Constellation Technologies
Limited
Annual report
for the year ended 30 June 2021
ABN 58 009 213 754
Constellation Technologies Limited
ABN 58 009 213 754
Annual report - 30 June 2021
Contents
Corporate Directory....................................................................................................................................................................... 1
Chairman’s Letter ........................................................................................................................................................................... 2
CEO Report ..................................................................................................................................................................................... 3
Directors Report ............................................................................................................................................................................. 6
Remuneration Report (audited) ................................................................................................................................................. 14
Auditors Independence Declaration........................................................................................................................................... 27
Corporate governance statement .............................................................................................................................................. 28
Consolidated Statement of Profit or Loss and Other Comprehensive Income ...................................................................... 29
Consolidated Statement of Financial Position .......................................................................................................................... 30
Consolidated Statement of Changes in Equity ......................................................................................................................... 31
Consolidated Statement of Cash Flows ..................................................................................................................................... 32
Notes to the Consolidated Statements ...................................................................................................................................... 33
Director’s Declaration .................................................................................................................................................................. 71
Independent Auditors Report...................................................................................................................................................... 72
Shareholder Information ............................................................................................................................................................. 76
Corporate Directory
Directors
Mr Kartheek Munigoti
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 2021
Chairman’s Letter
Dear fellow shareholders,
Mr Leath Nicholson
Independent Non-
Executive Chairman
I welcome you to the 2021 Annual Report for Constellation Technologies
Limited and its subsidiaries and I thank you for your interest and continued
support.
There is no denying that the COVID19 pandemic has impacted all of us. It has
restricted the way we move through our communities; the way we attend our
work sites and the way we communicate with each other. How we conduct
business has changed for the foreseeable future.
The pandemic has undeniably impacted sales opportunities for the Company
across the globe. Some of our hospitality sector clients have had to close their
doors temporarily, whilst planned projects in other sectors have been put on
hold until economic conditions improve.
With this in mind, the Company has refocused its sales pipeline to core
infrastructure sectors and industries that have seen sustainability or growth
through the pandemic.
Our core temperature sensor product is now being used to monitor COVID
vaccines in the health sector and our flagship platform MeridianCT is being
used for monitoring water treatment facilities and disaster mitigation in
private and government backed utilities sectors.
The sales cycles in these industries however have changed from historical
norms. The period from initial discussions to closure has expanded twofold.
The Company will continue to focus its efforts on supporting its existing core
sensor products and the MeridianCT Platform in the coming year. It will be an
exciting year as we continue to build on the momentum we have generated in
the past twelve months.
Finally, I wish to thank my fellow directors and our staff for their continued
efforts & support in the past year, often under very difficult conditions,
especially working from home.
Leath Nicholson
Independent Non-Executive Chairman
2
Constellation Technologies Limited
Annual Report 2021
CEO Report
Dear fellow shareholders,
Mr Kartheek Munigoti
Chief Executive Officer
The 2021 financial year has been a year of many changes for the Company.
The IoT 4.0 adoption theme is rapidly receiving an increasing amount of
mainstream attention and awareness with many industries now moving from
conceptual pondering to practical application. Technical obstacles to
Industrial IoT (IIoT) at scale still exist. Many organisations are still wondering
how to overcome the challenges caused by these heterogeneous applications
and how to bring various disparate datasets into a single view to make
informed business decisions. Due to these complexities, even companies with
substantial IIoT track records are facing challenges in executing this process
in isolation.
Contrary to a common misbelief, there’s no need to replace a company’s
legacy infrastructure to implement an Industry 4.0 solution. CT1's
MeridianCT Platform (MCT) enables an organization to seamlessly integrate
its legacy equipment and datasets into one single framework. It also provides
Artificial Intelligence capabilities such as predictions and alerts, enabling the
automation of a workflow process.
We have seen an increasing amount of market enquiry from all levels of
government and infrastructure operators for technology vendors that can
provide IoT Solutions 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.
During the year, the Company continued to develop MCT to support
infrastructure projects in China and Australia.
MCT has the ability to receive data feeds from sensors, video, internal
system, third party API’s, ingest data, collate processes and apply business
intelligence to integrate with operational systems which allows for
automating business workflow.
MCT also supports Digital Twin Solutions that will reduce downtime and
simplify maintenance tasks with photorealistic 3D models that collect and
visualise real-time data from our customer’s assets.
This gives our customers a holistic view of their assets and facilities so they
can manage everything from anywhere, anytime.
During the year, MCT has been implemented over several projects in a
variety of environments. MCT is currently being used to monitor:
3
Constellation Technologies Limited
Annual Report 2021
CEO Report continued…
• the real-time environmental impact on wetlands via the collation of live
video feeds, weather, temperature, humidity and chemical analysis data.
The MCT also ingests data from a centralised Supervisory Control and
Data Acquisition (SCADA) system which connects with multiple
Programable Logic Controllers (PLC’s) at the wetlands. This data is
allowing the users to make informed real-time decisions to mitigate the
impact of adverse environmental events and vegetation health as they
occur rather than reacting to environmental damage post event
occurrence.
• the treatment of water through infrastructure facilities. 3D imagery of the
water treatment facilities incorporated into MCT is assisting users to visual
plant layout, monitor real-time video feed and anlayse data from various
sensors streamlining the overall control of the facilities. A trial SCADA
project is also underway to incorporate command execution into MCT to
allow users to remotely control the operations.
• flood levels over multiple locations in potential disaster zones during wet
seasons. Real-time camera monitoring and integration with onsite signage
systems that allows for fast decision making to reduce public exposure to
flooded roads, infrastructure damage and environmental impact.
MCT is a robust end to end IoT platform on which we can assist innovators to
develop, launch or maintain their IoT solutions.
We are able to, and have been, assisting clients to develop hardware sensors
suited to their specific needs through our design and production capabilities.
Due to MCT’s diversity and our hardware design capabilities, the Company is a
unique position to offer services across multiple industries, making it a real IoT
solution provider.
The Company continued to expand the application of its cold storage or
temperature monitoring solution into existing sites in the health sector. Barwon
Health has commenced utilizing our cold storage solution for COVID-19 vaccine
monitoring.
Despite the implementation of several new MCT projects and increased use of
the cold storage solution in the health sector, the economic downturn in the
hospitality and other sectors due to the COVID-19 pandemic has reduced sales
in some sectors and placed some sales pipeline projects on hold until economic
conditions improve.
4
Constellation Technologies Limited
Annual Report 2021
CEO Report continued…
Our sales cycle from inquiry to finalisation has increased as companies across the
globe struggle with ever changing COVID-19 related supply, travel or working
conditions that limits their ability to adhere to pre pandemic timeframes.
We expect that our sales cycle timelines to remain extended into the foreseeable
future.
Post 30 June, the Company announced the signing of a Master Services
Agreement with Fujitsu Australia for the provision of its full suite of services
including software & hardware development. The Company will contract
directly with Fujitsu’s customers for the licensing of MCT and SaaS services.
