Harris Technology Group Limited Annual Report 2019/20 | 1
Contents
Chairman and CEO Letter
FY20 Summary
FY21 Strategy
4
5
9
Directors’ Report including Remuneration Report 11
Auditor’s Independence Declaration
Corporate Governance Statement
Financial Statement
27
28
39
Notes to the Consolidated Financial Statements 33
Directors’ Declaration
Independent Auditor’s Report
Additional Information
75
76
80
Harris Technology Group Limited Annual Report 2019/20 | 2
Harris Technology Group Growth Strategy
Focus on Sales
and building
the brands in
the market
Emphasis on
Systemisation
to reduce costs
Ensure all sites
are Mobile &
Tablet-
Enabled to
increase
visibility
Harris Technology Group Limited Annual Report 2019/20 | 3
Chairman and CEO Letter
Dear Shareholders,
Harris Technology Group Limited (the Company)
and its controlled entities (the Group) present its
results for the financial year ended 30 June 2020
(“FY20”).
Review and Results of Operations
A review of Harris Technology Group for the
FY 20 is contained in three parts:
1. Continuing Operations; and
2. Forward View
Continuing Operations
Harris Technology Group Limited recorded a
substantial turnaround in performance. The
Group used its expertise and knowledge to
further develop its online IT and consumer
electronics operations as well as reviewing
new opportunities. HT8 established the “Pro-
Hygiene” division in April 2020, which has
achieved significant revenue and is profitable
in a very short period of time.
The rationalisation of staff, warehousing and
other overheads it was completed which
allowed management to focus on developing
the B2C sales channels for IT and consumer
sales were
electronic products. Strong
experienced across
the entire range of
products, together with product diversification
to include mobile phone accessories and
consumables such as inks and toners plus
gaming products. Sales of antivirus software
also increased.
Forward View
In August 2020, HT8 undertook a private
placement to raise $3.5 million at 8c per share
and a Share Purchase Plan at 8c per share to
raise a $1.4 million. With the additional
capital now available, coupled with the
structural shift in consumer behaviour
towards increasingly shopping online, HT8 is
well positioned to take advantage of the retail
“revolution” in the coming months and years.
The company has a proven strategy as well as
experienced professional management team
to drive further growth. The board of the
company is confident that HT8 will continue
to deliver strong revenue and improved
profitability in FY2020-2021.
Andrew Plympton
Non-Executive Chairman
Melbourne, 30 September 2020
Garrison Huang
Managing Director
Melbourne, 30 September 2020
Harris Technology Group Limited Annual Report 2019/20 | 4
FY20 Summary
Full year profit and loss summary
Revenue from continuing operations
Sales revenue
Other revenue
Total revenue
Total comprehensive (loss)/profit
FY20
($m)
13.64
0.62
14.26
1.00
FY19
($m)
9.00
0.17
9.17
(0.73)
Change
($m)
4.64
(0.10)
4.54
1.73
Revenue and Cost of Sales
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
-
0
2
4
6
8
10
12
14
Revenue
Cost of Sales
Harris Technology Group Limited Annual Report 2019/20 | 5
Full year profit and loss summary - underlying
Non-statutory financial results include:
Gross profit
Profit /(loss) before income tax
Total comprehensive (loss) / profit
Operating costs
Direct costs
Other costs and expenses
Balance Sheet
Cash and cash equivalents
Inventories
Property, plant and equipment
Intangible assets
Net assets
FY20
($m)
2.67
1.00
1.00
(0.74)
(0.31)
(0.61)
FY19
($m)
1.00
(0.73)
(2.20)
(0.15)
(1.33)
(0.25)
Change
($m)
1.67
(0.73)
(1.20)
(0.59)
(1.02)
(0.36)
30 Jun 20
($m)
30 Jun 19
($m)
1.17
3.32
-
-
(3.89)
1.00
0.41
0.11
0.29
(5.06)
Harris Technology Group Limited Annual Report 2019/20 | 6
Cash position
Cash and cash equivalents of $1,171,184 at 30 June 2020.
Based on the cash position at end of FY20 and as a result of a stringent budgeting process, the
company believes it is in a position to meet planned operational and capital expenditure throughout
FY21.
Cash and Cash Equivalent for June 2019 to June 2020
1,400
1,200
1,000
800
600
400
200
-
Jun'2019
Sep'2019
Dec'2019
Mar'2019
Jun'2020
Harris Technology Group Limited Annual Report 2019/20 | 7
Management Team
Garrison Huang
Executive Director & Chief Executive Officer
20 years’ experience in management in the IT Importing
and Distributing industry
Co-Founder of Anyware Corporation Pty Ltd – a leading IT
accessory distributor with well-established importing &
distribution channels
Appointed Executive Director and Chief Executive Officer
on 19 July 2016
Harris Technology Group Limited Annual Report 2019/20 | 8
FY21 Strategy
Growth of
revenue
Capitalising on the structural shift in consumer behaviour
towards online shopping
Operationally
profitable
Expansion of
platforms and
product lines
Continual improvement in business processes to improve
our position
Addition of further marketplace platforms
Further growth of the Pro-hygiene division
Commencement of the homeware and kitchenware
categories
Harris Technology Group Limited Annual Report 2019/20 | 9
Corporate Information
Non-Executive Chairman
Executive Director & CEO
Non-Executive Director
Non-Executive Director
DIRECTORS
Mr Andrew Plympton
Mr Garrison Huang
Mr Bob Xu
Mr Howard Chen
COMPANY SECRETARY
Mr Brett Crowley
REGISTERED OFFICE
Unit 6, 94 Abbott Road
Hallam, Victoria 3803
Tel: 1300 13 99 99
AUDITORS
EXCHANGE LISTING
RSM Australia Partners
Level 21, 55 Collins Street
Melbourne Victoria 3000
Harris Technology Group Limited’s ordinary
shares are quoted on the Australian Securities
Exchange (ASX: HT8)
BANKER
STATE OF INCORPORATION
Westpac
360 Collins Street
Melbourne Victoria 3000
Victoria
SHARE REGISTRY
Boardroom Pty Limited
Level 12, 225 George Street
Sydney New South Wales 2000
Tel: 1300 13 99 99
Harris Technology Group Limited Annual Report 2019/20 | 10
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2020)
The Directors present their report together with the financial report of the group consisting of Harris
Technology Group Limited (the Company) and its controlled entities (the Group), for the financial
year ended 30 June 2020 and independent auditor’s report thereon.
