting held on 27 May 2020 and is an increase from
$250,000 previously approved by shareholders.
If a non-executive director performs extra services which in the opinion of the directors are outside the scope
of the ordinary duties of the director, the Group may remunerate that director by payment of a fixed sum
determined by the directors in addition to or instead of the remuneration referred to above. Non-executive
directors are entitled to be paid travel and other expenses properly incurred by them in attending directors or
General Meetings of the Group or otherwise in connection with the business of the Group.
Executive directors and senior management
The Group aims to reward executive directors and senior management with a level and mix of remuneration
commensurate with their position and responsibilities within the group and to:
•
reward executives for Group and individual performance against targets set by reference to appropriate
benchmarks;
• align the interests of the executives with those of shareholders;
•
link reward with strategic goals and performance of the Group; and
• ensure total remuneration is competitive by market standards.
17
Constellation Technologies Limited
Annual Report 2020
Remuneration report continued…
The remuneration of the executive directors and senior management may from time-to-time be fixed by the
Remuneration Committee. As noted above, the policy is to align executive objectives with shareholder and
business objectives by providing a fixed remuneration component and offering short- and long-term
incentives. The level of fixed remuneration is set to provide a base level of remuneration, which is both
appropriate to the position and is competitive in the market. Fixed remuneration is reviewed annually by the
committee, and the process consists of a review of group-wide and individual performance, relevant
comparative remuneration in the market and internal, and where appropriate, external advice on policies and
practices.
In relation to the payment of bonuses, options and other incentive payments, discretion is exercised by the
committee, having regard to the overall performance of the Group and the performance of the individual
during the year.
Employment and consultancy contracts
The Group utilises a mixture of employment and consultancy contracts to provide the Group with the flexibility
to operate effectively in a dynamic industry.
It is the Board’s policy that agreements are entered into with all directors, executives and employees.
Details of notice periods and termination clauses are disclosed under Section c) below.
Voting and comments made at the last annual general meeting
At the last annual general meeting (AGM), the Group received approval for the remuneration report adopted
for the 2019 financial year. The Group did not receive any specific feedback at the AGM or throughout the year
on its remuneration policies.
(b) Details of remuneration
Mr Adam Gallagher, Executive Director and Chief Executive Officer
Mr Leath Nicholson, Independent Non-Executive Chairman
Mr Anoosh Manzoori, Independent Non-Executive Director
Key management personnel (KMP) of the Group are defined as those persons having authority and
responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly,
including any director (whether executive or otherwise) of the Group receiving the highest remuneration.
Details of the remuneration of the KMP of the Group are set out in the following tables.
Apart from Directors, the following persons were considered other KMP during the financial year:
• Mr Kartheek Munigoti, General Manager and Chief Technical Officer
• Ms Terri Bakos, Company Secretary & Chief Financial Officer (appointed Company Secretary 17
December 2019 & CFO 1 January 2020)
18
Constellation Technologies Limited
Annual Report 2020
Remuneration report continued…
Amounts of remuneration
The following table shows details of remuneration expenses recognised for the Group's KMP for the year ended
30 June 2020.
Short-term benefits
Post-
employm
ent
benefits
Share-based
payments
Cash
salary &
fees
$
Cash
bonus
$
Non-
monetary
benefits
Annual
leave
Superann
-uation
$
$
$
Shares Options
$
$
Total
$
46,667
40,000
-
-
135,000
-
156,000
36,923
414,590
-
-
-
-
-
-
-
-
-
-
30,200
65,219
142,086
-
29,000
62,627
131,627
- 155,000 365,693
655,693
-
-
(22,356)
3,289
14,799
3,508
28,125
-
62,474
49,979
239,042
93,699
- (19,067)
18,307 242,325 605,992 1,262,147
2020
Non-executive
directors
Leath Nicholson1
Anoosh
Manzoori2
Executive
directors
Adam Gallagher3
Other KMP
Kartheek
Munigoti
Terri Bakos4
Total
compensation
1 12,857,142 shares with a deemed value of $90,000 and a free-attaching option were issued to an associate of
Mr Nicholson during the year. 4,314,285 shares (with a 1:1 free attaching option) were issued in lieu of $20,000
of cash-based directors fees for this financial year and $ 10,200 of directors fees for the prior year. The balance
of the equity was issued in lieu of $59,800 of fees owing to related party entities of Mr Nicholson for services
provided to the Company during this financial year. Refer related party transactions note 15.
2 4,142,858 shares with a deemed value of $29,000 and a 1:1 free-attaching option were provided to an
associate of Mr Manzoori during the year in lieu of receiving $ 16,667 of cash-based directors fees for this
financial year and $12,334 for the prior year.
19
Constellation Technologies Limited
Annual Report 2020
Remuneration report continued…
3 22,142,858 shares with a deemed value of $155,000 and a 1:1 free-attaching option were issued to an
associate of Mr Gallagher during the year in lieu of receiving $45,000 of cash-based remuneration for this
financial year and $110,000 for the prior year. The full value of the equity has been expensed in the current
year as it formed compensation for services performed during the current and prior years and was subject to
shareholder approval at a general meeting of shareholders held 27 May 2020. The equity will vest upon Mr
Gallagher stepping down as CEO. For accounting purposes this has been estimated to be within 2 years and is
of no way a reflection of his estimate date of termination of employment with the Company
4 Compensation since commencing with the Company 1 January 2020.
Short-term benefits
Post-
employm
ent
benefits
Share-based
payments
2019
Cash
salary &
fees
Cash
bonus
Non-
monetary
benefits
Annual
leave
Superan-
nuation
Shares
Options Total
$
$
$
$
$
$
$
$
Non-executive
directors
Leath Nicholson
Anoosh Manzoori
Executive directors
Adam Gallagher
Michael White1
Anthony Rowley1
Other KMP
23,000
15,000
15,000
112,238
96,617
Kartheek Munigoti
126,000
Total KMP
compensation
387,855
1 Resigned 4 February 2019
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
37,000
35,000
8,075
8,075
68,075
58,075
-
7,980
7,191
35,000
91,661
90,661
7,826
57,826
(5,697) 206,182
(5,697) 188,772
- 14,889
11,970
77,710
- 230,569
- 14,889
27,141 367,032
12,582 809,499
20
Constellation Technologies Limited
Annual Report 2020
Remuneration report continued…
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Fixed remuneration
At risk - STI
At risk - LTI
2020
%
2019
%
2020
%
2019
%
2020
%
2019
%
33
30
21
-
-
65
45
88
86
86
57
53
100
-
-
-
-
-
-
-
-
-
-
-
43
47
-
-
67
70
79
-
-
35
55
12
14
14
-
-
-
-
Non-executive directors
Leath Nicholson
Anoosh Manzoori
Executive directors
Adam Gallagher
Michael White
Anthony Rowley
Other KMP
Kartheek Munigoti
Terri Bakos
(c) Service agreements
Adam Gallagher
The Group has entered into a service arrangement with Famile Pty Ltd to provide the services of Mr Adam
Gallagher as an Executive Director and Chief Executive Officer of the Group commencing on 9 February 2019.
The key terms of the arrangement are:
•
•
•
Current fee of $180,000 per annum.
No termination payment other than statutory requirements.
6 month notice period.
Leath Nicholson
The Group has entered into a service arrangement with Catellen Pty Ltd to provide the services of Mr Leath
Nicholson as Non-Executive Chairman of the Group commencing on 14 October 2016. The key terms of the
arrangement are:
•
•
•
Current fee of $70,000 per annum.
No termination payment.
No notice period.
21
Constellation Technologies Limited
Annual Report 2020
Remuneration report continued…
Anoosh Manzoori
The Group has entered into a service arrangement with Shape Capital Pty Limited to provide the services of Mr
Anoosh Manzoori as a Non-Executive Director of the Group commencing on 14 October 2016. The key terms
of the arrangement are:
•
•
•
Current fee of $60,000 per annum.
No termination payment.
No notice period.
Kartheek Munigoti
The Group has entered into a permanent employment contract with Mr Kartheek Munigoti as General Manager
and Chief Technical Officer (CTO). The key terms of the contract are:
•
•
•
Current salary of $156,000 per annum plus statutory superannuation contributions.
No termination payment other than statutory requirements.
6 month notice period, except where there is a change in control and the notice period is reduced to 3
months.
Terri Bakos
The Group has entered into a permanent part-time employment contract with Ms Terri Bakos as Company
Secretary and Chief Financial Officer (CFO). The key terms of the contract are:
•
•
•
Salary of $80,000 per annum plus statutory superannuation contributions.
No termination payment other than statutory requirements.
3 month notice period.