Whilst no definitive projects contracts have been signed, both companies are
currently developing mutual potential projects which they hope will come to
fruition during FY22.
I would like to take this opportunity to thank Mr Adam Gallagher, who was our
CEO throughout FY21 until 5 July 2021. In the last two years, Adam has been
instrumental in expanding the Company’s product base, securing new customers
and channel partners, and building a new foundation for growth.
Adams legacy will be with the Company in the years to come.
I would also like to thank the tireless effort of our staff across Australia, India and
China. During the past twelve months they have often worked in extenuating
conditions and spent more time working from home than in our office, but still
maintained a sense of humor and delivered to project timeframes. A very big
thankyou!
Kartheek Munigoti
Chief Executive Officer
5
Constellation Technologies Limited
Annual Report 2021
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 2021.
Directors and Company Secretary
The following persons were directors of Constellation Technologies Limited during the financial year and up
to the date of this report or their resignation or appointment as noted:
Mr Adam Gallagher, Executive Director and Chief Executive Officer – resigned 5 July 2021
Mr Kartheek Munigoti, Executive Director and Chief Executive Officer – appointed 5 July 2021
Mr Leath Nicholson, Independent Non-Executive Chairman
Mr Anoosh Manzoori, Independent Non-Executive Director
The following person held office as Company Secretary of Constellation Technologies Limited for the whole
of the financial year and up to the date of this report:
Ms Terri Bakos
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 112.02% to $1,466,114 (2020: $691,484) as a result of the
Group’s expansion into China and increased sales activity in Australia. The Group however recorded a loss for
the year of $3,221,821 (2020: $2,923,876), a 10.19% increase over the prior year. The increase in expenditure
was primarily in the area of wages and research & development activities to support the Company’s growth
initiatives and development of the MeridianCT Platform.
The Group had net assets of $3,011,651 as at 30 June 2021 (2020: $4,426,942). As at 30 June 2021, the Group
had cash reserves of $2,597,731 (2020: $4,405,173). 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
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.
6
Constellation Technologies Limited
Annual Report 2021
Directors Report continued…
Dividends
No dividends have been paid or proposed by the Group during or since the end of the financial year (2020: 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 the 5 July 2021, the Company announced the resignation of Adam Gallagher as an executive director and
Group CEO. Mr Kartheek Munigoti stepped into role as Group CEO and joined the board as an executive
director.
On 9 July 2021 the Company announced the signing of agreements with Fujitsu Australia Pty Ltd and QTEQ
Pty Ltd. Refer to CEO’s Report and ASX announcements for further information regarding these agreements.
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.
7
Constellation Technologies Limited
Annual Report 2021
Directors Report continued…
Our Board
The names of directors in office at any time during or since the end of the financial year are:
Mr Kartheek Munigoti
Executive Director and Chief Executive Officer
Experience:
Mr Munigoti has been with the Company since 2016 and a held a variety
of positions before being appointed CEO on 5 July 2021. He is the
founder of the Company’s core technology and instrumental in the
development of the Company’s core IoT Platform, the MeridianCT
Platform.
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.
Qualifications:
Date of appointment:
5 July 2021
Other current directorships:
Former directorships in last 3 years:
Committees:
None
None
None
Equity held as at date of this report:
Ordinary Shares
Options
Performance Rights
42,637,207
16,526,995
-
8
Constellation Technologies Limited
Annual Report 2021
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
(Honours)
Bachelor of Laws (Honours)
Master of Laws (Commercial
Law)
Other current directorship:
AMA Group Limited (ASX:AMA),
since 23 December 2015
Former directorships in last 3 years: Money3 Corporation Limited
Committees:
(ASX:MNY) until 15 November
2019
Chair – Remuneration &
Nomination Committee
Member – Audit & Risk
Committee
Equity held as at date of this report:
Shares
Options
17,930,084
15,033,613
9
Constellation Technologies Limited
Annual Report 2021
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:
Former directorships in last 3 years:
Committees:
First Growth Funds Ltd, since 14
December 2017. Company
delisted from the ASX on 4
December 2019 and joined the
Canadian Stock Exchange.
YPB Group Limited (ASX:YPB),
until 4 June 2019
Chair – Audit & Risk Committee
Member – Remuneration &
Nomination Committee
Equity held as at date of this report:
Shares
Options
10,260,506
7,201,682
10
Constellation Technologies Limited
Annual Report 2021
Directors Report continued…
Our management team
Mr Adam Gallagher
Executive Director and Chief Executive Officer
Date of appointment:
Date of resignation:
Other current directorships:
1 June 2015
5 July 2021
None
Former directorships in last 3 years: Envirosuite Limited (ASX:EVS),
until 31 July 2020
Committees:
None
Equity held on termination date:
Ordinary Shares
Options
26,482,360
24,729,747
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.
11
Constellation Technologies Limited
Annual Report 2021
Directors Report continued…
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 2021, and the numbers of meetings attended by each director were:
Mr Adam Gallagher
Mr Leath Nicholson
Mr Anoosh Manzoori
Full meetings of
directors
A
B
10
10
10
10
10
10
Meetings of committees
Audit
A
B
Remuneration
A
B
-
2
2
-
2
2
-
2
2
-
2
2
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
Shares under option
Unissued ordinary shares
Unissued ordinary shares of Constellation Technologies Limited under option or right at the date of signing
this report are as follows:
Options
Grant Date
Recipients
18/11/2016 Director
Director
8/11/2016
10/11/2017 Director
11/12/2018
14/11/2019 Rights Issue - free attaching
29/05/2020 Employees
29/05/2020 Directors
19/06/2020 Sophisticated Investor
Investors - free attaching
Expiry Date
15/12/2020
15/12/2020
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 2021
30 June 2020
-
-
1,446,550
-
316,146,295
19,285,714
39,142,858
16,800,000
2,000,000
2,000,000
1,446,550
19,890,191
426,582,657
19,285,714
39,142,858
16,800,000
392,821,417
527,147,970
12
Constellation Technologies Limited
Annual Report 2021
Directors Report continued…
Performance Rights
Grant Date
13/01/2020
13/01/2020
1/02/2020
Recipients
Employees
Employees
Employees
Vesting Date Expiry Date 30 June 2021
13/01/2021
13/01/2022
1/02/2021
13/04/2022
13/04/2022
1/05/2021
-
3,000,000
-
3,000,000
30 June 2020
3,000,000
3,000,000
375,592
6,375,592
No option or performance rights holder has any right under the options or performance rights to participate
in any other share issue of the Company or any other entity.
Shares issued on the exercise of options or rights
118,517,588 ordinary shares of Constellation Technologies Limited were issued during the year ended 30 June
2021 on the exercise of options or conversion of performance rights granted. Between 30 June 2021 and the
date of this report, a further 1,284,484 performance rights were converted to ordinary shares of the
Company.
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.
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.
13
Constellation Technologies Limited
Annual Report 2021
Remuneration Report (audited)
The directors present the Constellation Technologies Limited 2021 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) Equity instruments
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, the Company’s CEO during the period had a standing invitation to attend Committee
meetings, however he is not permitted 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.