INFORMATION ON DIRECTORS AND COMPANY SECRETARY
The qualifications, experience and special responsibilities of each person who has been a Director of
Harris Technology Group Limited, together with details of the Company Secretary, during the
financial year and until the date of this report are as follows. Directors were in office for this entire
period unless otherwise stated.
Names, qualifications, experience and special responsibilities
Andrew Plympton, Independent, Non-Executive Chairman
Mr Plympton was appointed to the Board on 9 February 2010 as an Independent Non-Executive
Chairman. Mr Plympton assumed the role of Executive Chairman from 11 March 2016 – 19 July 2016,
after which he resumed his role as Non-Executive Chairman.
Experience and expertise
Mr Plympton joined the Company in February 2010 and brings a wealth
of experience in a diverse range of commercial activities.
Mr Plympton has spent more than 35 years in the financial services area,
as Managing Director and/or Executive Chairman of a number of
international insurance brokers and risk managers. In addition, he held
the role of Chairman in Underwriting Agencies and Captive Insurance
Managers.
In addition, Mr Plympton has served as a non-executive director/
Chairman of 9 ASX listed companies over the last twenty years.
Mr Plympton has extensive experience in sport and administration of the
sector. He was a long term member of The Australian Olympic Committee,
President of AFL club St Kilda for 8 years and continues as the longest
serving director of The Australian Sports Commission (including The
Australian Institute of Sport).
Other directorships held by
Director in the last 3 years
In the public company sector, during the last three years Mr Plympton
has also served as a director of the listed companies XPD Soccer Gear
Limited (ASX: XPD) from 7 February 2015 to 3 August 2017.
Special responsibilities
Chair of the Board
Relevant interest in Harris
Technology Group securities as
at the date of this report
Mr Plympton has a relevant interest in 660,000 fully paid ordinary shares
which are held by an entity Mr Plympton controls.
Harris Technology Group Limited Annual Report 2019/20 | 11
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2020)
Garrison Huang, Executive Director
Mr Huang was appointed to the Board on 3 March 2016 as a Non-Executive Director. Mr Huang was
appointed as Executive Director and CEO on 19 July 2016.
Experience and expertise
Mr. Huang came to Australia from Shanghai, where he was born, and
became an Australian citizen in 1996. Mr. Huang holds a Bachelor of
Engineering degree from Zhejiang University, in China, a Graduate
Diploma in Computer Systems Engineering from Swinburne University
and a Graduate Certificate in Marketing from Melbourne University.
Mr. Huang is a co-founder of Anyware Corporation Pty Ltd – a leading IT
accessory distributor in Australia. Anyware is a well-established importing
and distribution business with offices and warehouses in Melbourne,
Sydney, Brisbane, Perth and Adelaide. In 2015 Anyware Corporation Pty
Ltd acquired Harris Technology (www.ht.com.au) from Office works, one
of Australia’s longest established and leading e-commerce businesses
focusing on technology products.
Other directorships held by
Director in the last 3 years
During the last three years, Mr Huang has not served as a director of any
other listed companies.
Special responsibilities
None.
Relevant interest in Harris
Technology Group securities as
at the date of this report
Mr Huang has a relevant interest in 83,644,992 fully paid ordinary shares
which are held by an entity that Mr Huang controls.
Bob Xu, Non -Executive Director
Mr. Xu resigned as a non-executive director of the group effective on the 2 September 2020.
Experience and expertise
Mr. Xu came to Australia in 1987, and became an Australian Citizen in
1995. Mr. Xu holds a Diploma in Mechanical Engineering from the
Shanghai Aviation Technology Institute, and studied Engineering for four
years at Tongji University.
Mr. Xu started an import and distribution business with AZA International
Pty Ltd in 1996. Mr. Xu has served as Business Director of Anyware
Corporation Pty Ltd (Anyware) since 2012.
Other directorships held by
Director in the last 3 years
During the last three years, Mr Xu has not served as a director of any
other listed companies.
Special responsibilities
None.
Relevant interest in Harris
Technology Group securities as
at the date of this report
Mr Xu has a relevant interest in 10,305,570 fully paid ordinary shares
which are held by an entity that Mr Xu controls.
Harris Technology Group Limited Annual Report 2019/20 | 12
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2020)
Howard Chen, Non-Executive Director
Mr Chen was appointed to the Board on 19 July 2016 as a Non-Executive Director.
Experience and expertise
Mr. Chen holds a Masters of Microelectronics degree from Griffith
University, and is a member of the Institution of Engineers Australia. Mr.