22
Constellation Technologies Limited
Annual Report 2020
Remuneration report continued…
(d) Equity instruments
I. Shares and options granted as compensation.
Details on Shares and Options over ordinary shares in the Company that were granted as compensation to
each Key Management Person during the reporting period and details of options that vested during the
reporting period are as follows:
Shares
Name
Grant Date Vesting Date
Qty
Issue
Price
Value of
Shares
Granted
Year in
which shares
vests
Leath Nicholson
27/05/2020
29/05/2020
4,314,285
$0.0070
$30,200
Adam Gallagher
27/05/2020
29/05/2022
22,142,858
$0.0070
$155,000
Anoosh Manzoori
27/05/2020
29/05/2020
4,142,858
$0.0070
$29,000
Kartheek Munigoti
1/05/2020
29/05/2020
3,571,429
$0.0070
$25,000
Kartheek Munigoti
1/05/2020
29/05/2021
3,571,429
$0.0070
$25,000
Kartheek Munigoti
1/05/2020
29/05/2022
3,571,428
$0.0070
$25,000
FY20
FY22
FY20
FY20
FY21
FY22
Options
Name
Grant Date
Vesting
Date
Expiry Date
Qty
Exercise
Price
Fair
value
per
option
at grant
date
Value
of
options
exercise
d
during
the year
Value
of
options
lapsed
during
the
year
Year
in
which
option
vests
Value of
options
granted
during the
year
$
$
$
$
$
Leath
Nicholson
Adam
Gallagher
Anoosh
Manzoori
Kartheek
Munigoti
27/05/2020
29/05/2020
29/05/2023
4,314,285
0.0150
0.0150
65,219
27/05/2020
29/05/2022
29/05/2023
22,142,858
0.0150
0.0170
365,693
27/05/2020
29/05/2020
29/05/2023
4,142,858
0.0150
0.0150
62,627
1/05/2020
29/05/2020
29/05/2023
10,714,286
0.0150
0.0050
62,474
Terri Bakos
1/05/2020
29/05/2020
29/05/2023
8,571,428
0.0150
0.0050
49,979
-
-
-
-
-
-
-
-
-
-
FY20
FY22
FY20
FY20
FY20
All options have a life of 3 years from 29 May 2020 and expire on their expiry date.
The value of shares and fair value of options granted as compensation are expensed as remuneration over their
vesting period, except for Mr Gallagher. Shares and options issued to Mr Gallagher were expensed in the
current year as they formed compensation for services performed during the current and prior years. The
equity will vest upon Mr Gallagher stepping down as CEO. For accounting purposes this has been estimated to
be within 2 years and is of no way a reflection of his estimate date of termination of employment with the
Company.
23
Constellation Technologies Limited
Annual Report 2020
Remuneration report continued…
Further information can be found in the Share-based payment note 16.
II. Exercise of options granted as compensation.
No options granted as compensation during the current or prior years were exercised during the year by
Key Management Personnel.
III. Movement in options granted as compensation.
Refer to movement in Key Management Personnel disclosures below.
(e)
Relationship between the remuneration policy and group performance
Statutory performance indicators
The factors that are considered to affect shareholder return in the past five years are summarised below:
Share price at end of year
Market capitalisation at the end of the
year ($M)
30 June
2020
30 June
2019
30 June
2018
30 June
2017
30 June
2016
$
0.032
$
0.018
$
0.010
$
0.025
$
0.016
31.2
8.92
3.50
7.10
2.52
Net profit/(loss) for the financial year
(2,923,876)
(2,177,277)
(2,833,837)
(3,758,069)
(376,510)
Dividends paid
Nil
Nil
Nil
Nil
Nil
Fixed remuneration is not linked to Group performance. It is set to the individuals' role, responsibilities and
performance and remuneration levels for similar positions in the market.
The Board do not believe that financial targets such as net profit are the only appropriate performance
measure for the granting of short and long term incentives to KMP. Other financial targets such as cost
reduction and key performance indicators such as projects/strategic targets, executive behavior and customer
experience are equally as important for a Group in this stage of its life cycle and have a direct and indirect
impact on shareholder returns.
During the year, the Group granted equity to KMP’s in lieu of cash-based fixed remuneration or as a fee for
service outside of employment contracts.
Share prices are subject to the influence of market sentiment toward the sector in which it operates and
increase and decreases in the share price may occur independently of executive performance or remuneration.
24
Constellation Technologies Limited
Annual Report 2020
Remuneration report continued…
(f)
Key management personnel disclosures
Share holdings
The number of shares in the parent entity held during the financial year ended 30 June 2020 by each director
and other members of key management personnel of the Group, including their personally related parties, is
set out below:
Balance at
the start
of the year
Granted as
remuneration
Received
on
exercise
of
options
Other
changes1
Balance at
the end of
the year
Vested
Non-executive directors
Leath Nicholson
2,176,471
4,314,285
Anoosh Manzoori
2,058,824
4,142,858
-
-
11,439,328
17,930,084
17,930,084
4,058,824
10,260,506
10,260,506
Executive directors
Adam Gallagher
Other KMP
2,981,772
22,142,858
-
1,357,730
26,482,360
4,339,502
Kartheek Munigoti
25,341,882
10,714,286
Terri Bakos
-
-
32,558,949
41,314,287
-
-
-
5,000,000
41,056,168
33,913,311
-
-
-
21,855,882 95,729,118 66,443,403
1Other changes reflect changes in holdings as a result of acquisitions outside of remuneration activities, I.e. on
and off market acquisitions, compensation for services provided by related parties and subscriptions under
rights issue.
Option holdings
The number of options over ordinary shares in the parent entity held during the financial year ended 30
June 2020 by each director and other members of key management personnel of the Group, including
their personally related parties, is set out below:
25
Constellation Technologies Limited
Annual Report 2020
Remuneration report continued…
Balance at the
start of the
year
Granted as
remuneration
Exercised
Other
changes1
Balance at
the end of
the year
Vested
and
exercisable
Non-executive directors
Leath Nicholson
2,000,000
4,314,285
-
10,719,328
17,033,613
17,033,613
Anoosh Manzoori
2,000,000
4,142,858
-
3,058,824
9,201,682
9,201,682
Executive directors
Adam Gallagher
1,446,550
22,142,858
-
1,140,339
24,729,747
2,586,889
Other KMP
Kartheek Munigoti
Terri Bakos
-
-
10,714,286
8,571,428
-
-
5,000,000
15,714,286
15,714,286
-
8,571,428
8,571,428
5,446,550
49,885,715
- 19,918,491 75,250,756 53,107,898
1Other changes reflect changes in holdings as a result of acquisitions outside of remuneration activities, i.e. on
and off market acquisitions, compensation for services provided by related parties and subscriptions under
rights issue.
Transactions with KMP and related parties
Transactions between key management personnel related parties are on normal commercial terms and
conditions no more favorable than those available to other parties unless otherwise stated. The following
transactions occurred during the year ended 30 June 2020:
26
Constellation Technologies Limited
Annual Report 2020
Remuneration report continued…
During the
Year
Outstanding
at end of Year
During the
Year
Outstanding
at end of Year
2020
2020
$
-
$
-
2019
$
16,788
2019
$
1,416
33,000
-
6,000
6,600
18,982
-
64,364
6,896
131,650
-
94,201
95,897
-
-
-
-
-
33,675
37,042
5,833
-
-
-
-
-
27,408
15,125
15,747
Office rent and outgoings paid on an
arm’s length commercial basis to Lagoon
Properties Pty Ltd, company associated
with former directors Michael White and
Anthony Rowley in respect of offices in St
Kilda.
Office rent and outgoings paid on an
arm's length commercial basis to FNJ
Properties Pty Ltd, a company associated
with director, Leath Nicholson in respect
of the Groups's Melbourne Offices.
Compensation received in cash and
equity.
Consultancy fees paid to Skantech Pty
Ltd, a company associated with Kartheek
Munigoti, in respect of the provision of IT
technical support services.
Legal fees paid on normal commercial
terms to Nicholson Ryan Lawyers Pty Ltd,
a company associated with director Leath
Nicholson. Compensation received in
cash and equity.
Share issue cost paid to First Growth
Funds Limited, a company associated with
director, Anoosh Manzoori
Directors fees payable to Catellen Pty Ltd,
a company associated with Leath
Nicholson
Directors fees payable to Famile Pty Ltd, a
company associated with Adam Gallagher
Directors fees payable to Shape Capital
Pty Ltd, a company associated with
Anoosh Manzoori
[This concludes the remuneration report, which has been audited]
27
Constellation Technologies Limited
Annual Report 2020
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001
is set out on the following page.
This report is made in accordance with a resolution of directors.
Mr Adam Gallagher
Executive Director and Chief Executive Officer
Melbourne
27 August 2020
28
Constellation Technologies Limited
Annual Report 2020
Auditors Independence Declaration
29
Constellation Technologies Limited
Annual Report 2020
Corporate governance statement
Constellation Technologies Limited and the Board are committed to achieving and demonstrating the highest
standards of corporate governance. Constellation Technologies Limited has reviewed its corporate governance
practices against the Corporate Governance Principles and Recommendations (3rd edition) published by the
ASX Corporate Governance Council.
The 2020 Corporate Governance Statement dated as at 30 June 2020 reflects the corporate governance
practices in place throughout the 2020 financial year. The 2020 Corporate Governance Statement was approved
by the Board on 27 August 2020. A description of the Group's current corporate governance practices is set out
in the Group's Corporate Governance Statement which can be viewed at https://www.ct1limited.com.