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Constellation Technologies Limited
Annual Report 2021
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.
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;
•
• ensure total remuneration is competitive by market standards.
link reward with strategic goals and performance of the Group; and
15
Constellation Technologies Limited
Annual Report 2021
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 2020 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 Leath Nicholson, Independent Non-Executive Chairman
• Mr Anoosh Manzoori, Independent Non-Executive Director
• Mr Adam Gallagher, Executive Director and Chief Executive Officer until 5 July 2021
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
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Constellation Technologies Limited
Annual Report 2021
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 2021.
Cash
salary &
fees
$
Short-term benefits
Non-
monetary
benefits
$
Cash
bonus
$
70,000
60,000
180,000
154,400
115,332
579,722
-
-
-
-
-
-
-
-
-
-
-
-
2021
Non-executive
directors
Leath Nicholson
Anoosh Manzoori
Executive
directors
Adam Gallagher1
Other KMP
Kartheek
Munigoti
Terri Bakos
Total
compensation
1 Mr Gallagher resigned 5 July 2021.
Post-
employm
ent
benefits
Share-based
payments
Annual
leave
$
Superann
-uation
$
Shares
$
Options
/Rights
$
Total
$
-
-
-
-
-
-
-
-
-
-
-
70,000
60.000
-
180,000
12,514
10,551
14,820
11,254
40,417
5,000
5,000
5,000
227,150
147,125
23,065
26,074
45,417
10,000
684,277
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Constellation Technologies Limited
Annual Report 2021
Remuneration report continued…
Short-term benefits
Post-
employm
ent
benefits
Share-based
payments
2020
Cash
salary &
fees
Cash
bonus
$
$
Non-
monetary
benefits
$
Annual
leave
Superan-
nuation
Shares Options
Total
$
$
$
$
$
Non-executive
directors
Leath Nicholson1
Anoosh Manzoori2
46,667
40,000
Executive directors
Adam Gallagher3
135,000
Other KMP
Kartheek Munigoti
Terri Bakos
Total KMP
compensation
156,000
36,923
414,590
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30,200
29,000
65,219
62,627
142,086
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
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 2020 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 the 2020 year and $ 10,200 of directors fees for the 2019 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 the 2020 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 2020 year in lieu of receiving $ 16,667 of cash-based directors fees for the 2020 year and $12,334 for
the 2019 year.
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 2020 year in lieu of receiving $45,000 of cash-based remuneration for the 2020 year and $110,000
for the 2019 year. The full value of the equity was expensed in the 2020 year as it formed compensation for services
performed during the 2020 and 2019 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.
18
Constellation Technologies Limited
Annual Report 2021
Remuneration report continued…
The relative proportions of remuneration that are linked to performance and those that are fixed are as
follows:
Fixed remuneration
2020
%
2021
%
At risk - STI
2020
%
2021
%
At risk - LTI
2020
%
2021
%
100
100
33
30
100
21
79
93
65
45
-
-
-
-
-
-
-
-
-
-
-
-
-
21
7
67
70
79
35
55
Non-executive directors
Leath Nicholson
Anoosh Manzoori
Executive directors
Adam Gallagher
Other KMP
Kartheek Munigoti
Terri Bakos
c)
Service agreements
Adam Gallagher
Mr Gallagher resigned from the Company subsequent to the end of the 2021 financial year on 5 July 2021.
The Group had a service arrangement with Famile Pty Ltd to provide the services of Mr Adam Gallagher as an
Executive Director and Chief Executive Officer to the Group commencing from 9 February 2019. The key
terms of the arrangement were:
• Current fee of $180,000 per annum.
• No termination payment other than statutory requirements.
• 6 month notice period.
Leath Nicholson
The Group has 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.
19
Constellation Technologies Limited
Annual Report 2021
Remuneration report continued…
Anoosh Manzoori
The Group 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 an employment contract with Mr Kartheek Munigoti. His contract as Chief Executive Officer
remains the same as his position as General Manager and Chief Technical Officer (CTO). The key terms of the
arrangement 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 a part-time employment contract with Ms Terri Bakos as Company Secretary and Chief
Financial Officer (CFO). The key terms of the arrangement are:
• Current salary of $120,000 per annum plus statutory superannuation contributions.
• No termination payment other than statutory requirements.
• 3 month notice period.
d)
Equity instruments
Shares and options granted as compensation.
Details on Share and Options or Performance Rights over ordinary shares in the Company that were granted
as compensation to each Key Management Person (KMP) during the reporting period and details of any
equity that vested during the reporting period are as follows:
Shares
Name
Grant Date Vesting Date
Qty
Issue
Price
Kartheek Munigoti
Terri Bakos
02/09/2020
02/09/2020
01/07/2021
01/07/2021
172,414
172,414
$0.029
$0.029
Value of
Shares
Granted
$5,000
$5,000
Year in which
shares vests
FY22
FY22
The above shares were granted during the year to KMP’s under a salary sacrifice arrangement with the KMP.
3,571,429 shares allocated to Kartheek Munigoti on 1 June 2020 vested during the year.
20
Constellation Technologies Limited
Annual Report 2021
Remuneration report continued…
Options
No further options were granted to KMP during the year. No options issued in prior years vested during the
year.
Performance Rights
Name
Grant Date Vesting Date
Qty
Issue
Price
Kartheek Munigoti
Terri Bakos
02/09/2020
02/09/2020
01/07/2021
01/07/2021
172,414
172,414
$0.029
$0.029
Value of
Shares
Granted
$5,000
$5,000
Year in which
shares vests
FY22
FY22
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.
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:
30 June 2021
$
Share price at end of year
0.016
30 June
2020
$
0.032
30 June 2019
$
0.018
30 June
2018
$
0.010
30 June
2017
$
0.025
Market capitalisation at the end of the
year ($M)
Net profit/(loss) for the financial year
Dividends paid
23.4
31.2
8.92
3.50
7.10
(3,221,821) (2,923,876) (2,177,277) (2,833,837) (3,758,069)
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.
21
Constellation Technologies Limited
Annual Report 2021
Remuneration report continued…
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 and as part of a
salary sacrifice arrangement.
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.
Key management personnel disclosures
f)
Share holdings
The number of shares in the parent entity held during the financial year ended 30 June 2021 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
Anoosh Manzoori
17,930,084
10,260,506
Executive directors
Adam Gallagher2
26,482,360
-
-
-
Other KMP
Kartheek Munigoti
Terri Bakos
41,056,168
-
95,729,118
172,414
172,414
344,828
-
-
-
-
-
-
- 17,930,084 17,930,084
- 10,260,506 10,260,506
- 26,482,360
4,339,52
1,098,280 42,326,862 37,345,809
-
172,414
-
1,098,280 97,172,226 69,876,901
1Other changes reflects the disclosure of additional securities held by a related party to Mr Munigoti.