Chen has a strong background in and deep understanding of electrical
and IT products, with years of extensive experience in global product
sourcing, development, brand marketing and sales. Prior to the
completion of his Master’s degree, he worked as the system design
engineer in Quanta Computer (Shanghai), the global number one in
laptop and hardware manufacturing. Mr. Chen is also a graduate of
Jiliang University.
Mr. Chen is currently the managing director of Ultra Imagination
Technology Pty Ltd. The company owns mbeat, one of the most dynamic
and fast-growing lifestyle tech brands in Australia. mbeat holds a
heavyweight presence in the Australian and New Zealand national
retailer and online sectors, being retailed through the likes of Harvey
Norman, Officeworks, The Warehouse Group, Catchoftheday and Kogan,
and is currently breaking into the US market.
Other directorships held by
Director in the last 3 years
During the last three years, Mr Chen has not served as a director of any
other listed companies.
Special responsibilities
None.
Relevant interest in Harris
Technology Group securities as
at the date of this report
Mr Chen has a relevant interest in 4,168,968 fully paid ordinary shares in
Harris Technology Group Ltd which are held by an entity Mr Chen
controls and by Mr Chen personally.
Brett Crowley, Company Secretary
Mr Crowley was appointed as Company Secretary on December 2018.
Experience and expertise
Mr. Crowley is a practicing solicitor and a former Partner of Ernst &
Young in Hong Kong and Australia, and of KPMG in Hong Kong. Mr.
Crowley is an experienced chairman, finance director and company
secretary of ASX-listed companies, and is a former Senior Legal Member
of the NSW Civil and Administrative Tribunal. He has been HT8 Secretary
since December 2018.
Harris Technology Group Limited Annual Report 2019/20 | 13
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2020)
Directors’ Meeting
The number of meetings of the Board of Directors held during the financial year and the numbers
of meetings attended by each Director (while they were a Director) were as follows:
Director
Eligible to Attend
Number Attended
Mr. Andrew Plympton
Mr. Garrison Huang
Mr. Bob Xu
Mr. Howard Chen
8
8
8
8
8
8
8
8
Board Committees
Functions previously being undertaken by the Nomination and Remuneration Committee and the
Audit and Risk Management Committee are currently being performed by the Board as a whole. This
will continue to be the case until the Board determines otherwise.
Directors’ Interests in Shares and Options of the Group
As at the date of this report, the relevant interests of the Directors (and former Directors during the
year) in the shares and options of the Group were:
Director
Number of ordinary shares
Number of options (unlisted)
Mr. Andrew Plympton 1
Mr. Garrison Huang 2
Mr. Bob Xu 3
Mr. Howard Chen 4
660,000
83,644,992
10,305,570
4,168,968
nil
nil
nil
nil
1.
2.
3.
4.
The shares are held by Mr. Andrew J Plympton & Mrs. Kim P Plympton ATF Plympton Exec Super Fund A/C; Mr.
Plympton controls this entity.
The shares are held by Australian PC Accessories Pty Ltd ATF GWH A/C; Mr. Huang controls this entity.
The shares are held by Aza International (Aust) Pty Ltd ATF North City Family A/C; Mr. Xu controls this entity.
The shares are held by H & J Investment Pty Ltd ATF H & J Superannuation Fund which Mr. Chen controls; and by Mr.
Chen personally.
Harris Technology Group Limited Annual Report 2019/20 | 14
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2020)
Earnings Per Share
Earnings Per Share
Basic and diluted earnings per share
Cents
0.54
Dividends Paid, Recommended and Declared
No dividends were paid, declared or recommended since the start of the financial year ended 30
June 2020 (2019: nil).
OPERATING AND FINANCIAL REVIEW
Corporate Structure
Harris Technology Group Limited is a company limited by shares that is incorporated and domiciled
in Australia and listed on the Australian Securities Exchange (ASX). Harris Technology Group Limited
has prepared a consolidated financial report incorporating the entities that it controlled during the
financial year ended 30 June 2020. The Company’s subsidiary entities are set out in note 31 to the
consolidated financial statements.
Nature of operations and principal activities
The Group’s principal activities during the course of the financial year were in the areas of technology
distribution and online retailing. There was a significant change to the Group’s principal activities
during the year, which are detailed below in ‘significant changes in the state of affairs.
Employees
The Group has 18 employees, inclusive of casual and part-time staff as at 30 June 2020 (2019:
14). The Group does not have consulting agreements with any contractors as at 30 June 2020 (2019:
Nil).
Group Performance over the five-year period
Basic earnings/(loss) per share (cents)
0.54
(0.46)
(1.46)
(2.20)
(1.08)
2020
2019
2018
2017
2016
Harris Technology Group Limited Annual Report 2019/20 | 15
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2020)
Financial position
The Group had net liabilities of $3,892,395 as at 30 June 2020 (2019: $5,063,008 net liabilities). The
Group had trade and other receivables of $736,549 as at 30 June 2020 (2019: $347,965). The Group
had trade and other payables of $3,125,241 as at 30 June 2020 (2019: $2,068,926).
Cash flows
The Group generated net cash inflows of $162,768 during the year ended 30 June 2020 (2019: net
cash outflows $775,090). Cash inflows included receipts from customers of $15,100,485, and
proceeds from borrowings of $2,043,490. Cash outflows included $15,849,021 from payments to
suppliers, $13,525 from interest paid, $1,071,866 from repayments of borrowings and $46,795 from
repayment of lease liabilities for the year ended 30 June 2020.
There was a cash balance at 30 June 2020 of $1,171,184 (2019: $1,008,416).