30
Constellation Technologies Limited
Annual Report 2020
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 30 June 2020
Revenue from contracts with customers
Cost of sales
Gross profit/(loss)
Other gains/(losses) - net
Distribution costs
General and administrative expenses
Research and development expenses
Selling and market expenses
Operating loss
Finance income
Finance expense
Finance costs - net
Loss before income tax
Income tax expense
Loss for the year
Net loss attributable to equity holders of the company
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Total comprehensive loss for the year, net of tax
Notes
2020
$
2019
$
2
3a
3b
691,484
(403,085)
288,399
578,990
(353,118)
225,872
84,779
(2,171)
(16,662)
(3,196,553)
(77,562)
(6,646)
(26,424)
(2,155,512)
(157,077)
(62,586)
(2,924,245) (2,177,898)
1,759
(1,390)
369
621
-
621
(2,923,876) (2,177,277)
4
-
-
(2,923,876) (2,177,277)
(2,923,876)
(2,177,277)
(100,615)
3,890
(3,024,491) (2,173,387)
Total comprehensive loss attributable to equity holders of the company
(3,024,491) (2,173,387)
Loss per share for loss attributable to the ordinary equity holders
of the company:
Basic/diluted earnings per share
18
(0.33)
(0.52)
Cents
Cents
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
31
Constellation Technologies Limited
Annual Report 2020
Consolidated Statement of Financial Position
As at 30 June 2020
Notes
2020
$
2019
$
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other
Total current assets
Non-current assets
Property, plant and equipment
Other
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Provisions
Contract liabilities
Liabilities directly associated with discontinued operations
Total current liabilities
Non-current liabilities
Borrowings
Total non-current liabilities
Total liabilities
Net assets/(deficiency)
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
5a
5b
6a
6b
6a
5c
6c
6d
2b
6c
7a
7b
4,405,173
77,182
224,945
4,706,851
40,854
90,507
24,144
155,505
82,152
20,208
102,360
25,471
-
25,471
4,809,211
180,976
238,667
43,746
38,526
25,050
21,658
367,647
14,622
14,622
615,376
-
36,312
58,170
21,658
731,516
-
-
382,269
731,516
4,426,942
(550,540)
16,390,763
845,977
(12,809,798)
4,426,942
9,644,401
154,424
(10,349,365)
(550,540)
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
32
Constellation Technologies Limited
Annual Report 2020
Consolidated Statement of Changes in Equity
For the year ended 30 June 2020
Notes
Share Capital
Other
reserves
Accumulated
Losses
$
$
$
Total
equity
$
At 1 July 2018
Loss for the period
Other comprehensive income
Total comprehensive loss for the
period
8,400,628
137,951
(8,172,088)
(2,177,277)
-
366,491
(2,177,277)
3,890
3,890
3,890
(2.177.277)
(2,173,387)
-
-
Transactions with owners in their capacity as owners:
Shares issued, net of transaction costs
Share based payments
1,243,773
-
1,243,773
-
12,583
12,583
-
-
-
1,243,773
12,583
1,256,356
Balance at 30 June 2019
9,644,401
154,424
(10,349,365)
(550,540)
At 1 July 2019
9,644,401
154,424
(10,349,365)
(550,540)
Loss for the period
Other comprehensive income
Total comprehensive loss for the
period
-
-
-
(100,615)
(2,923,876)
-
(2,923,876)
(100,615)
-
(100,615)
(2,923,876)
(3,024,491)
Transactions with owners in their capacity as owners:
Shares issued, net of transaction costs
Write-back of equity
Share based payments
7
7,209,805
(463,443)
-
6,746,362
-
-
792,168
792,168
-
463,443
-
463,443
7,209,805
-
792,168
8,001,973
Balance at 30 June 2020
16,390,763
845,977
(12,809,798)
4,426,942
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
33
Constellation Technologies Limited
Annual Report 2020
Consolidated Statement of Cash Flows
For the year ended 30 June 2020
Cash flows related to operating activities
Receipts from customers
Payments to suppliers and employees
Interest paid
Other income receipts
Notes
2020
$
2019
$
662,392
(2,670,838)
(1,390)
87,029
670,922
(1,934,565)
-
-
Net operating cash flows
8
(1,922,807)
(1,263,643)
Cash flows relating to investing activities
Payment for purchases of plant and equipment
Interest received
Payments for deposits
Net investing cash flows
Cash flows relating to financing cash flows
Proceeds from issue of equity
Share issue transaction costs
Net financing cash flows
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Foreign exchange movement
(22,987)
1,759
(21,122)
(5,755)
621
-
(42,350)
(5,134)
6,534,277
(104,186)
852,795
-
6,430,093
852,795
4,464,936
(415,982)
40,854
(100,617)
453,776
3,060
Cash and cash equivalents at the end of the year
4,405,173
40,854
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
34
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements
For the year ended 30 June 2020
1.
Segment information
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision makers, who are responsible for allocating resources and
assessing performance of the operating segments, has been identified as the Board and the Chief Executive Officer
of Constellation Technologies Limited. The Group has identified one reportable segment; that is, the sale and
commercialisation of the IoT Solution. The segment details are therefore fully reflected in the body of the financial
statements.
2.
Revenue from contracts with customers
a) Disaggregation of revenue from contracts with customers
The Group derives revenue from the transfer of goods and services at a point in time and over time in the
following categories:
2020
Timing of revenue
recognition
At a point in time
Over time
2019
Timing of revenue
recognition
At a point in time
Over time
Monitor tag
revenue
$
-
17,905
Monitoring
subscription
revenue
$
Consulting
revenue
$
Labour-
hire
revenue
$
Total
$
-
184,586
80,533
124,899
283,561
-
364,094
327,390
17,905
184,586
205,432
283,561
691,484
Monitor tag
revenue
Monitoring
subscription
revenue
Consulting
revenue
Labour-hire
revenue
Total
$
$
$
$
$
-
49,164
-
213,631
162,195
-
154,000
-
316,195
262,795
49,164
213,631
162,195
154,000
578,990
35
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
b) Liabilities related to contracts with customers
Other gains/(losses)
Contract liabilities – deferred revenue on consulting contracts
25,050
58,170
25,050
58,170
2020
$
2019
$
c) Accounting policies
I.
Installation and use of monitor tags
Revenue from the sale of the food temperature monitoring tags are recognised over time when the
customer has access and thus control of the gadget and where the tag is considered distinct from other
services provided to the customer. Contracts do not provide for discounts or rebates which give rise to
variable consideration. Neither do they contain provision for warranties.
II. Monitoring subscriptions
Revenue from the sale of monitoring subscriptions is recognised on a straight-line basis over the
subscription term.
III. Consulting
Revenue from the provision of consulting and ad hoc maintenance services is recognised typically over
time when the Group has an enforceable right to payment for its performance completed to date.
Customer contracts will include a statement of work, which will describe the work to be completed and the
time frame for its completion. These services are invoiced at the point in time of completion of performance
obligations within the statement of work.
Therefore revenue is recognised when the performance obligation is completed.
IV. Labour hire
Revenue from the provision of labour hire services is recognised on a straight-line basis over the term of
the hire agreement.
V. Critical judgements in allocating the transaction price
Management allocates the transaction price to each performance obligation based on an assessment of
work completed at each reporting date for consulting revenue. Due to variations between each contract,
up front payments and changes to projects during the term of engagement, judgement is used in
estimating the completion of performance obligations and allocating the transaction price to each
performance obligation.
36
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
VI. Customer contract with multiple performance obligations
The Group frequently enters into multiple contracts with the same customer and where that occurs the
Group treats those arrangements as one contract if the contracts are entered into at or near the same time
and are commercially interrelated. The Group does not consider contracts closed more than three months
apart as a single contract.
The Group's subscription contracts are combining an obligation to receive a monitor tag and customer
support and monitoring services. The provision of monitor tags is treated as a separate performance
obligation to the services provided. As a result, the total transaction price for a customer contract is
allocated amongst the distinct performance obligations based on their relative stand-alone selling prices.
Where the stand-alone prices are highly variable, the Group applies a residual approach.
VII.
Incremental costs of obtaining customer contracts
Commissions on obtaining any customer contracts are capitalised and amortised over the term, where the
term is greater than 12 months.
VIII. Financing components
The group does not recognise adjustments to transition prices or contract balances where the period
between the transfer of promised goods or services to the customer and payment by customer does not
exceed 12 months.
3.
Expense items
a) Other gains/(losses)
Government COVID-19 cash incentives
Other non-operating income
Net foreign exchange (losses)
2020
$
83,812
3,217
(2,250)
2019
$
-
-
(2,171)
84,779
(2,171)
37
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
b) Breakdown of expenses by nature
General and administrative expenses
Accounting and audit
Bad debts and expected credit losses
Computer costs
Consulting costs
Depreciation
Employee benefits
Insurance
Investor relations
Legal
Listing and share registry
Occupancy
Patent costs
Share-based payments
Superannuation
Travel and entertainment
Other
I.
Depreciation
Office Equipment
Plant and Equipment
Property – right of use
Notes
2020
$
2019
$
i)
16
90,949
7,239
90,175
114,783
45,797
852,537
71,414
-
137,079
136,336
83,692
-
1,231,492
49,328
77,240
208,792
220,874
31,071
90,965
163,414
23,651
616,300
35,532
13,188
99,421
64,259
108,680
23,924
437,236
47,829
83,894
95,274
3,196,553
2,155,512
2020
$
24,936
988
19,873
2019
$
21,316
2,335
-
45,797
23,651
38
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
4.
Income tax expense
a) Numerical reconciliation of income tax expense to prima facie tax payable
Loss from continuing operations before income tax expense
Tax at the Australian tax rate of 27.5% (2019: 27.5%)
(2,923,876)
(804,066)
(2,177,277)
(598,751)
2020
$
2019
$
Tax effect of amounts which are not deductible (taxable)
in calculating taxable income:
Entertainment
Employee leave obligations
Expected credit losses
Share-based payments expense
Superannuation liability
Unrealised foreign exchange movements
Subtotal
Difference in overseas tax rate
Tax losses and other timing differences for which no
deferred tax asset is recognised
Income tax expense
b) Tax losses
-
-
-
337,634
-
29,842
(436, 590)
421
(10,569)
1,412
120,240
1,672
228
(485,347)
(6,350)
(9,591)
442,940
494,938
-
-
The Group does not recognise as a deferred tax asset carried forward tax losses. Deferred tax assets are
recognised for deductible temporary differences only if the entities consider it is probable that future taxable
amounts will be available to utilise those temporary differences and losses. As at 30 June 2020, no deferred
tax balances have been recognised (2019: nil).