2 Mr Gallagher resigned on 5 July 2021. Balance represents holding on date of resignation.
22
Constellation Technologies Limited
Annual Report 2021
Remuneration report continued…
Option holdings
The number of options over ordinary shares in the parent entity held during the financial year ended 30 June
2021 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
Exercised
Other
changes1
Balance at
the end of
the year
Vested and
exercisable
Non-executive directors
Leath Nicholson
Anoosh Manzoori
17,033,613
9,201,682
Executive directors
Adam Gallagher
24,729,747
Other KMP
Kartheek Munigoti
Terri Bakos
15,714,286
8,571,428
75,250,756
-
-
-
-
-
-
-
-
(2,000,000)
(2,000,000)
15,033,613
7,201,682
15,033,613
7,201,682
-
-
-
-
- 24,729,747
2,586,889
812,709 16,526,995
16,526,995
-
8,571,428
8,571,428
(3,187,291) 72,063,465
49,920,607
1Other changes for Mr Nicholson & Mr Manzoori reflect the lapse of options during the period. Other changes for Mr
Munigoti reflects the disclosure of additional securities held by a related party to Mr Munigoti.
2 Mr Gallagher resigned on 5 July 2021. Balance represents holding on date of resignation.
23
Constellation Technologies Limited
Annual Report 2021
Remuneration report continued…
Performance Rights holdings
The number of rights over ordinary shares in the parent entity held during the financial year ended 30 June 2021 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
Exercised
Other
changes1
Balance at
the end of
the year
Vested and
exercisable
Non-executive directors
Leath Nicholson
Anoosh Manzoori
Executive directors
Adam Gallagher
Other KMP
Kartheek Munigoti
Terri Bakos
-
-
-
-
-
-
-
-
-
172,414
172,414
344,828
-
-
-
-
-
-
-
-
-
-
-
-
137,931
310,345
-
172,414
137,931
482,759
-
-
-
-
-
-
1Other changes reflects the disclosure of additional securities held by a related party to Mr Munigoti.
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 2021:
24
Constellation Technologies Limited
Annual Report 2021
Remuneration report continued…
During the Year
2021
$
13,042
Outstanding
at end of Year
2021
$
During the
Year
2020
$
Outstanding
at end of Year
2020
$
-
33,000
-
-
-
18,982
63,557
-
131,650
70,000
180,000
-
-
60,000
5,000
-
-
-
-
-
5,833
-
-
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.
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]
25
Constellation Technologies Limited
Annual Report 2021
Directors Report continued…
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.
Non-audit services
Fees paid or payable to PKF Brisbane Audit being the lead auditor of the Group, for non-audit and other
assurance work during the year totaled $4,000 (2020: nil). Amounts paid to PKF Kexin (Beijing) Business
Advisory Co., Ltd and its related practices for non-audit and other assurance work totaled $20,601 (2020:
nil).
Details of the amounts paid or payable to the auditors for non-audit services provided during the financial
year are outlined in note 17 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial by the auditors (or by
another person or firm on the auditors’ behalf) is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001.
The directors are of the opinion that the services discussed in note 17 to the financial statements do not
compromise the external auditor’s independence requirements of the Corporations Act 2001 for the following
reasons:
• All non-audit services have been reviewed and approved to ensure that they do not impact the
integrity and objectively of the auditors; and
• None of the services undermine the general principles relating to auditor independence as set out in
APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and
Ethical Standards Board, including reviewing or auditing the auditors own work, acting in a
management or decision-making capacity for the company, acting as advocate for the company or
jointly sharing economic risks or rewards.
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 Kartheek Munigoti
Executive Director and Chief Executive Officer
Melbourne
30 August 2021
26
Constellation Technologies Limited
Annual Report 2021
Auditors Independence Declaration
27
Constellation Technologies Limited
Annual Report 2021
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 (4th edition)
published by the ASX Corporate Governance Council.
The 2021 Corporate Governance Statement dated as at 30 June 2021 reflects the corporate governance
practices in place throughout the 2021 financial year. The 2021 Corporate Governance Statement was
approved by the Board on 30 August 2021. 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
www.ct1limited.com.
28
Constellation Technologies Limited
Annual Report 2021
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 30 June 2021
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
2021
$
2020
$
2a
3a
3b
1,466,114
(1,180,791)
285,323
691,484
(403,085)
288,399
78,738
84,779
(5,227)
(2,766,325)
(763,820)
(50,873)
(16,662)
(3,196,553)
(77,562)
(6,646)
(3,222,184)
(2,924,245)
1,890
(1,527)
363
1,759
(1,390)
369
(3,221,821)
(2,923,876)
4
-
-
(3,221,821)
(2,923,876)
(3,221,821)
(2,923,876)
3,443
(100,615)
(3,218,378)
(3,024,491)
Total comprehensive loss attributable to equity holders of the company
(3,218,378)
(3,024,491)
Loss per share for loss attributable to the ordinary equity holders
of the company:
Basic/diluted earnings per share
18
(0.23)
(0.33)
Cents
Cents
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying
notes.
29
Constellation Technologies Limited
Annual Report 2021
Consolidated Statement of Financial Position
As at 30 June 2021
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventory
Other
Total current assets
Non-current assets
Trade and other receivables
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
Equity
Share capital
Reserves
Accumulated losses
Total equity
Notes
2021
$
2020
$
5a
5b
6a
5a
6b
6a
5c
6c
6d
2b
6c
7a
7b
2,597,731
714,787
71,953
547,821
4,405,173
77,182
-
224,655
3,932,292
4,706,851
36,382
131,953
-
168,335
-
82,152
20,208
102,360
4,100,627
4,809,211
615,525
14,949
123,481
335,021
-
1,088,976
238,667
43,746
38,526
25,050
21,658
367,647
-
-
14,622
14,622
1,088,976
382,269
3,011,651
4,426,942
18,196,600
762,670
(15,947,619)
16,390,763
845,977
(12,809,798)
3,011,651
4.426.942
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
30
Constellation Technologies Limited
Annual Report 2021
Consolidated Statement of Changes in Equity
For the year ended 30 June 2021
Notes
Share Capital Reserves
$
$
Accumulated
Losses
$
Total
equity
$
At 1 July 2019
Loss for the period
Other comprehensive income
Total comprehensive loss for the
period
9,644,401
-
-
154,424
-
(100,615)
(10,349,365)
(2,923,876)
-
(550,540)
(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
Share based payments
Write-back of equity
7
7,209,805
-
(463,443)
-
792,168
-
-
-
463,443
7,209,805
792,168
-
6,746,362
792,168
463,443
8,001,973
Balance at 30 June 2020
16,390,763
845,977
(12,809,798)
4,426,942
At 1 July 2020
16,390,763
845,977
(12,809,798)
4,426,942
Loss for the period
Other comprehensive income
Total comprehensive loss for the
period
-
-
-
-
3,443
(3,221,821)
-
(6,221,821)
3,443
3,443
(3,221,821)
(3,218,378)
Transactions with owners in their capacity as owners:
Shares issued, net of transaction costs
Share based payments
Lapse of options
7
1,805,837
-
-
(49,750)
47,000
(84,000)
-
-
84,000
1,756,087
47,000
-
1,807,837
(86,750)
84,000
1,803,087
Balance at 30 June 2021
18,196,600