Risk Management
The Board takes a proactive approach to risk management. The Board is responsible for ensuring
that risks, and also opportunities, are identified on a timely basis and that the Company’s objectives
and activities are aligned with the risks and opportunities identified by the Board. In FY16 the
Company established an Audit and Risk Management Committee to oversee this audit and risk
management function of the Board. Following changes to the composition of the Board, the Audit
and Risk Management Committee has been suspended and its functions carried out by the Board as
a whole.
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the group during the financial year.
Significant events after the balance date
The group completed a capital raise of $3.5m through a private placement on the 11 August 2020 to
existing shareholders, sophisticated and professional investors.
Mr. Bob Xu resigned as a non-executive director of the group effective on the 2 September 2020.
On the 4 September 2020, the group completed a capital raise through a share purchase plan
resulting in 17.5m shares to be issued at 8c per share to raise a maximum of $1.4m.
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has been financially
positive for the group up to 30 June 2020, it is not practicable to estimate the potential impact,
positive or negative, after the reporting date. The situation is rapidly developing and is dependent
on measures imposed by the Australian Government and other countries, such as maintaining social
distancing requirements, quarantine, travel restrictions and any economic stimulus that may be
provided.
No other matters or circumstances has arisen since 30 June 2020 that has significantly affected, or
may significantly affect the group ’s operations, the results of those operations, or the group ’s state
of affairs in future financial years.
Harris Technology Group Limited Annual Report 2019/20 | 16
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2020)
Remuneration Report (Audited)
This Remuneration Report for the year ended 30 June 2020 outlines the remuneration arrangements
of the Company and the Group in accordance with the requirements of the Corporations Act 2001
(the Act) and its regulations. This information has been audited as required by section 308(3C) of the
Act.
At the Company’s 2016 Annual General Meeting, shareholders approved Harris Technology Group’s
Long-Term Incentive Plan (LTIP).
The remuneration report is presented under the following sections:
1.
2.
3.
4.
5.
6.
7.
Key Management Personnel (KMP) disclosed in this report
Remuneration Governance
Executive remuneration arrangements
Non-executive director remuneration arrangements
Additional information
Details of Key Management Personnel Remuneration
Additional disclosures relating to options and shares
1.
Key Management Personnel (KMP) disclosed in this report
Key management personnel are those persons having authority and responsibility for planning,
directing and controlling activities of the Group, including any Director of the Group.
Key Management Personnel during the financial year are as follows:
(i) Executive directors
Mr Garrison Huang
Director (executive)
(ii) Non-executive directors (NEDs)
Mr Andrew Plympton
Chairman (non-executive)
Mr Bob Xu
Mr Howard Chen
Director (non-executive)
Director (non-executive)
Harris Technology Group Limited Annual Report 2019/20 | 17
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2020)
Remuneration Report (Cont.) (Audited)
2.
Remuneration Governance
Remuneration Policy
The performance of the Group depends upon the quality of its Directors and executives. To be
successful, the Group must attract, motivate and retain highly skilled Directors and executives. To
this end, the Group seeks to provide competitive rewards to attract high calibre executives. The
Nomination and Remuneration Committee assesses the appropriateness of the nature and amount
of remuneration of Non-Executive Directors, the Chief Executive Officer and other Key Management
Personnel on a periodic basis. In doing so, the Nomination and Remuneration Committee has
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. A
recommendation of the Nomination and Remuneration Committee is presented to the Board of
Directors for adoption and approval. Following changes to the structure of the Board, the
Nomination and Remuneration Committee has been suspended and its functions are currently being
performed by the entire Board.
Hedging of equity awards
The Group has a policy in place to prohibit Directors and executives from entering into equity
hedging arrangements to protect the value of unvested options.
Remuneration structure
In accordance with best practice corporate governance, the structure of non-executive and executive
remuneration is separate and distinct.
3.
Executive remuneration arrangements
The Group aims to reward executives with a level and mix of remuneration commensurate with their
position and responsibilities within the Group so as to:
Reward executives for the Group and individual performance;
Align the interests of executives with those of shareholders;
Link reward with the strategic goals and performance of the Group; and
Ensure total remuneration is competitive by market standards.
Currently remuneration is paid in the form of salaries & fees, superannuation contributions, short
term performance incentives and shares based payments where applicable.
Harris Technology Group Limited Annual Report 2019/20 | 18
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2020)
Remuneration Report (Cont.) (Audited)
4.
Non-Executive Director remuneration arrangements
The Group’s constitution provides that the total amount of remuneration provided to all non-
executive Directors must not exceed $500,000.
5.
Additional Information
The earnings of the group for the five years to 30 June 2020 are summarised below:
2020
$’000
2019
$’000
2018
$’000
2017
$’000
2016
$’000
Total sales revenue
13,639
20,031
45,657
51,069
17,790
Less: Discontinued operations
-
11,028
34,144
-
-
Sales revenue
13,639
9,003
11,513
51,069
17,790
EBITDA*
EBIT
Profit / (loss) after income tax
1,330
1,272
1,010
(646)
(717)
(732)
(530)
(443)
(567)
782
(5,967)
(2,466)
(6,373)
(3,061)
(6,510)
*EBITDA noted above includes the impact of AASB 16 in 2020.
The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:
2020
2019
2018
2017
2016
Share price at financial year end ($)
0.035
0.012
0.038
0.08
0.10
Total dividends declared (cents per
share)
Basic earnings per share (cents per
share)
-
-
-
-
-
0.54
(0.46)
(1.46)
(2.20)
(1.08)
Harris Technology Group Limited Annual Report 2019/20 | 19
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2020)
Remuneration Report (Cont.) (Audited)
6.