Unused tax losses available to the Group are currently not known and have not been included as the Group
has not yet calculated a reliable estimate of these losses.
39
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
5.
Financial assets and financial liabilities
a) Cash and cash equivalents
Current assets
Cash at bank and on hand
2020
$
2019
$
4,405,173
40,854
I. Reconciliation to cash flow statement
The above figures reconcile to the amount of cash shown in the consolidated statement of cash flows at the
end of the financial year as follows:
Balances as above
Balances as per statement of cash flows
II. Classification as cash equivalents
2020
$
4,405,173
4,405,173
2019
$
40,854
40,854
Term deposits are presented as cash equivalents if they have a maturity of three months or less from the date
of acquisition and are repayable with 24 hours notice with no loss of interest. See note 20(j) for the Group’s
other accounting policies on cash and cash equivalents.
III. Risk exposure
The Group's maximum exposure to credit risk at the end of the reporting period is the carrying amount of
each class of cash and cash equivalents mentioned above.
40
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
b) Trade and other receivables
Notes
Current
$
2020
Non-
current
$
Trade receivables
Provision for impairment
Other receivables
Total trade and other
receivables
59,773
(7,027)
52,746
24,436
77,182
-
-
-
-
-
Total
$
Current
$
59,773
(7,027)
52,746
63,310
(5,136)
58,174
24,436
32,333
77,182
90,507
2019
Non-
current
$
-
-
-
-
-
Total
$
63,310
(5,136)
58,174
32,333
90,507
I. Classification as trade and other receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary
course of business. They are generally due for settlement within 30 days and therefore are all classified as
current. Trade receivables are recognised initially at the amount of consideration that is unconditional unless
they contain significant financing components, when they are recognised at fair value. The Group holds the
trade receivables with the objective to collect the contractual cash flows and therefore measures them
subsequently at amortised cost using the effective interest method. Details about the Group’s impairment
policies and the calculation of the loss allowance are provided in note 10(b).
II. Other receivables
Other receivables principally comprises GST refundable.
c) Trade and other payables
Notes
Trade payables
Accrued expenses
Other payables
Total trade and other
payables
2020
Non-
current
$
-
-
-
-
Total
$
Current
$
130,659
81,097
26,911
491,049
48,960
75,367
238,667
615,376
2019
Non-
current
$
-
-
-
-
Current
$
130,659
81,097
26,911
238,667
Total
$
491,049
48,960
75,367
615,376
41
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
Trade payables are unsecured and are usually paid within 30 days of recognition.
The carrying amounts of trade and other payables are considered to be the same as their fair values, due to
their short-term nature.
6. Non-financial assets and liabilities
a) Other current assets
Notes
Current
$
2020
Non-
current
$
Total
$
Current
$
Prepayments
Consumables
Security deposits
138,543
46,634
39,318
224,495
20,208
-
-
20,208
158,751
46,634
39,318
244,703
3,732
-
20,412
24,144
2019
Non-
current
$
-
-
-
-
Total
$
3,732
-
20,412
24,144
b) Property, plant & equipment
At 30 June 2020
Cost or fair value
Accumulated depreciation
Net book amount
Opening net book value
Exchange differences
Additions
Disposals
Depreciation charge
Closing net book value
Furniture &
fittings
$
Plant &
equipment
$
Property –
right-of-use
assets
$
71,370
(53,429)
17,941
19,591
(595)
23,881
-
(24,936)
17,941
8,325
(3,732)
4,593
5,880
(298)
-
-
(989)
4,593
79,490
(19,872)
59,618
-
-
79,490
-
(19,872)
59,618
Total
$
159,184
(77,033)
82,152
25,471
(893)
103,371
-
(45,797)
82,152
42
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
Furniture &
fittings
$
Plant &
equipment
$
48,083
(28,492)
19,591
37,632
(31)
10,796
(7,490)
(21,316)
19,591
8,623
(2,743)
5,880
5,735
63
3,100
(683)
(2,335)
5,880
Property –
right-of-use
assets
$
-
-
-
-
-
-
-
-
-
Total
$
56,706
(31,235)
25,471
43,367
32
13,896
(8,173)
(23,651)
25,471
At 30 June 2019
Cost or fair value
Accumulated depreciation
Net book amount
Opening net book value
Exchange differences
Additions
Disposals
Depreciation charge
Closing net book value
c) Borrowings
2020
Current
$
Non-current
$
Total
$
Current
$
2019
Non-current
$
Total
$
Lease liability
43,746
14,622
58,368
-
-
-
d) Employee benefit obligations
2020
2019
Current
Non-current
Total
Current Non-current
Total
$
$
$
$
Leave obligations
38,526
-
38,526
36,312
$
-
$
36,312
I.
Leave obligations
The leave obligations cover the Group’s liabilities for annual leave which are classified as short-term benefits,
as explained in note 20(o).
The current portion of this liability includes all of the accrued annual leave. The entire amount of the provision
of $38,526 (2019: $36,312) is presented as current, since the Group does not have an unconditional right to
defer settlement for any of these obligations. However, based on past experience, the Group does not expect
all employees to take the full amount of accrued leave or require payment within the next 12 months.
43
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
7.
Equity
a) Share capital
30 June 2020
No.
30 June 2020
$
30 June 2019
No.
30 June 2019
$
Ordinary shares - fully paid
1,347,887,247
16,390,762
446,167,028
9,644,401
Movement in ordinary shares
Balance at 1 July 2018
Note
No. of shares
349,678,422
$
8,400,628
Issue of securities at $0.017 each - Directors
Issue of securities at $0.023 each - ESOP
Issue of securities at $0.027 each - Directors
Issue of securities at $0.027 each - ESOP
Issue of securities at $0.015 each - Consultants for services rendered
Issue of securities at $0.025 each - Consultants for services rendered
Issue of securities at $0.020 each - private placement
Issue of securities at $0.015 each - private placement
Issue of securities at $0.015 each - share purchase plan
Less: Transaction costs arising on share issues
i)
6,294,119
508,693
6,715,648
2,878,135
1,527,777
960,183
43,062,350
14,333,333
20,208,368
107,000
11,700
181,322
77,710
22,917
24,004
395,295
215,000
242,500
(33,675)
Balance at 30 June 2019
446,167,028
9,644,401
Issue of securities at $0.013 each - ESOP
Issue of securities at $0.019 each - ESOP
Issue of securities at $0.015 each - ESOP
Issue of securities at $0.007 each - ESOP
Issue of securities at $0.007 each - Directors
Issue of securities at $0.013 each - Consultants for services received
Issue of securities at $0.0104 each - Consultants for services received
Issue of securities at $0.007 each - Consultants for services received
Issue of securities at $0.013 - private placement
Issue of securities at $0.007 - rights issue
Issue of securities at $0.007 - private placement
Exercise of options
Cancellation of shares
Transfer from share based payment reserve
Less: transaction costs
769,231
1,056,358
600,000
10,714,286
39,142,858
13,744,216
4,807,692
21,428,571
44,430,252
487,029,970
243,758,058
57,410,886
(23,172,159)
-
10,000
20,071
9,000
75,000
274,000
178,675
50,000
150,000
577,593
3,409,209
1,706,306
841,168
(463,443)
63,366
(154,586)
Balance at 30 June 2020
1,347,887,247
16,390,761
44
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
I. Ordinary shares
Ordinary shares entitle the holder to participate in dividends, and to share in the proceeds of winding up the
Group in proportion to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to
one vote, and upon a poll each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
II. Options
Information relating to options, including details of options issued, exercised and lapsed during the financial
year and options outstanding at the end of the financial year, is set out in notes 7(b) and 16.
b) Other reserves
The following table shows a breakdown of the consolidated balance sheet line item ‘other reserves’ and the
movements in these reserves during the year. A description of the nature and purpose of each reserve is
provided below the table.
Share-based
payments
$
Foreign
currency
translation
$
Total
$
Balance at 1 July 2018
149,742
(11,791)
137,951
Currency translation differences
Other comprehensive income for the year
-
-
3,890
3,890
3,890
3,890
Transactions with owners in their capacity as owners
Share-based payment expenses
12,583
-
12,583
At 30 June 2019
162,325
(7,901)
154,424
45
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
Share-based
payments
$
Foreign currency
translation
$
Balance at 1 July 2019
162,325
(7,901)
Currency translation differences
Other comprehensive income for the year
-
-
(100,615)
(100,615)
Total
$
154,424
-
(100,615)
(100,615)
Transactions with owners in their capacity as owners
Share-based payment expenses
792,168
-
792,168
At 30 June 2020
954,493
(108,516)
845,977
Nature and purpose of other reserves
I.
Share-based payments
The share-based payment reserve records items recognised as expenses on valuation of share options and
rights issued to Key Management Personnel, other employees and eligible contractors.
Foreign currency translation
Exchange differences arising on translation of the foreign controlled subsidiaries are recognised in other
comprehensive income and accumulated in a separate reserve within equity. The cumulative amount is
reclassified to profit or loss when the net investment is disposed of.
II.
Movement in options and rights
Options and rights
537,892,989
954,493
50,041,900
30 June
2020
No.
30 June
2020
$
30 June
2019
No.