762,670
(15,947,619)
3,011,651
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
31
Constellation Technologies Limited
Annual Report 2021
Consolidated Statement of Cash Flows
For the year ended 30 June 2021
Cash flows related to operating activities
Receipts from customers
Payments to suppliers and employees
Interest paid
Other income receipts
Notes
2021
$
2020
$
1,500,342
(4,358,134)
(1,527)
58,855
662,392
(2,670,838)
(1,390)
87,029
Net cash used in operating activities
8
(2,800,464)
(1,922,807)
Cash flows relating to investing activities
Payment for purchases of plant and equipment
Interest received
Payments for deposits
Loans to other entities
(71,021)
1,890
(413,155)
(206,578)
(22,987)
1,759
(21,122)
-
Net cash used in investing activities
(688,864)
(42,350)
Cash flows relating to financing cash flows
Proceeds from issue of equity
Share issue transaction costs
Repayment of lease liabilities
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Foreign exchange movement
1,722,087
-
(43,639)
6,534,277
(104,186)
-
1,678,448
6,430,093
(1,880,880)
4,405,173
3,438
4,464,936
40,454
(100,617)
Cash and cash equivalents at the end of the year 5a
2,597,731
4,405,173
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
32
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements
For the year ended 30 June 2021
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:
2021
Timing of revenue recognition
At a point in time
Over time
Monitor
tag
revenue
$
Monitoring
subscription
revenue
$
Consulting
revenue
$
Labour-hire
revenue
$
Total
$
-
67,805
-
234,762
7,650
919,352
236,545
-
244,195
1,221,919
67,805
234,762
927,002
236,545
1,466,114
2020
Timing of revenue recognition
At a point in time
Over time
Monitor
tag
revenue
$
Monitoring
subscription
revenue
$
Consulting
revenue
$
Labour-hire
revenue
$
Total
$
-
17,905
-
184,586
80,533
124,899
283,561
-
364,094
327,390
17,905
184,586
205,432
283,561
691,484
33
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
b)
Liabilities related to contracts with customers
Other gains/(losses)
Contract liabilities – deferred revenue on consulting contracts
2021
$
2020
$
335,023
25,050
335,023
25,050
c) Accounting policies
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.
Monitoring subscriptions
Revenue from the sale of monitoring subscriptions is recognised on a straight-line basis over the subscription
term.
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.
Labour hire
Revenue from the provision of labour hire services is recognised on a straight-line basis over the term of the hire
agreement.
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.
34
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
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.
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.
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)
Loss on disposal of assets
Gain on deconsolidation of dormant entities
2021
$
58,855
-
228
(1,640)
21,295
2020
$
83,812
3,217
(2,250)
-
-
78,738
84,779
35
Constellation Technologies Limited
Annual Report 2021
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
Legal
Listing and share registry
Occupancy
Share-based payments
Superannuation
Travel and entertainment
Other
i)
Depreciation
Office Equipment
Plant and Equipment
Property – right of use
Notes
2021
$
2020
$
i)
16
68,784
11,189
23,089
236,388
84,253
1,574,732
70,294
68,104
98,648
68,658
122,250
112,436
45,190
182,310
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
2,766,325
3,196,553
2021
$
16,524
27,874
39,855
2020
$
24,936
988
19,873
84,253
45,797
36
Constellation Technologies Limited
Annual Report 2021
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 26% (2020: 27.5%)
(3,221,821)
(886,001)
(2,923,876)
(804,066)
2021
$
2020
$
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
-
-
-
41,923
-
28,895
(815,183)
-
-
-
337,634
-
29,842
(436,590)
(9,468)
(6,350)
824,651
442,940
-
-
Tax losses
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 2021, no deferred tax
balances have been recognised (2020: 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.
37
Constellation Technologies Limited
Annual Report 2021
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
2021
$
2020
$
2,597,731
4,405,173
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
2021
$
2020
$
2,597,731
2,597,731
4,405,173
4,405,173
Classification as cash equivalents
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 (Error! Reference s
ource not found. for the Group’s other accounting policies on cash and cash equivalents.
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.
38
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
b)
Trade and other receivables
Notes
Current
$
2021
Non-
current
$
Total Current
$
$
2020
Non-
current
$
Trade receivables
Provision for impairment
466,625
(11,514)
455,111
36,382 503,007
(11,514)
-
59,773
(7,027)
36,382
491,493
52,746
Other receivables
259,676
-
259,676
24,436
Total trade and other receivables
714,787
36,382
751,169
77,182
-
-
-
-
-
Total
$
59,773
(7,027)
52,746
24,436
77,182
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).
Other receivables
Other receivables are amounts due from parties other than customers that are deemed to be receivable within
12 months. Other receivables are impaired in accordance with note 20 (n).
c)
Trade and other payables
Trade payables
Accrued expenses
Other payables
Notes
Current
$
268,899
233,859
112,766
Total trade and other payables
615,525
2021
Non-
current
$
Total
$
Current
$
2020
Non-
current
$
Total
$
-
-
-
-
268,899
233,859
112,766
130,659
81,097
26,911
615,525
238,667
-
-
-
-
130,659
81,097
26,911
238,667
39
Constellation Technologies Limited
Annual Report 2021
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
2021
Notes Current Non-current
$
$
Total Current
$
$
2020
Non-
current
$
Total
$
Prepayments
Consumables
Deposits
Security deposits
20,594
78,263
413,155
35,809
547,821
-
-
-
-
-
20,594
78,263
413,155
35,809
138,543
46,634
-
39,318
20,208
-
-
-
158,751
46,634
-
39,318
547,821
224,495
20,208
244,703
Other current assets are non-financial benefits that the consolidated entity shall be entitled to receive within a twelve
month period.
b)
Property, plant & equipment
At 30 June 2021
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
$
116,557
(69,556)
47,001
17,941
(2,249)
47,972
(139)
(16,524)
47,001
95,728
(30,759)
64,969
4,593
(597)
90,342
(1,495)
(27,874)
64,969
79,931
(59,948)
19,983
59,618
220
-
-
(39,855)
19,983
Total
$
292,216
(160,263)
131,953
82,152
(2,626)
138,314
(1,634)
(84,253)
131,953
40
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
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
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
c)
Borrowings
2021
Current
$
Non-current
$
Total
$
Current
$
2020
Non-current
$
Total
$
Lease liability
14,949
-
14,949
43,746
14,622 58,368
d)
Employee benefit obligations
2021
2020
Current
Non-current
Total
Current Non-current
Total
$
$
$
$
$
$
Leave obligations
123,481
-
123,481
38,526
-
38,526
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(q).
The current portion of this liability includes all of the accrued annual leave. The entire amount of the provision of
$123,481 (2020: $38,526) 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.
41
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
7. Equity
a) Contributed Equity
30 June 2021 30 June 2021
$
No.
30 June 2020 30 June 2020
$
No.