Details of Key Management Personnel Remuneration
Details of remuneration received by key management personnel of the Group for the current
financial year are set out in the following table:
Short-term benefits
Post-
employment
Security based
payments
Total
$
Performance
related %
Executive
Directors
Salary &
fees
$
Cash
bonus
$
Superannuation
$
Options
$
Mr Garrison
Huang
2020
2019
-
13,963
Non-
Executive
Directors
Mr Bob Xu 1
2020
-
2019
43,918
Mr Andrew
Plympton
Mr Howard
Chen
2020
2019
2020
2019
28,000
32,000
-
-
Other Key
Management
Personnel
Mr Brett
Crowley 2
2020
2019
21,000
9,000
Total KMP
2020
2019
49,000
98,881
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1.
2.
Bob Xu Re-appointed Non-Executive Director in December 2018.
Brett Crowley appointed Company Secretary in December 2018
-
-
-
-
-
-
-
-
-
-
-
-
Shares
$
20,000
-
20,000
-
6,000
-
20,000
30,000
20,000
13,963
20,000
43,918
34,000
32,000
20,000
30,000
49,800
-
40,800
9,000
85,800
30,000
134,800
128,881
-
-
-
-
-
-
-
-
-
-
-
Harris Technology Group Limited Annual Report 2019/20 | 20
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2020)
Remuneration Report (Cont.) (Audited)
7.
a.
Additional disclosures relating to options and shares
Shareholdings of key management personnel
Acquired
during the
year pre-
consolidation
Post-
consolidat
ion
balance
Balance at
1 July 2019
Acquired/(dis
-posed)
during the
year post-
consolidation
Other
movements
Balance at
30 June
2020
No.
No.
No.
No.
No.
No.
Executive Directors
Mr Garrison Huang 1
80,110,489
Non-Executive
Directors
Mr Andrew Plympton 3
160,000
Mr Howard Chen 4
2,502,301
Mr Bob Xu 2
8,638,903
Other Key
Management
Personnel
Mr Brett Crowley 5
-
-
-
-
-
-
-
-
-
-
-
3,534,503
500,000
1,666,667
1,666,667
1,160,000
-
-
-
-
-
83,644,992
660,000
4,168,968
10,305,570
1,160,000
1. The shares are held by Australian PC Accessories Pty Ltd ATF GWH A/C; Mr Huang controls this entity.
2. The shares are held by Aza International (Aud) Pty Ltd ; Mr Xu controls this entity.
3. The shares are held by Mr Andrew J Plympton & Mrs Kim P Plympton ; Mr Plympton
controls this entity.
4. The shares are held by Mr Chen personally and by H & J Investment Pty Ltd ; Mr Chen controls
this entity.
5. The share are held by Mr Crowley personally
Harris Technology Group Limited Annual Report 2019/20 | 21
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2020)
Remuneration Report (Cont.) (Audited)
b.
Share-based compensation
Issue of shares
Details of shares issued to directors and other key management personnel as part of compensation
during the year ended 30 June 2020 are set out below:
Executive Directors
Mr Garrison Huang
Non-Executive Directors
Mr Andrew Plympton
Mr Howard Chen
Mr Bob Xu
Other Key Management Personnel
Date
Shares
Issue price
$
25/11/19
1,666,667
0.012
20,000
25/11/19
500,000
25/11/19
1,666,667
25/11/19
1,666,667
0.012
0.012
0.012
6,000
20,000
20,000
Mr Brett Crowley
24/6/20
660,000
0.030
19,800
Performance rights holdings of key management personnel
There were no performance rights issued to directors and other key management personnel as part
of compensation during the year ended 30 June 2020.
Options holdings of key management personnel
There were no options issued or exercised by directors and other key management personnel as part
of compensation during the year ended 30 June 2020.
c.
Loans from key management personnel and their related parties
Details of loans from directors of Harris Technology Group Limited and other key management
personnel of the group, including their close family members and entities related to them, are set
out below:
($)
2020
2019
Name of director
Entity/Shareholder
Garrison Huang
Australian PC Accessories Pty Ltd
4,764,212
3,726,552
4,764,212
3,726,552
The payments of principal and interest on all directors’ loans have been deferred for a period through
to the 1st July 2021. The interest rate charged is 5.5% for loans of $3,090,749 and 12% for the loan of
$300,000, however Garrison Huang provided the Group with a debt forgiveness of $157,560 in FY20
for unpaid interest on these loans. In addition, there are interest free loans to the value of $1,373,463.
Harris Technology Group Limited Annual Report 2019/20 | 22
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2020)
Remuneration Report (Cont.) (Audited)
d. Other transactions and balances with key management personnel and their related parties
All transactions were made on normal commercial terms and conditions and at market rates unless
otherwise stated.
Purchases from entities controlled by KMP and their related parties
Rental of office and warehouse buildings 1
Inventories 2
Interest expense on directors’ loans 3
Disposal of motor vehicle 4
Directors’ salaries
Gain on debt forgiveness 3
Total related party purchases
Sales to entities controlled by KMP and their related parties
Inventories 2
Total related party sales
2020
$
2019
$
60,200
22,017
157,560
55,000
28,000
250,200
188,317
-
-
89,881
(157,560)
(165,685)
165,217
362,713
9,583
9,583
284,981
284,981
1. Rental to Garrison Huang and his controlling entity was $60,000 in FY20 (2019: $250,200); Rental to Bob
2.