30 June
2019
$
162,325
46
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
Note
Number of
options
$
Balance at 1 July 2018
Issue of options - Placement
Forfeiture of options - Directors
Share based payments
Balance at 30 June 2019
Issue of free attaching options under Rights Issue
exercisable at $0.15 each
Cancellation of Options
Exercise of Options
Issue of options - ESOP
Issue of rights - ESOP
Issue of rights - ESOP
Issue of rights - ESOP
Issue of options - Directors
Issue of options - Supplier
Exercise of Options
Lapse of options - ESOP
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
c)
16,979,550
149,742
43,062,350
(10,000,000)
-
-
(11,393)
23,976
50,041,900
162,325
487,029,970
(23,172,159)
(1,333,000)
19,285,714
3,000,000
3,000,000
375,592
39,142,858
16,800,000
(56,077,886)
(200,000)
-
-
(63,366)
112,453
30,000
30,000
10,000
622,681
50,400
-
-
Balance at 30 June 2020
537,892,989
954,493
a) Unlisted options at $0.030, expiring 6 December 2020
On 11 December 2018, Constellation Technologies Limited issued 43,062,350 options free-
attaching to the 43,062,350 private placement shares issued on 8 August 2018. As these options
are outside the scope of AASB 2 Share-based Payment, no share-based payment expense was
recognised for the issue of these unlisted options.
b) Unlisted options at $0.10, expiring 15 December 2020
Options forfeited by Directors due to performance conditions not being met.
c) Unlisted options at $0.015, expiring 14 November 2022
On 15 November 2019, Constellation Technologies Limited issued 487,029,970 options free-attaching
to the 487,029,970 right-issue shares. As these options are outside the scope of AASB 2 Share-based
Payment, no share-based payment expense was recognised for the issue of these unlisted options.
During the period, 56,077,886 of the options were exercised.
47
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
d) Unlisted options at $0.030, expiring 10 December 2020
Cancelation of free-attaching options granted to Penta Global,
e) Unlisted options at $0.015, expiring 29 May 2023
Issued to Key Management Personal in lieu of cash based remuneration.
f) Unlisted performance rights vesting 13 January 2021, expiring 13 April 2022
Issued to other employees as part of the Company’s long-term incentive program
g) Unlisted performance rights vesting 13 January 2022, expiring 13 April 2022
Issued to other employees as part of the Company’s long-term incentive program
h) Unlisted performance rights vesting 1 February 2021, expiring 1 May 2021
Issued to other employees as part of the Company’s long-term incentive program
i) Unlisted options at $0.015, expiring 29 May 2023
Issued to directors in lieu of cash based remuneration and approved by shareholders at a General
Meeting held 27 May 2020.
j) Unlisted options at $0.015, expiring 18 June 2023
On 27 May 2020 shareholders approved the issue of 16,800,000 options to MRGL Pty Ltd in lieu of
outstanding under-writing fees to the value of $50,400 owing to MRGL Pty Ltd for the Rights Issued as
disclosed in item c) above.
48
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
8. Cash flow information
Reconciliation of profit/(loss) after income tax to net cash inflow (outflow) from operating
activities
Loss for the year
(2,923,876)
(2,177,277)
2020
$
2019
$
Adjustments for
Depreciation
Finance costs
Finance income
Share-based payments
Unrealised net foreign currency (gains)/losses
Change in operating assets and liabilities
Movement in trade and other receivables
Movement in other current assets
Movement in trade and other payables
Movement in contract liabilities
Movement in other operating liabilities
Net cash inflow (outflow) from operating activities
45,797
-
(1,759)
1,231,492
-
13,483
(128,993)
(153,046)
(33,120)
27,215
(1,922,807)
23,651
-
(621)
437,236
830
620
20,158
412,022
58,170
(38,432)
(1,263,643)
a) Non-cash investing and financing activities
Non-cash investing and financing activities disclosed in other notes are:
• Options and shares issued to employees under the 'employee share option plan' for no cash
consideration - note 16.
9. Critical estimates and judgements
The preparation of financial statements requires the use of accounting estimates which, by definition, will
seldom equal the actual results. Management also needs to exercise judgement in applying the Group’s
accounting policies.
This note provides an overview of the areas that involved a higher degree of judgement or complexity, and
of items which are more likely to be materially adjusted due to estimates and assumptions turning out to
be wrong. Detailed information about each of these estimates and judgements is included in other notes
together with information about the basis of calculation for each affected line item in the financial
statements.
49
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
a)
Significant estimates and judgements
The areas involving significant estimates or judgements are:
• Recognition of revenue and allocation of transaction price - note 2(c)(iii)
• Non-recognition of carry-forward tax losses - note 4(b)
• Estimation of employee benefit obligations - note 6(d)(i)
• Estimation of share-based payments - note 16
• Application of the going concern assumption - note 20(a)(iii)
Estimates and judgements are continually evaluated. They are based on historical experience and other factors,
including expectations of future events that may have a financial impact on the entity and that are believed to
be reasonable under the circumstances.
In assessing the carrying value of the company’s assets and liabilities, the directors have taken into consideration
the economic outlook in light of the COVID-19 pandemic. The pandemic has not had a material impact on the
Group’s operations to date and therefore no additional provisions specific to the pandemic have been taken up
in the Group’s accounts. At this stage, the directors do not believe the pandemic will have a material impact on
the Group’s operations in the future due to its diversification of operations in Australia and China.
10. Financial risk management
This note explains the Group's exposure to financial risks and how these risks could affect the Group’s future
financial performance.
The Group’s risk management is predominantly controlled by the Board. The Board monitors the Group's financial
risk management policies and exposures and approves substantial financial transactions. It also reviews the
effectiveness of internal controls relating to market risk, credit risk and liquidity risk.
a) Market risk
I.
Foreign exchange risk
The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency
risk through foreign exchange rate fluctuations. The Group is primarily exposed to changes in the Chinese yuan
and Indian rupee against the Australian dollar on translation into the Group's presentation currency of
subsidiaries' financial information. However, there are no material financial assets and liabilities denominated in
currencies other than the functional currency of each entity. Therefore, management has concluded that market
risk from foreign exchange fluctuation is not material.
Credit risk
b)
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties
of contract obligations that could lead to a financial loss to the Group.
50
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
I.
Risk management
Credit risk is managed through the maintenance of procedures (such as the utilisation of systems for the approval,
granting and renewal of credit limits, regular monitoring of exposures against such limits and monitoring the
financial stability of significant customers and counterparties), ensuring to the extent possible that customers and
counterparties to transactions are of sound credit worthiness. Such monitoring is used in assessing receivables
for impairment. Credit terms are normally 30 days from the invoice date.
Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating.
II.
Impairment of financial assets
The Group has one type of financial asset subject to the expected credit loss model:
•
trade receivables for sales of monitor tags, the provision of monitoring subscriptions, consulting and
labour hire services.
While cash and cash equivalents are also subject to the impairment requirements of AASB 9, the identified
impairment loss was immaterial.
Trade receivables
The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables.
To measure the expected credit losses, trade receivables have been grouped based on shared credit risk
characteristics and the days past due.
The expected loss rates are based on the payment profiles of sales over a period of 24 months before 30 June
2020 and the corresponding historical credit losses experienced within this period. The historical loss rates are
adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of
the customers to settle the receivables.
On that basis, the loss allowance as at 30 June 2019 and 30 June 2020 were determined as follows for trade
receivables:
30 June 2019
Expected credit loss rate
Gross carrying amount
Loss allowance
Days past due
Current
$
1-30
$
31-60
$
61-90
$
91-
120
$
121+ Total
$
$
1.33%
33,136
441
7.95
%
15.17
%
24.30
%
44.11
%
69.85
%
7,073 20,161
3,058
562
1,905
463
428
189
63,31
0
607
423 5,136
51
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
30 June 2020
Days past due
Current
$
1-30
$
31-60
$
61-90
$
91-
120
$
121+ Total
$
$
Expected credit loss rate
0.00%
Gross carrying amount
Loss allowance
-
-
2.03%
32,72
8
666
11.35
%
34.45
%
46.43
%
58.63
%
432
49
2,244
773
924
429
45,04
8,715
3
5,110 7,027
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no
reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment
plan with the Group, and a failure to make contractual payments for a period of greater than 121 days past due.
Impairment losses on trade receivables are presented as net impairment losses within operating profit.
Subsequent recoveries of amounts previously written off are credited against the same line item.
The directors have deemed that no additional provision over and above current provisions are warranted in light
of the COVID-19 pandemic due to the recoverability of receivables to date and the Company’s relationships with
its customers. This will however be monitored closely into the future.
c)
Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or
otherwise meeting its obligations related to financial liabilities. The Group manages this risk through the
following mechanisms:
• preparing forward looking cash flow analyses in relation to its operating, investing and financing
activities;
•
obtaining funding from a variety of sources;
• maintaining a reputable credit profile;
• managing credit risk related to financial assets;
•
•
investing cash with major financial institutions; and
comparing the maturity profile of financial liabilities with the realisation profile of financial assets.
Maturities of financial liabilities
I.
The tables below analyse the Group's financial liabilities into relevant maturity groupings based on their
contractual maturities. The amounts disclosed in the table are the contractual undiscounted cash flows.
52
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
Contractual maturities of financial liabilities
2019
Less
than 6
months
6 - 12
month
s
Between 1
and 2 years
Between
2 and 5
years
Over 5
years
Total
contractual
cashflows
$
$
Trade and other
payables
Total
615,376
615,376
-
$
-
$
$
$
615,376
615,376
-
-
615,376
615,376
Carrying
amount
(assets)/
liabilities
$
Less than
6 months
6 - 12
month
s
Between
1 and 2
years
Between
2 and 5
years
Over 5
years
Total
contractual
cashflows
2020
$
$
Trade and other
payables
Total
238,667
238,667
-
$
-
$
-
$
$
238,667
238,667
-
238,667
238,667
Carrying
amount
(assets)/
liabilities
$
11. Capital management
a)
Risk management
The Group's objectives when managing capital are to
•
safeguard their ability to continue as a going concern, so that they can continue to provide returns for
shareholders and benefits for other stakeholders, and
• maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may issue new shares or reduce its capital, subject
to the provisions of the Group's constitution. The capital structure of the Group consists of equity attributed to
equity holders of the group, comprising contributed equity, reserves and accumulated losses. By monitoring
undiscounted cash flow forecasts and actual cash flows provided to the Board by the Group's management, the
Board monitors the need to raise additional equity from the equity markets.
b)
Dividends
No dividends were declared or paid to members for the year ended 30 June 2020 (2019: nil). The Group’s
franking account balance was nil at 30 June 2020 (2019:nil).