Ordinary shares - fully paid
1,467,577,250
18,196,600
1,347,887,247
16,390,763
Movement in ordinary shares
Balance at 1 July 2019
Note
No. of shares
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
577,594
3,409,209
1,706,307
841,169
(463,443)
63,366
(154,586)
Balance at 30 June 2020
1,347,887,247
16,390,763
Issue of securities at $0.029 each - ESOP
Exercise of options
Conversion of Performance Rights - ESOP
Transfer from share based payment reserve
1,172,415
114,805,789
3,711,799
-
34,000
1,722,087
-
49,750
Balance at 30 June 2021
1,467,577,250 18,196,600
42
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
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.
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.
Reserves
b)
The following table shows a breakdown of the consolidated balance sheet line item ‘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 2019
162,325
(7,901)
154,424
Currency translation differences
Other comprehensive income for the year
-
-
(100,615)
(100,615)
(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
43
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
Share-based
payments
$
Foreign currency
translation
$
Total
$
Balance at 1 July 2020
954,493
(108,516)
845,977
Currency translation differences
Other comprehensive income for the year
-
-
3,443
3,443
-
3,443
3,443
Transactions with owners in their capacity as owners
Share-based payment expenses
(86,750)
-
(86,750)
At 30 June 2021
867,743
(105,073)
762,670
i) Nature and purpose of reserves
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.
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.
ii) Options and Rights on Issue
Options and rights
397,105,901
867,743 537,892,989
954,493
30 June
2021
No.
30 June
2021
$
30 June
2020
No.
30 June
2020
$
44
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
Movement in options and rights
Note
Number of
options
$
Balance at 1 July 2019
50,041,900
162,325
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
Balance at 30 June 2020
Exercise of Options
Issue of rights - ESOP
Issue of rights - ESOP
Issue of rights - ESOP
Conversion of rights - ESOP
Lapse of options
a)
b)
c)
d)
e)
f)
g)
h)
a)
a)
i)
j)
k)
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
-
-
537,892,989
954,493
(114,805,789)
344,828
827,587
448,276
(3,711,799)
(23,890,191)
-
10.000
24,000
13,000
(49,750)
(84,000)
Balance at 30 June 2021
397,105,901
867,743
a) 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, 114,805,789 (2020: 56,077,886) of the options were exercised.
45
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
b) Unlisted options at $0.030, expiring 10 December 2020
Cancelation of free-attaching options granted to Penta Global,
c) Unlisted options at $0.015, expiring 29 May 2023
Issued to Key Management Personal in lieu of cash based remuneration.
d) 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
e) 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
f)
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
g) 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.
h) 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.
i)
j)
Unlisted performance rights vesting 1 July 2021, expiring 30 September 2021
Issue to Key Management Personnel as part of the Company’s long-term incentive program.
Unlisted performance rights vesting 1 July 2021, expiring 30 September 2021
Issue to employees as part of the Company’s long-term incentive program.
k) Unlisted performance rights vesting 1 October 2020, 1 January 2021 & July 2021, expiring 30 June 2022
Issue to employee as part of the Company’s long-term incentive program. Tranche to vest in four equal
portions over a 12 month period.
46
Constellation Technologies Limited
Annual Report 2021
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
Adjustments for
Depreciation
Finance costs
Finance income
Share-based payments
Employee salary sacrifice to acquire equity
Unrealised net foreign currency (gains)/losses
Disposal of assets
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 outflow from operating activities
2021
$
(3,221,821)
2020
$
(2,923,876)
84,253
-
(1,890)
122,250
34,000
-
1,640
(467,309)
(69,486)
355,180
309,973
84,955
45,797
-
(1,759)
1,231,492
-
-
-
13,483
(128,993)
(153,046)
(33,120)
27,215
(2,800,464)
(1,922,807)
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.
47
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
Significant estimates and judgements
The areas involving significant estimates or judgements are:
• Recognition of revenue and allocation of transaction price - note 2c
• Non-recognition of carry-forward tax losses - note 4b
• Estimation of employee benefit obligations - note 6d
• Estimation of share-based payments - note 16
• Application of the going concern assumption - note 20a
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 has
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
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.
b) Credit risk
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.
48
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
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.
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 2021 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 2020 and 30 June 2021 were determined as follows for
trade receivables:
2020
Current
$
1-30
$
31-60
$
61-90 91-120
$
$
121+
$
Total
$
Days past due
Expected credit loss rate
Gross carrying amount
Loss allowance
0.00%
-
-
2.03% 11.35% 34.45% 46.43% 58.63%
32,728
666
2,244
5,110
924
432
429
773
49
8,715 45,043
7,027
49
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
2021
Current
$
1-30
$
31-60
$
61-90 91-120
$
$
121+
$
Total
$
Days past due
Expected credit loss rate
Gross carrying amount
Loss allowance
0.00%
-
-
16,283 54,012
7,577
519
3.19% 14.03% 44.38% 60.53% 80.46%
1,999
2,050
1,487
75,831
910
900
1,608
11,514
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
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.
50
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
Contractual maturities of financial liabilities
2020
Trade and other
payables
Total
Less
than 6
months
$
238,667
238,667
6 - 12
months
Between 1
and 2 years
Between 2
and 5
years
Over 5
years
Total
contractual
cashflows
Carrying
amount
(assets)/
liabilities
$
$
$
-
-
$
-
-
$
-
-
$
-
238,667
238,667
-
238,667
238,667
Less than
6 months
6 - 12
months
Between
1 and 2
years
Between
2 and 5
years
Over 5
years
Total
contractual
cashflows
Carrying
amount
(assets)/
liabilities
$
615,525
615,525
$
-
-
$
-
-
$
-
-
$
-
$
615,525
$
615,525
-
615,525
615,525
2021
Trade and other
payables
Total
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 2021 (2020: nil). The Group’s
franking account balance was nil at 30 June 2021 (2020: nil).
51
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
12. Interest in other entities
Material subsidiaries
The Group’s principal subsidiaries at 30 June 2021 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
2021
2020
%
%
100
100
100
100
100
100
100
100
-
-
100
100
100
100
100
100
100
100
Constellation Technologies Australia Pty
Ltd
Beijing Constellation Technology
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
Australia
China
India
Australia
Australia
United States
Australia
Australia
United States
2
3
3
2
1. Formerly CCP Network Australia Pty Ltd
2. Entities in the process of being wound up.
3. Deregistration completed and deconsolidated during the year.
13. Contingent liabilities
The Group had no contingent liabilities at 30 June 2021 (2020: nil).
52
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
14. Events occurring after the reporting period
On the 5 July 2021, the Company announced the resignation of Adam Gallagher as an executive director and
Group CEO. Mr Kartheek Munigoti stepped into role as Group CEO and joined the board as an executive
director.
On 9 July 2021 the Company announced the signing of agreements with Fujitsu Australia Pty Ltd and QTEQ
Pty Ltd. Refer to CEO’s Report and ASX announcements for further information regarding these agreements.
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.
15. Related party transactions
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Share-based payments
2021
$
602,786
26,074
55,417
684,277
2020
$
395,523
18,307
1,037,259
1,451,089
Detailed remuneration disclosures are provided in the remuneration report.