Xu’s controlling entity was Nil in FY20 (2019: nil).
Inventories purchased from Bob Xu’s controlling entity were $4,913 in FY20 (2019: $80,290); Inventories
purchased from Howard Chen’s controlling entity were $17,104 in FY20 (2019: $108,026); Inventories sold to
Bob Xu’s Controlling entity in FY20 were $9,583 (FY19: $17,512), Inventories sold to Howard Chen’s
controlling entity in FY20 were NIL (FY19: $49,162).
3. The Group accrued $157,560 interest expense in FY20 for loans from Garrison Huang. Garrison Huang
provided the Group with a debt forgiveness of $157,560 in FY20 for unpaid interest on loans.
4. Motor vehicle was disposed of to Garrison Huang in FY20 for the amount of $55,000.
Harris Technology Group Limited Annual Report 2019/20 | 23
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2020)
Remuneration Report (Cont.) (Audited)
($)
2020
2019
Current payables to entities controlled by KMP
Trade payables – Inventories
10,687
-
Current receivables from entities controlled by KMP
Trade receivables – Inventories
9,583
4,280
For the period up to the 30 June 2020, the following arm’s length transactions took place:
APCA purchases inventories from AZA International Pty Ltd for its ordinary business activities at arm’s
length.
Harris Technology Pty Ltd purchases inventories from MOKI International whose director is Howard
Chen for its ordinary business activities at arm’s length.
This concludes the remuneration report, which has been audited.
Environmental regulation
The Group’s operations are not subject to any significant Commonwealth or State environmental
regulations or laws.
Shares issued during the year
5,500,0001 shares were issued in lieu of a Director's accrued and outstanding fees of $660,000.
660,000 shares were issued in lieu of Consultant’s accrued and outstanding fees of $19,800.
Share under options
Unissued ordinary shares of the Company under option at the date of this report are outlined in note
34 of the financial statements.
Share under performance rights
Unissued ordinary shares of the Company under performance rights at the date of this report are
outlined in note 34 of the financial statements.
Share issued on the exercise of options
There were no ordinary shares of the Company issued on the exercise of options during the year
ended 30 June 2020 and up to the date of this report.
Harris Technology Group Limited Annual Report 2019/20 | 24
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2020)
Share issued on the exercise of performance rights
There were no ordinary shares of the Company issued on the exercise of performance rights during
the year ended 30 June 2020 and up to the date of this report.
Indemnity and insurance of officers
The company has indemnified the directors and executives of the company for costs incurred, in their
capacity as a director or executive, for which they may be held personally liable, except where there
is a lack of good faith.
During the financial year, the company has not paid a premium in respect of a contract to insure the
directors and executives of the company against a liability to the extent permitted by the
Corporations Act 2001.
Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, RSM Australia
Partners, as part of the terms of its audit engagement agreement against claims by third parties
arising from the audit (for an unspecified amount). No payment has been made to indemnify RSM
Australia Partners during or since the financial year.
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
company is a party for the purpose of taking responsibility on behalf of the company for all or part
of those proceedings.
Tax consolidation
Harris Technology Group and its 100% owned subsidiaries are part of an income tax consolidated
group.
Officers of the Company who are former partner of RSM Australia Partners
There are no officers of the Company who are former partners of RSM Australia Partners.
Harris Technology Group Limited Annual Report 2019/20 | 25
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2020)
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the
financial year by the auditor are outlined in note 30 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the
auditor (or by another person or firm on the auditor's 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 as disclosed in note 30 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 objectivity of the auditor; 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 auditor's own work, acting in a management or decision-
making capacity for the company, acting as advocate for the company or jointly
sharing economic risks and 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 immediately after this directors' report.
Signed in accordance with a resolution of the Directors
Andrew Plympton
Non-Executive Chairman
Melbourne, 30 September 2020
Harris Technology Group Limited Annual Report 2019/20 | 26
RSM Australia Partners
Level 21, 55 Collins Street Melbourne VIC 3000
PO Box 248 Collins Street West VIC 8007
T +61 (0) 3 9286 8000
F +61 (0) 3 9286 8199
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Harris Technology Group Limited for the year ended 30 June
2020, I declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
B Y CHAN
Partner
Dated: 30 September 2020
Melbourne, Victoria
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
Harris Technology Group Limited Annual Report 2019/20 | 27
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the
RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
Corporate Governance Statement
The Company’s Directors and management are committed to conducting the Group’s business in an
ethical manner and in accordance with the highest standards of corporate governance. The Company
has adopted and has substantially complied with the ASX Corporate Governance Principles and
Recommendations (Third Edition) (Recommendations) to the extent appropriate to the size and
nature of the Group’s operations.
The Company has prepared a statement which sets out the corporate governance practices that were
in operation throughout the financial year for the Company, identifies any recommendations that
have not been followed, and provides reasons for not following such recommendations (Corporate
Governance Statement).
In accordance with ASX Listing Rules 4.10.3 and 4.7.4, the Corporate Governance Statement will be
available for review on Harris Technology Group’s website (www.ht8.com.au), and will be lodged
together with an Appendix 4G with ASX at the same time that this Annual Report is lodged with ASX.
The Appendix 4G will identify each Recommendation that needs to be reported against by Harris
Technology Group, and will provide shareholders with information as to where relevant governance
disclosures can be found.
The Company’s corporate governance policies and charters and policies are all available on Harris
Technology Group’s website (www.ht8.com.au).