53
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
12. Interest in other entities
a) Material subsidiaries
The Group’s principal subsidiaries at 30 June 2020 are set out below. Unless otherwise stated, they have share
capital consisting solely of ordinary shares that are held directly by the Group, and the proportion of ownership
interests held equals the voting rights held by the Group. The country of incorporation or registration is also their
principal place of business.
Name of entity
Note
Place of
business/country of
incorporation
Ownership interest
held by the group
2020
2019
%
%
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
Australia
China
India
Australia
Australia
United States
Australia
Australia
Unites States
Constellation Technologies Australia Pty Ltd
Beijing Constellation Technologies
Development Co. Ltd
CCP IoT Technologies Pvt Ltd
CCP IP Pty Ltd
CCP Asia Pacific Pty Ltd
CCP Network North America Inc.
Agen Limited
Agen Biomedical Limited
Agen Inc.
1
3
2
2
2
2
1.
2.
3.
Formerly CCP Network Australia Pty Ltd
Entitles in the process of being wound up.
Incorporated on 17 January 2020
13. Contingent liabilities
The Group had no contingent liabilities at 30 June 2020 (2019: nil).
14. Events occurring after the reporting period
On 29 July 2020, the Group announced that ASIC had consented to resignation of BDO Audit Pty Ltd as the
Group’s auditors. PKF Brisbane Audit commenced as the Group’s auditors for the FY20 audit. PKF Brisbane
Audit will be confirmed as the Group’s auditors at the 2020 Annual General Meeting.
No other matter or circumstance has occurred subsequent to period end that has significantly affected, or may
significantly affect, the operations of the Group, the results of those operations or the state of affairs of the
Group or economic entity in subsequent financial years.
54
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
15. Related party transactions
a)
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Share-based payments
Notes
2020
$
395,523
18,307
1,037,259
1,451,089
2019
$
402,744
27,141
379,614
809,499
Detailed remuneration disclosures are provided in the remuneration report.
55
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
b)
Transactions with other related parties
Transactions between related parties are on normal commercial terms and conditions no more favourable
than those available to other parties unless otherwise stated. The following transactions occurred during the
year ended 30 June 2020 with related parties and were outstanding as the reporting date:
Office rent and outgoings paid on an arms's
length commercial basis to Lagoon Properties
Pty Ltd, company associated with former
directors Michael White and Anthony Rowley in
respect of offices in St Kilda.
Office rent and outgoings paid on an arms's
length commercial basis to FNJ Properties Pty
Ltd, a company associated with director, Leath
Nicholson in respect of the Company's
Melbourne Offices. Payment received in cash
and equity.
Consultancy fees paid to Skantech Pty Ltd, a
company associated with Kartheek Munigoti, in
respect of the provision of IT technical support
services.
Legal fees paid on normal commercial terms to
Nicholson Ryan Lawyers Pty Ltd, a company
associated with director Leath Nicholson.
Payment received in cash and equity.
Share issue cost paid to First Growth Funds
Limited, a company associated with director,
Anoosh Manzoori
Directors fees payable to Catellen Pty Ltd, a
company associated with Leath Nicholson
Directors fees payable to Famile Pty Ltd, a
company associated with Adam Gallagher
Directors fees payable to Shape Capital Pty Ltd,
a company associated with Anoosh Manzoori
During
the Year
2020
$
Outstanding
at end of Year
2020
$
During the
Year
2019
$
Outstanding
at end of Year
2019
$
-
-
16,788
1,416
33,000
18,982
131,650
-
-
-
-
-
-
-
6,000
6,600
64,364
6,896
94,201
95,897
-
33,675
37,042
5,833
-
-
-
-
-
27,408
15,125
15,747
56
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
16. Share-based payments
(a)
Share options and performance rights on issue
Set out below are summaries of all options & rights, including those issued under the ESOP:
Weighted
average
exercise price
per share
$ 0.040
$ 0.015
$ 0.015
$ 0.008
2020
2019
Number of
options &
performance
rights
50,041,900
568,634,134
(23,372,159)
(57,410,886)
537,892,989
509,374,539
Weighted
average
exercise price
per share
$ 0.090
$ 0.030
$ 0.100
-
$0.040
Number of
options &
performance
rights
16,979,550
43,062,350
(10,000,000)
-
50,041,900
48,595,350
As at 1 July
Granted during the year
Forfeited during the year
Exercised
As at 30 June
Vested and exercisable
Share options outstanding at the end of the year have the following expiry date and exercise prices:
Grant Date
Recipients
Expiry Date
18/11/2016
8/11/2016
15/12/2016
10/11/2017
11/12/2018
14/11/2019
29/05/2020
29/05/2020
19/06/2020
Director
Director
Consultants
Director
Investors - free attaching
Rights Issue - free attaching
Employees
Directors
Sophisticated Investor
15/12/2020
15/12/2020
15/12/2019
25/10/2021
10/12/2020
14/11/2022
29/05/2023
29/05/2023
18/06/2023
Exercise
Price
$0.100
$0.100
$ -
$0.100
$0.030
$0.015
$0.015
$0.015
$0.015
30 June 2020 30 June 2019
2,000,000
2,000,000
-
1,446,550
19,890,191
430,952,084
19,285,714
39,142,858
16,800,000
531,517,397
2,000,000
2,000,000
1,533,000
1,446,550
43,062,350
-
-
-
-
50,041,900
Weighted average remaining contractual life of options outstanding at end of
period
2.36
1.03
57
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
Performance rights outstanding at the end of the year have the following terms:
Grant Date
13/01/2020
13/01/2020
1/02/2020
Recipients
Employees
Employees
Employees
Vesting Date Expiry Date
13/04/2022
13/04/2022
1/05/2021
13/01/2021
13/01/2022
1/02/2021
Weighted average remaining contractual life of rights outstanding at
end of Year:
(b)
Employee share scheme
30 June 2020 30 June 2019
-
-
-
-
3,000,000
3,000,000
375,592
6,375,592
1.73
-
The establishment of the 'employee share option plan' (ESOP) was approved by shareholders at the 2017
annual general meeting. The plan is designed to provide long-term incentives for employees (including
directors) to deliver long-term shareholder returns. Participation in the plan is at the Board's discretion and
no individual has a contractual right to participate in the plan or to receive any guaranteed benefits.
The following equity has been issued under the scheme since it was last approved by shareholders.
Shares
Name
Kartheek
Munigoti
Karen
Davy
Other
Employees
Kartheek
Munigoti
Kartheek
Munigoti
Kartheek
Munigoti
Other
Employees
Other
Employees
Term
Code
Issue Date Grant Date
Vesting
Date
Qty
Issue
Price
Value of
Shares
Granted
Value
Vested
$
$
$
A
26/11/2018
31/12/2017
31/12/2017
2,878,135
0.0270
77,710
77,710
B
26/11/2018
18/12/2017
18/12/2017
43,478
0.0230
1,000
1,000
C
2/09/2019
2/09/2020
2/09/2020
769,231
0.0130
10,000
10,000
D
29/05/2020
1/05/2020
29/05/2020
3,571,429
0.0070
25,000
25,000
D
29/05/2020
1/05/2020
29/05/2021
3,571,429
0.0070
25,000
D
29/05/2020
1/05/2020
29/05/2022
3,571,428
0.0070
25,000
-
-
E
F
29/05/2020
28/05/2020
28/05/2020
1,056,358
0.0190
20,071
20,071
29/05/2020
28/05/2020
28/05/2020
600,000
0.0150
9,000
9,000
58
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
A: Issue Price was 7 day VWAP up to close of trading on 31 December 2017 and at a 50% premium to the
closing price on 11 October 2018.
B: Ms Davy was the spouse of KMP Michael White who resigned on 4 February 2019. Issue price was
closing share price on grant date.
C: Issue price was 14 day VWAP up to close of trading on 23 July 2019 and a 42% premium to closing share
price on date of issue.
D: Issue price based on price granted to all shareholders under Rights Issue Allocation 15 November 2019.
E: Issue price based on 30 day VWAP as at 30 April 2020.
F: Issue price based on a 30% discount to the 30 day VWAP as at 30 April 2020.
Options
Name
Valuation
Code
Grant
Date
Vesting
Date
Expiry Date
Qty
Exercise
Price
$
Value of
Options
Granted
$
Kartheek Munigoti
Terri Bakos
A 1/05/2020 29/05/2020 29/05/2023 10,714,286
8,571,428
A 1/05/2020 29/05/2020 29/05/2023
0.0150
0.0150
53,571
42,857
All options were valued using a Black-Scholes valuation model with parameters as disclosed in note 16.
Value
Vested
$
53,571
42,857
Rights
Name
Term
Code
Grant
Date
Vesting Date Expiry Date
Qty
Other Employee
Other Employee
Other Employee
H 13/01/2020
I 13/01/2020
1/02/2020
J
13/01/2021
13/01/2022
1/02/2021
13/04/2022
13/04/2022
1/05/2021
3,000,000
3,000,000
375,592
Value of
Rights
Granted
$
30,000
30,000
10,000
Value
Vested
$
-
-
-
H & I: Issued price based on a 43% premium to shares issued to shareholders under the Rights Issue Allocation
15 November 2019.
J: Issued price based on 30 day VWAP as at grant date.