53
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
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 2021 with related parties and were outstanding as the reporting date:
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.
Directors fees payable to Catellen Pty Ltd, a
company associated with Leath Nicholson
70,000
Directors fees payable to Famile Pty Ltd, a
company associated with Adam Gallagher
180,000
-
-
Directors fees payable to Shape Capital Pty
Ltd, a company associated with Anoosh
Manzoori
60,000
5,000
-
-
-
During
the Year
2021
$
Outstanding
at end of Year
2021
$
During the
Year
2020
$
Outstanding
at end of Year
2020
$
13,042
-
33,000
-
-
-
18,982
63,557
-
131,650
-
-
5,833
-
-
54
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
16. Share-based payments
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
$ 0.018
$ 0.000
$ 0.065
$ 0.015
$0.027
2021
Number of
options &
performance
rights
537,892,989
1,620,691
(23,890,191)
(118,517,588)
397,105,901
367,302,967
2020
Weighted
Number of
average
options &
exercise price
performance
per share
rights
50,041,900
$ 0.040
$ 0.015 568,634,134
(23,372,159)
$ 0.015
(57,410,886)
$ 0.008
$0.018
537,892,989
509,374,539
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 Director
8/11/2016
Director
10/11/2017 Director
11/12/2018
14/11/2019
29/05/2020
29/05/2020 Directors
19/06/2020
15/12/2020
15/12/2020
25/10/2021
10/12/2020
Investors - free attaching
Rights Issue - free attaching 14/11/2022
29/05/2023
Employees
29/05/2023
18/06/2023
Sophisticated Investor
Exercise
Price
$0.100
$0.100
$0.100
$0.030
$0.015
$0.015
$0.015
$0.015
30 June 2021
30 June 2020
-
-
1,446,550
-
316,146,295
19,285,714
39,142,858
16,800,000
2,000,000
2,000,000
1,446,550
19,890,191
430,952,084
19,285,714
39,142,858
16,800,000
392,821,417
531,517,397
Weighted average remaining contractual life of options outstanding at end of
Year:
1.48
2.36
55
Constellation Technologies Limited
Annual Report 2021
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
2/09/2020
2/09/2021
Recipients
Employees
Employees
Employees
Employees
Employees
Vesting Date Expiry Date
13/04/2022
13/01/2021
13/04/2022
13/01/2022
1/05/2021
1/02/2021
30/09/2021
1/07/2021
30/06/2022
1/07/2021
Weighted average remaining contractual life of rights outstanding at
end of Year:
Employee share scheme
30 June 2021 30 June 2020
-
3,000,000
-
1,172,415
112,069
3,000,000
3,000,000
375,592
-
-
4,284,484
6,375,592
0.92
1.73
The Company has established the 'employee share option plan' (ESOP) 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.
Shareholders last approved the Company’s capacity to issue securities under the ESOP at the 2017 Annual
General Meeting. Since the last approval, the following equity has been issued under the scheme:
56
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
Shares
Name
Term
Code
Issue Date
Grant Date Vesting
Qty
Date
Issue
Price
Value of
Shares
Granted
Value
Vested
$
$
$
Kartheek
Munigoti
Karen
Davy
Other
Employees
Kartheek
Munigoti
Kartheek
Munigoti
Kartheek
Munigoti
Other
Employees
Other
Employees
Kartheek
Munigoti
Terri
Bakos
Other
Employees
A
B
C
D
D
D
E
F
G
G
G
26/11/2018 31/12/2017
31/12/2017 2,878,135
0.0270
77,710
77,710
26/11/2018 18/12/2017
18/12/2017
43,478
0.0230
1,000
1,000
02/09/2019 02/09/2020
02/09/2020
769,231
0.0130
10,000
10,000
29/05/2020 01/05/2020
29/05/2020 3,571,429
0.0070
25,000 25,000
29/05/2020 01/05/2020
29/05/2021 3,571,429
0.0070
25,000 25,000
29/05/2020 01/05/2020
29/05/2022 3,571,428
0.0070
25,000
-
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
02/09/2020 02/09/2020
01/07/2021
172,414
0.0290
5,000
02/09/2020 02/09/2020
01/07/2021
172,414
0.0290
5,000
02/09/2020 02/09/2020
01/07/2021
827,587
0.0290 24,000
-
-
-
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.
G: Issue price based on 7 day VWAP as at 1 September 2020.
57
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
Options
Name
Kartheek
Munigoti
Terri Bakos
Grant
Date
Vesting
Date
Expiry Date
Qty
Exercise
Price
$
Value of
Options
Granted
$
Value
Vested
$
1/05/2020
1/05/2020
29/05/2020
29/05/2020
29/05/2020 10,714,286
8,571,428
29/05/2020
0.0150
0.0150
53,571
42,857
53,371
42,857
All options were valued using a Black-Scholes valuation model with parameters as disclosed in note 16.
Rights
Name
Term
Code
Grant
Date
Vesting Date
Expiry Date Qty
H
Other Employee
I
Other Employee
Other Employee
J
Kartheek Munigoti K
K
Terri Bakos
K
Other Employees
13/01/2020
13/01/2020
01/02/2020
02/09/2020
02/09/2020
02/09/2020
13/01/2021
13/01/2022
01/02/2021
02/09/2020
02/09/2020
02/09/2020
13/04/2022
13/04/2022
01/05/2021
01/07/2021
01/07/2021
01/07/2021
Value of
Rights
Granted
$
3,000,000
3,000,000
375,592
172,414
172,414
30,000
30,000
10,000
5,000
5,000
1,275,863 37,000
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.
K: Issued based on 7 day VWAP as at 1 September 2020
Other share based payment arrangements
No other equity has been issued to employees or directors outside of the Company ESOP during the year.
58
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
Valuation of share options
No options were issued during the year.
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 rights issued to key management personnel
Expenses arising from shares issued to other employees
Expenses arising from rights issued to other employees
Expenses arising from shares issued to consultants
2021
$
35,417
-
10,000
1,500
75,333
-
2020
$
111,878
605,992
-
29,263
22,917
461,442
122,250
1,231,492
Additional $34,000 share-based payments expense relates to a salary sacrifice arrangement with employees to acquire
shares. This share-based payment expense has been allocated as an employee benefit at note 3(b).
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
PKF Kexin (Beijing) Business Advisory Co., Ltd
Non-audit services
PKF Brisbane Audit
PKF Kexin (Beijing) Business Advisory Co., Ltd
2021
$
-
52,000
25,545
77,545
4,000
20,601
24,601
2020
$
44,189
34,000
78,189
-
-
-
Non-audit services include due diligence advisory services provided to the Company during the year.
59
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
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
(b) Weighted average number of shares used as the denominator
2021
$
2020
$
(3,221,821)
(2,923,876)
(3,221,821)
(2,923,876)
2021
No.
2020
No.
Weighted average number of ordinary shares used as the denominator in
calculating basic and diluted loss per share
1,381,166,017 873,682,078
There are 488,157,186 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
1,869,323,203.