Harris Technology Group Limited Annual Report 2019/20 | 28
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
(FOR THE YEAR ENDED 30 JUNE 2020)
($)
Revenue
Sales revenue
Direct costs
Gross profit
Other income
Distribution expenses
Marketing expenses
Transaction expenses
Employee contractor and director expenses
Occupancy costs
Technology expenses
Holding company expenses
Depreciation and amortisation expenses
Impairment expense
Other expenses
Finance costs
Exchange gain / (loss)
Profit /(loss) before income tax
Income tax benefit / (expense)
Profit / (loss) from continuing operations
Discontinued operations
Notes
2020
2019
7
7
8
8
8
8
9
5
13,638,567
9,003,268
(10,968,591)
(8,007,879)
2,669,976
676,097
(184,124)
(173,997)
(48,201)
(925,104)
(18,404)
(61,903)
(291,525)
(58,056)
(298,813)
(18,311)
(262,771)
4,659
995,389
169,346
(120,808)
(106,217)
(87,798)
(858,094)
(163,790)
(113,505)
(194,384)
(20,588)
(173,537)
(41,247)
(14,741)
(2,062)
1,009,522
(732,036)
-
-
1,009,522
(732,036)
-
(1,470,613)
Total comprehensive Profit / (loss) for the period
1,009,522
(2,202,649)
Earnings per share from profit / (loss)
- Basic earnings / (loss) per share
- Diluted earnings / (loss) per share
10
10
0.54
0.54
(1.40)
(1.40)
Harris Technology Group Limited Annual Report 2019/20 | 29
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(AS AT 30 JUNE 2020)
($)
Notes
2020
2019
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments and deposits
Total Current Assets
Non-current Assets
Property, plant and equipment
Right of use asset
Intangible assets
Total Non-current Assets
Total Assets
Current Liabilities
Trade and other payables
Financial liability
Deferred revenue
Lease Liability
Employee benefit liabilities
Total Current Liabilities
Non-current Liabilities
Financial liability
Lease liability
Employee benefit liabilities
Total Non-current Liabilities
Total Liabilities
11
12
13
14
16
17
15
18
19
20
21
22
19
21
22
1,171,184
736,549
3,322,985
36,800
5,267,518
-
198,524
-
198,524
5,466,042
3,125,241
867,727
318,369
50,594
66,022
4,427,953
4,764,212
155,279
11,993
4,931,484
9,359,438
1,008,416
347,965
405,123
34,727
1,796,231
109,744
-
291,867
401,611
2,197,842
2,068,926
1,408,472
-
-
53,578
3,530,976
3,726,553
-
3,321
3,729,874
7,260,850
Net Assets / (Net Deficiency of Assets)
(3,893,395)
(5,063,008)
Equity
Contributed equity
Accumulated losses
Reserves
Total Equity
23
25
24
7,803,124
7,654,915
(11,707,951)
(12,717,472)
11,432
-
(3,893,395)
(5,063,008)
Harris Technology Group Limited Annual Report 2019/20 | 30
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(FOR THE YEAR ENDED 30 JUNE 2020)
($)
Share Capital
At 1 July 2019
7,654,464
Profit for the period
Other comprehensive
income
Total comprehensive
income
Transactions with
owners in their capacity
as owners
-
-
-
Contributions of equity
148,660
Share based payment
-
At 30 June 2020
7,803,124
($)
Share Capital
At 1 July 2018
7,594,915
Loss for the period
Other comprehensive
income
Total comprehensive
income
Transactions with
owners in their capacity
as owners
Share based payment
At 30 June 2019
-
-
-
59,549
7,654,464
Reserves
Accumulated
Losses
Total Equity
-
-
-
-
-
11,432
11,432
(12,717,472)
(5,063,008)
1,009,522
1,009,522
-
-
1,009,522
1,009,522
-
-
148,660
11,432
(11,707,950)
(3,893,395)
Reserves
Accumulated
Losses
Total Equity
-
-
-
-
-
-
(10,514,823)
(2,919,808)
(2,202,649)
(2,202,649)
-
-
(2,202,649)
(2,202,649)
-
59,549
(12,717,472)
(5,063,008)
Harris Technology Group Limited Annual Report 2019/20 | 31
CONSOLIDATED STATEMENT OF CASH FLOWS
(FOR THE YEAR ENDED 30 JUNE 2020)
($)
Notes
2020
2019
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest paid
15,100,485
24,034,412
(15,849,021)
(24,923,562)
(13,525)
-
Net cash flows (used in) / provided by operating activities
11
(762,061)
(889,150)
Cash flows from investing activities
Disposal of business, net of cash consideration
Payments for property, plant and equipment
Net cash flows (used in) / provided by investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Net cash flows (used in) / provided by financing activities
-
-
-
3,416,084
17,000
3,443,084
2,043,490
-
(1,071,866)
(3,319,024)
(46,795)
-
924,829
(3,319,024)
Net increase / (decrease) in cash and cash equivalents
162,768
(775,090)
Cash and cash equivalents at the beginning of the financial year
1,008,416
1,783,506
Cash and cash equivalents at the end of the financial year
11
1,171,184
1,008,416
Harris Technology Group Limited Annual Report 2019/20 | 32
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
1.
CORPORATE INFORMATION
The consolidated financial report of Harris Technology Group Limited (the Company or Harris
Technology Group) and controlled entities (the Group) for the year ended 30 June 2020 was
authorised for issue in accordance with a resolution of the Directors on 29 September 2020.
Harris Technology Group is a company limited by shares incorporated in Australia whose shares are
publicly traded on the Australian Securities Exchange.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise
stated.