59
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
(c) Other share based payment arrangements
The following equity has been issued to directors and consultants outside of the Employee Equity Share
Plan.
Shares
Name
Issue Date
Grant
Date
Vesting
Date
Qty
Leath Nicholson
Adam Gallagher
Anoosh Manzoori
29/05/2020 27/05/2020 29/05/2020 12,857,142
29/05/2020 27/05/2020 29/05/2022 22,142,858
4,142,858
29/05/2020 27/05/2020 29/05/2020
Issue
Price
$
0.0070
0.0070
0.0070
Value of
Shares
Granted
$
90,000
155,000
29,000
Value
vested
$
90,000
-
29,000
Options
Name
Valuation
Code
Grant
Date
Vesting
Date
Expiry
Date
Value
of
Options
Granted
$
Qty
Exercise
Price
$
Leath Nicholson
Adam Gallagher
Anoosh Manzoori
B 27/05/2020 29/05/2020 29/05/2023 12,857,142
C 27/05/2020 29/05/2022 29/05/2023 22,142,858
4,142,858
B 27/05/2020 29/05/2020 29/05/2023
0.0150 192,857
0.0150 376,428
62,142
0.0150
All of the above equity issued to associates of the directors and was approved by shareholders at a General
Meeting held 27 May 2020. The shares and options were issued as part of the directors remuneration except for
Mr Nicolson. 8,542,857 shares and options were issued to an associate of Mr Nicholson for services provided by
related parties to Mr Nicholson. Refer related party transactions note 19.
All options were valued using a Black-Scholes valuation model with parameters as disclosed in note 16.
60
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
(d) Valuation of share options
Options issued to employees under the employee share scheme and to directors outside of the employee share
scheme were valued in accordance with AASB 2 – Share Based Payments over the vesting period with the
following parameters.
Employees (A)
Directors (B)
Directors (C)
Exercise price
Grant date
Vesting date
Life of option
Share price on grant date
Expected volatility
Expected dividend yield
Risk free rate
$0.015
29/05/20
29/05/20
3 yrs
$0.02
53%
0%
0.25%
$0.015
29/05/20
29/05/20
3 yrs
$0.03
53%
0%
0.26%
$0.015
29/05/20
29/05/22
3 yrs
$0.03
53%
0%
0.26%
Options granted form part of the employee or directors’ remuneration. The options vest on the dates disclosed
and are not transferable. Shares and options issued to Mr Gallagher vest when Mr Gallagher ceases to be CEO.
For accounting purposes this has been estimated to be within 2 years and is of no way a reflection of his
estimated date of termination of employment with the Company.
(e)
Expenses arising from share-based payment transactions
Expenses arising from shares issued to key management personnel
Expenses arising from options issued to key management personnel
Expenses arising from shares issued to other employees
Expenses arising from rights issued to other employees
Expense arising from shares issued to consultants
2020
$
111,878
605,992
29,263
22,917
461,442
1,231,492
2019
$
367,032
12,582
10,702
-
46,920
437,236
61
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
17. Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the parent entity,
its related practices and non-related audit firms:
Audit and review of financial statements
BDO Audit Pty Ltd
PKF Brisbane Audit
2020
$
44,189
34,000
78,189
2019
$
62,500
-
62,500
Subsequent to balance date ASIC consented for BDO Audit Pty Ltd to resign as the Group’s auditors (refer note
14). This will be ratified at the 2020 Annual General Meeting by shareholders. PKF Brisbane Audit commenced
as the Group’s auditors for the FY20 year end audit.
18. Loss per share
(a) Reconciliation of loss used in calculating loss per share
Loss attributable to equity holders of the Group used in calculating loss per share:
From continuing operations
(2,923,876)
(2,177,277)
2020
$
2019
$
(b) Weighted average number of shares used as the denominator
(2,923,876)
(2,177,277)
2020
No.
2019
No.
Weighted average number of ordinary shares used as the denominator in
calculating basic and diluted loss per share
873,682,078 418,652,763
There are 317,759,446 share options on issue not included in diluted earnings per share as these would have an
anti-dilutive effect on earnings per share. These potential ordinary shares are anti-dilutive as their conversion to
ordinary shares would decrease loss per share. If these shares options were included in the calculation of
diluted earnings per share, the weighted average number of shares used in the denominator would be
1,191,441,524.
62
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
19. Parent entity financial information
Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Balance Sheet
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Share capital
Reserves
- Share-based payments
Retained earnings
Income Statement
Loss for the year
Total comprehensive income
2020
$
3,348,746
5,450,539
8,799,285
(73,898)
-
(73,898)
2019
$
47,298
2,000
49,298
569,401
-
569,401
91,181,314
84,434,953
5,618,491
(88,074,418)
8,725,387
4,826,323
(89,781,379)
(520,103)
2,518,452
2,518,452
2,023,673
2,023,673
20. Summary of significant accounting policies
This note provides a list of the significant accounting policies adopted in the preparation of these consolidated
financial statements to the extent they have not already been disclosed in the other notes above. These policies
have been consistently applied to all the years presented, unless otherwise stated. The financial statements are
for the Group consisting of Constellation Technologies Limited and its subsidiaries.
(a)
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 and the Corporations Act
2001. Constellation Technologies Limited is a for-profit entity for the purpose of preparing the financial
statements.
I. Compliance with IFRS
The consolidated financial statements of the Constellation Technologies Limited group also comply with
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board
(IASB).
63
Constellation Technologies Limited
Annual Report 2020
Notes to the Consolidated Statements continued …
II. Historical cost convention
The financial statements have been prepared on a historical cost basis.
III. Going concern
The financial statements have been prepared on the going concern basis, which contemplates continuity of
normal business activities and the realisation of assets and settlement of liabilities in the normal course of
business.
As disclosed in the financial statements, the Group is in a net asset position of $4,426,941, net current asset
position of $4,339,204 and has net operating cash outflows of $1,922,807. The Group generated a loss after tax
for the year of $2,923,876. The group’s cash position increased to $4,405,173 at 30 June 2020.
Notwithstanding the historical losses to date the directors believe that the going concern basis of preparation is
appropriate due to the following reasons:
• Recent history in raising capital. The Group completed two successful capital raisings in September and
November 2019 where $3,985,801 in cash was raised via a Placement and a Rights Issue. A further placement
was made to a Group of Sophisticated Investors during the year that raised $1,706,306.
• Significant progress has been made in realising the Group’s intellectual property. The Group has entered into
Strategic Agreements with two partners to exploit the Group’s technology, particularly in the Asian
region. These investors have a history of working with and growing public companies. Refer Group
announcement 11 December 2019.
• The Group is incurring a rate of expenditure designed to enhance its prospects in generating growth in sales
locally and in the event that the Group encounters any difficulties in raising capital, the Board is comfortable
that the current levels of expenditure can be scaled back to preserve cash, and
• The Group continues to apply different measures to control its expenditure to preserve cash and working
capital. The recent changes at executive management level, and the ability to negotiate payment in equity in
lieu of cash with its consultants and suppliers, also improves the Group’s cash coverage.
IV. New and amended standards adopted by the group
The Group has applied the following standards and amendments for the first time for their annual reporting
period commencing 1 July 2019:
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Notes to the Consolidated Statements continued …
AASB 16 Leases – impact of adoption
AASB 16 Leases was adopted from 1 July 2019. The standard replaces AASB 117 Leases and for lessees eliminates
the classification of operating leases and finance leases. Except for short-term leases and leases of low-value
assets, right of use assets and corresponding lease liabilities are recognized in the statement of financial position.
Straight line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets
(including in operating costs) and an interest expense on the recognized lease liabilities (including in finance
costs). In the earlier periods of the lease, the expenses associated with the lease under ASSB 16 will be higher
when compared to lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation
and Amortisation) results improve as the operating expense is now replaced by interest expense and depreciation
in profit or loss. For classification within the statement of cash flows, the interest portion is disclosed in operating
activities and the principal portion of the lease payments are separately disclosed in financing activities.
There has been no impact on the initial adoption of this standard as the Company did not have any leases until
this current reporting period.
V. New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June
2020 reporting periods and have not been early adopted by the Group. As at the date of this report there are no
new Accounting Standards that have been issued but not yet applied that have a material effect on the results of
the Group.
(b)
Principles of consolidation
I.
Subsidiaries
Subsidiaries are all entities (including structured 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 deconsolidated from the date
that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of
the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
(c)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision makers. This has been identified as the Board and chief executive officer.
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Notes to the Consolidated Statements continued …
(d)
Foreign currency translation
I. Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using the currency of the
primary economic environment in which the entity operates ('the functional currency'). The consolidated financial
statements are presented in Australian dollar ($), which is Constellation Technologies Limited's functional and
presentation currency.
II. Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of
the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates
are generally recognised in profit or loss.
Foreign exchange gains and losses that relate to borrowings are presented in the consolidated statement of profit
or loss, within finance costs. All other foreign exchange gains and losses are presented in the consolidated
statement of profit or loss on a net basis within other gains/(losses).
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates
at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value
are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets
and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of
the fair value gain or loss and translation differences on non-monetary assets such as equities classified as at fair
value through other comprehensive income are recognised in other comprehensive income.