60
Constellation Technologies Limited
Annual Report 2021
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 loss
2021
$
2020
$
1,840,355
7,550,081
9,390,436
(85,582)
-
(85,582)
3,348,746
5,450,539
8,799,285
(73,898)
-
(73,898)
92,987,151
91,181,314
5,531,741
(87,990,418)
10,528,474
5,618,491
(88,074,418)
8,725,387
1,223,621
1,223,621
2,518,452
2,518,452
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 the entities its controlled.
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.
61
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
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).
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 $3,011,651, net current
asset position of $2,843,316 and has net operating cash outflows of $2,800,464. The Group generated a
loss after tax for the year of $3,221,821. The group’s cash position decreased to $2,597,731 at 30 June
2021.
Notwithstanding the historical losses to date the directors believe that the going concern basis of
preparation is appropriate due to the following reasons:
•
•
•
Significant progress has been made in releasing the Group’s intellectual property. The Group’s
revenue increased 112.02% over the prior year;
Recent history in raising capital. The Group successfully raised over $5.6 from investors in the prior
year. In the current year shareholders have exercised options raising $1.7m. There are still
392,821,417 options outstanding that could raise up to $5.8m from shareholders; and
The Group continues to apply different measures to control its expenditure to preserve cash and
working capital. It has the ability to negotiate payment in equity in lieu of cash with its consultants
and suppliers, also improves the Group’s cash coverage.
New and amended standards adopted by the group
No new standards came into effect for the annual reporting period commencing 1 July 2020.
62
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
New standards and interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are
not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting
period ended 30 June 2021. The consolidated entity’s assessment of the impact of these new amended
Accounting Standards and Interpretations, most relevant to the consolidated entity, are set out below:
Conceptual Framework for Financial Reporting (Conceptual Framework)
The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 July
2021 and early adopted is permitted. The Conceptual Framework contains new definition and
recognition criteria as well as new guidance on measurement that affects several Accounting Standards.
Where the consolidated entity has relied on the existing framework in determining its accounting policies
for transactions, events or conditions that are not otherwise dealt with under the Australian Accounting
Standards, the consolidated entity may need to review such policies under the revised framework. At this
time, the application of the Conceptual Framework is not expected to have a material impact on the
consolidated entity’s financial statements.
b)
Principles of consolidation
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.
63
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
d)
Foreign currency translation
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.
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.
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.
64
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
e)
f)
g)
Revenue recognition
The accounting policies for the Group’s revenue from contracts with customers are explained in note 2.
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.
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.
65
Constellation Technologies Limited
Annual Report 2021
Notes to the Consolidated Statements continued …
i)
j)
k)
l)
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.
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.
Impairment of assets
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.
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.
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Notes to the Consolidated Statements continued …
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
Classification
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).
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.
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.
Impairment
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.
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Notes to the Consolidated Statements continued …
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.
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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Notes to the Consolidated Statements continued …
p)
q)
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.
Employee benefits
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.
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)
s)
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.
Loss per share
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.
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.
v)
Inventory
Stock on hand is stated at the lower of cost and net realisable value on a ‘first in first out’ basis or FIFO.
Costs of purchased inventory are determined after deducting rebates and discounts received or
receivable. Net realisable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale.
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Director’s Declaration
In the directors' opinion:
the financial statements and notes set out on pages 29 to 70 are in accordance with the Corporations Act
2001, including:
• complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements, and
• giving a true and fair view of the consolidated entity's financial position as at 30 June 2021 and of its
performance for the financial year ended on that date, and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
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 Kartheek Munigoti
Executive Director and Chief Executive Officer
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Independent Auditors Report
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Shareholder Information
As at 27 August 2021
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
No. of
holders
705
489
17
34
124
Ordinary Shares
No. of shares
1,444,559,046
24,051,580
147,753
82,964
20,391
No. of
holders
Options
No. of
shares
176 388,724,821
4,055,061
16,020
19,853
5,662
76
2
8
22
1,369
1,468,861,734
284 392,821,417
There is one holder of 3,000,000 Performance Rights on issue.
There were 330 holders of less than a marketable parcel of 4,359,420 ordinary shares.
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Shareholder Information
Twenty largest holders of quoted securities are:
Name of registered holder
LG EQUITIES PTY LTD
KARTHEEK MUNIGOTI SHANKAR RAO
BERNE NO 132 NOMINEES PTY LTD
1
2 MISS MENGJIAO ZHAO
3 MRGL PTY LTD
4 MR XIAONIU BAO
5 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
6
7
8 MRS XIAOFANG ZHANG
9 MR YI ZHANG
10 BNP PARIBAS NOMS PTY LTD
11 BERNE NO 132 NOMINEES PTY LTD
12 K & M HOLDINGS AUSTRALIA PTY LTD
13 S & M FRENCH INVESTMENTS PTY LTD
14 MS XIAOFANG ZHANG
15 AUSTANCO PTY LTD
16 HONGMEN CAPITAL HOLDINGS PTY LTD
17 MAINLINE SOLUTIONS PTY LIMITED
18 PRADO INVESTMENTS PTY LTD
19 MR CHRISTOPHER THOMAS TITMARSH
20 MR CHANG LIANG ZHANG + MRS DAN YUN WEI
No. of
shares
% of
holding
94,466,988
74,497,459
51,189,192
41,760,000
34,983,461
30,341,882
30,000,000
27,881,641
27,840,000
26,119,239
26,000,000
25,000,000
24,884,983
22,000,000
21,975,000
21,428,571
21,079,044
20,500,000
18,004,625
17,373,543
6.43
5.07
3.48
2.84
2.38
2.07
2.04
1.90
1.90
1.78
1.77
1.70
1.69
1.50
1.50
1.46
1.44
1.40
1.23
1.18
657,325,628
44.75
Substantial shareholders
The names of the substantial shareholders who have notified the Group in accordance with section 371B of
the Corporations Act 2001 are as follows. Quantity and Percentage of shares stipulated are as supplied by
the substantial shareholder:
Name of registered holder
1 Raymond Malone
2 Mengjiao Zhao
3 K&M Holdings Australia Pty Ltd
4 Mainline Solutions Pty Limited
5 S&M French Investments Pty Ltd
No. of
shares
156,276,694
84,865,427
35,840,430
33,249,673
28,984,983
% of
holding
11.61
5.78
7.03
6.52
5.69
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Annual Report 2021
Shareholder Information
Voting rights
The voting rights attached t equity securities are set out below:
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.
Options and performance rights
Options and performance rights are not entitled to voting rights.
Unquoted equity security holdings greater than 20%
No single shareholder has an unquoted equity holding greater than a 20%.
Escrowed securities holdings
The following securities holdings are subject to restrictions or voluntary escrow arrangements.
Security Type
Ordinary Shares1
Ordinary Shares1
Qty
Escrow Date
60,000,000
61,879,029
8/01/2026
19/06/2022
121,879,029
1Securities escrowed until disclosed date or when various performance targets are satisfied.
On market buy-back
There is no current on-market buy-back of the Group’s securities.
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