II. Group companies
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
• assets and liabilities for each consolidated balance sheet presented are translated at the closing rate at the
date of that consolidated balance sheet
•
income and expenses for each consolidated statement of profit or loss and consolidated statement of profit
or loss and other comprehensive income are translated at average exchange rates (unless this is not a
reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which
case income and expenses are translated at the dates of the transactions), and
• all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and
of borrowings and other financial instruments designated as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment
are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.
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(e)
Revenue recognition
The accounting policies for the Group’s revenue from contracts with customers are explained in note 2.
(f)
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.
(g)
Income tax
The income tax expense or credit for the year is the tax payable on the current year's taxable income based on
the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
end of the reporting year in the countries where the Company and its subsidiaries and associates operate and
generate taxable income. Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However,
deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income
tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by
the end of the reporting year and are expected to apply when the related deferred income tax asset is realised or
the deferred income tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise
those temporary differences and losses.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
(h) 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.
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Notes to the Consolidated Statements continued …
(i)
Lease liabilities
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 consolidated entities 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 excepted 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.
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.
(j)
Discontinued operations
A discontinued operation is a component of the consolidated entity that has been disposed of or is classified as
held for sale and that represents a major line of business or area of operations, or is a subsidiary acquired
exclusively with a view to resale. The results of discontinued operations are presented separately on the face of
the profit or loss and other comprehensive income. Where a decision is made to treat a major line of business or
area of operations as discontinued the comparative information is restated to reflect as if that major line of
business or area of operations had been discontinued in the prior year.
(k)
Impairment of assets
Goodwill and 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 assets are tested 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. The recoverable amount is the higher of an asset's fair value
less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows
from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that
suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting year.
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(l)
Cash and cash equivalents
For the purpose of presentation in the consolidated statement of cash flows, 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, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities in the consolidated balance sheet.
(m) Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less loss allowance. See note 5(b) for further information about the Group’s accounting
for trade receivables and note 10(b) for a description of the Group's impairment policies.
(n)
Investments and other financial assets
I.
Classification
From 1 July 2019, the Group classifies its financial assets in the following measurement categories:
•
•
those to be measured subsequently at fair value (either through OCI or through profit or loss), and
those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual
terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments
in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable
election at the time of initial recognition to account for the equity investment at fair value through other
comprehensive income (FVOCI).
II.
Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group
commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows
from the financial assets have expired or have been transferred and the Group has transferred substantially all the
risks and rewards of ownership.
III. Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the
financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
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Notes to the Consolidated Statements continued …
IV.
Impairment
From 1 July 2018, the Group assesses on a forward looking basis the expected credit losses associated with its
debt instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether
there has been a significant increase in credit risk.
For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected
lifetime losses to be recognised from initial recognition of the receivables, see note 10(b) for further details.
(o)
Property, plant and equipment
Plant & Equipment
Plant & equipment acquired are stated at historical cost less depreciation. Historical cost includes expenditure
that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the
cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate
asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the
reporting year in which they are incurred.
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
year.
An assets carrying amount is written down immediately to its recoverable amount if the asset's carrying amount
is greater than its estimated recoverable amount (note 20(m)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included
in profit or loss.
Right-of-use assets
These includes leases of rental properties and equipment.
A right-of-use asset is recogised at the commencement date of a lease. The right-of-use asst 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 commence date, net of any lease incentives received, any initial direct costs incurred, and except
where included in the cost of inventories, an estimate of the cost expected to be incurred for dismantling and
removing the underlaying 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 consolidated entity expects to obtain
ownership of the lease asset at the end of the lease term, the depreciation is over the 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.
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(p)
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year
which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other
payables are presented as current liabilities unless payment is not due within 12 months after the reporting year.
They are recognised initially at their fair value and subsequently measured at amortised cost using the effective
interest method.
(q)
Employee benefits
I.
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave that
are expected to be settled wholly within 12 months after the end of the year in which the employees render the
related service are recognised in respect of employees’ services up to the end of the year and are measured at
the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee
benefit obligations in the balance sheet.
II.
Share-based payments
Share-based compensation benefits are provided to employees via the 'employee share option plan' (ESOP).
Information relating to these schemes is set out in note 16.
Employee options
The fair value of options granted under the ESOP is recognised as a share-based payment expense with a
corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value
of the options granted:
-
including any market performance conditions (e.g. the Group’s share price)
- excluding the impact of any service and non-market performance vesting conditions (e.g. profitability, sales
growth targets and remaining an employee of the Group over a specified time period), and
-
including the impact of any non-vesting conditions (e.g. the requirement for employees to save or holdings
shares for a specific period of time).
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each year, the Group revises its estimates of the number of options
that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the
revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
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Notes to the Consolidated Statements continued …
(r)
Contributed equity
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.
(s)
Loss per share
I.
Basic loss per share
Basic loss per share is calculated by dividing:
•
the loss attributable to owners of the Group, 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 year.
II. Diluted loss per share
Diluted loss per share adjusts the figures used in the determination of basic loss 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 the
conversion of all dilutive potential ordinary shares.
(t)
Rounding of amounts
The Group is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the 'rounding off' of
amounts in the financial statements. Amounts in the financial statements have been rounded off in accordance
with the instrument to the nearest dollar.
(u) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is
not recoverable from the taxation authority. In this case it is recognised as part of the cost of 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 taxation authority is included with other receivables or payables in the
consolidated balance sheet.
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 taxation authority, are presented as operating cash flows.
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Director’s Declaration
In the directors' opinion:
(a) the financial statements and notes set out on pages 31 to 72 are in accordance with the Corporations Act
2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements, and
(ii) giving a true and fair view of the consolidated entity's financial position as at 30 June 2020 and of its
performance for the financial year ended on that date, and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
Note 20(a) confirms that the financial statements also comply with International Financial Reporting Standards
as issued by the International Accounting Standards Board.
The directors have been given the declarations by the chief executive officer and chief financial officer required
by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of directors.
Mr Adam Gallagher
Executive Director and Chief Executive Officer
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Independent Auditors Report
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Shareholder Information
As at 25 August 2020
(a) Distribution of equity securities
The number of shareholders, by size of holding in each class of equity are:
Distribution
100,001 and over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Ordinary Shares
Options
No. of
holders
No. of shares
No. of
holders
629
449
20
37
124
1,330,680,561
21,293,200
174,617
86,419
21,877
205
80
2
8
21
No. of
shares
522,701,377
4,405,061
16,030
19,853
5,649
1,259
1,352,256,674
316 527,147,970
There are two holders of 6,375,592 Performance Rights on issue, each holding is greater than 100,001.
There were 229 holders of less than a marketable parcel of 949,994 ordinary shares.
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Shareholder Information
(b)
Twenty largest holders of quoted securities are:
Name of registered holder
1 MRGL PTY LTD
2 MR XIAONIU BAO
3
4
5
K & M HOLDINGS AUSTRALIA PTY LTD
KARTHEEK MUNIGOTI SHANKAR RAO
FIRST GROWTH FUNDS LIMITED
6 MR YI ZHANG
7
COMMIT CO PTY LTD
8 MR ZHIGANG ZHANG
9 MR CHRISTOPHER THOMAS TITMARSH
10 S & M FRENCH INVESTMENTS PTY LTD
11 MAINLINE SOLUTIONS PTY LIMITED
12 PRADO INVESTMENTS PTY LTD
13 MS XIAOFANG ZHANG
14 HONGMEN CAPITAL HOLDINGS PTY LTD
15 MR XIAONIU BAO
16 DSA SUPERANNUATION NOMINEES PTY LTD
17 MR HONGLIANG CAI
18 MR CHANG LIANG ZHANG + MRS DAN YUN WEI
19 EQUITAS NOMINEES PTY LIMITED
20 HONG & JIANG SUPER HOLDINGS PTY LTD
No. of
shares
138,122,848
% of
holding
10.23
41,760,000
37,784,144
30,341,882
30,180,740
27,840,000
27,521,086
26,000,000
25,442,857
24,884,983
24,637,301
24,201,682
22,000,000
21,428,571
20,000,000
17,000,000
14,000,000
13,308,126
13,003,423
13,000,000
3.09
2.80
2.25
2.24
2.06
2.04
1.93
1.88
1.84
1.82
1.79
1.63
1.59
1.48
1.26
1.04
0.99
0.96
0.96
592,457,643
43.88
(c)
Substantial shareholders
The names of the substantial shareholders who have notified the Group in accordance with section 371B of the
Corporations Act 2001 are:
Name of registered holder
1 K&M Holdings Australia Pty Ltd
2 Mainline Solutions Pty Limited
3 S&M French Investments Pty Ltd
4 Raymond Malone
No. of
shares
% of
holding
35,840,430
33,249,673
28,984,983
7.03
6.52
5.69
156,276,694
11.61
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Annual Report 2020
Shareholder Information
(d) Voting rights
The voting rights attached t equity securities are set out below:
(i) Ordinary shares
Each ordinary share is entitled to on vote when a poll is called, otherwise each member present at a meeting or
by proxy has one vote on a show of hands.
(ii) Options and performance rights
Options and performance rights are not entitled to voting rights.
(e) Unquoted equity security holdings greater than 20%
No single shareholder has an unquoted equity holding greater than a 20%.
(f)
Escrowed securities holdings
The following securities holdings are subject to restrictions or voluntary escrow arrangements.
Security Type
Ordinary Shares1
Ordinary Shares1
Ordinary Shares1
Ordinary Shares
Qty
Escrow Date
120,000,000
8/01/2021
1,879,029
19/06/2021
121,879,029
19/06/2022
21,428,571
19/06/2022
265,186,629
1Securities escrowed until disclosed date or when various performance targets are satisfied.
(g) On market buy-back
There is no current on-market buy-back of the Group’s securities.
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