New or amended Accounting Standards and Interpretations adopted
The group has adopted all of the new or amended Accounting Standards and Interpretations issued
by the Australian Accounting Standard Board (“AASB”) that are mandatory for the current reporting
period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not
been early adopted.
The following Accounting Standards and Interpretations are most relevant to the group :
AASB 16 Leases
The group has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and for
lessees eliminates the classifications of operating leases and finance leases. Except for short-term
leases and leases of low-value assets, right-of-use assets and corresponding lease liabilities are
recognised in the statement of financial position. Straight-line operating lease expense recognition
is replaced with a depreciation charge for the right-of-use assets (included in operating costs) and
an interest expense on the recognised lease liabilities (included in finance costs). In the earlier periods
of the lease, the expenses associated with the lease under AASB 16 will be higher when compared
to lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and
Amortisation) results improve as the operating expense is now replaced by interest expense and
depreciation in profit or loss. For classification within the statement of cash flows, the interest portion
is disclosed in operating activities and the principal portion of the lease payments are separately
disclosed in financing activities. For lessor accounting, the standard does not substantially change
how a lessor accounts for leases.
Harris Technology Group Limited Annual Report 2019/20 | 33
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Impact of adoption
AASB 16 was adopted using the modified retrospective approach and as such the comparatives have
not been restated. The impact of adoption on opening retained earnings as at 1 July 2019 was as
follows:
Operating lease commitments as at 1 July 2019 (AASB 117)
Finance lease commitments as at 1 July 2019 (AASB 117)
Operating lease commitments further term option reasonably certain to be exercised
(AASB 16)
Operating lease commitments discounted based on the weighted average incremental
borrowing rate of 6% (AASB 16)
Short-term leases not recognised as a right-of-use asset (AASB 16)
Low-value leases not recognised as a right-of-use asset (AASB 16)
Right-of-use asset (AASB 16)
Lease liabilities – current (AASB 16)
Lease liabilities – non-current (AASB 16)
Impact on opening retained earnings as at 1 July 2019
1 July 2019
$
181,500
-
108,255
(37,088)
-
-
252,667
(46,795)
(205,872)
-
(b)
Statement of compliance
The financial report complies with Australian Accounting Standards as issued by the Australian
Accounting Standards Board and International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
Harris Technology Group Limited Annual Report 2019/20 | 34
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(c)
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 discharge of liabilities in the
normal course of business. As disclosed in the financial statements, the group had net cash outflows
from operating activities of $762,061 for the year ended 30 June 2020. As at that date the group
had net liabilities of $3,892,395.
The Directors believe that it is reasonably foreseeable that the group will continue as a going concern
and that it is appropriate to adopt the going concern basis in the preparation of the financial report
after consideration of the following factors:
The group has prepared budgets and cash flow forecasts for the next 12 months from the
date of this report which indicate the group will have a positive cash balance during this
period;
Subsequent to year end, the group raised funds of $4.9m through a private placement of
$3.5m and a capital raise from a share purchase plan of $1.4m to support its business plan;
The Directors with loans to the group , equating to $4,764,212 of debt as at 30 June 2020,
have irrevocably deferred monthly payments of principal and interest on loans for a period
through to 1 July 2021 , or sooner if the group has the capacity to repay these loans without
impacting the ongoing viability of the group ; and
The Directors are negotiating with an external loan holder to extend the repayment terms of
a $867,727 loan, as disclosed in Note 19 Financial Liability, and are confident that the loan
extension will be successful.
Harris Technology Group Limited Annual Report 2019/20 | 35
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(d)
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group and its
subsidiaries as at 30 June 2020. Control is achieved when the Group is exposed, or has rights, to
variable returns from its involvement with the investee and has the ability to affect those returns
through its power over the investee. Specifically, the Group controls an investee if and only if the
Group has:
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant
activities of the investee);
Exposure, or rights, to variable returns from its involvement with the investee; and
The ability to use its power over the investee to affect its returns
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of control. Consolidation of a subsidiary
begins when the Group obtains control over the subsidiary and ceases when the Group loses control
of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of
during the year are included in the statement of comprehensive income from the date the Group
gains control until the date the Group ceases to control the subsidiary.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with the Group’s accounting policies. All intra-group assets and
liabilities, equity, income, expenses and cash flows relating to transactions between members of the
Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an
equity transaction. If the Group loses control over a subsidiary, it:
De-recognises the assets (including goodwill) and liabilities of the subsidiary;
De-recognises the carrying amount of any non-controlling interests;
De-recognises the cumulative translation differences recorded in equity;
Recognises the fair value of the consideration received;
Recognises the fair value of any investment retained;
Recognises any surplus or deficit in profit or loss; and
Reclassifies the parent’s share of components previously recognised in OCI to profit or loss
or retained earnings, as appropriate, as would be required if the Group had directly disposed
of the related assets or liabilities
Harris Technology Group Limited Annual Report 2019/20 | 36
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(e)
Revenue recognition
The group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the group is expected
to be entitled in exchange for transferring goods or services to a customer. For each contract with a
customer, the group: identifies the contract with a customer; identifies the performance obligations
in the contract; determines the transaction price which takes into account estimates of variable
consideration and the time value of money; allocates the transaction price to the separate
performance obligations on the basis of the relative stand-alone selling price of each distinct good
or service to be delivered; and recognises revenue when or as each performance obligation is
satisfied in a manner that depicts the transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the
customer such as discounts, rebates and refunds, any potential bonuses receivable from the
customer and any other contingent events. Such estimates are determined using either the 'expected
value' or 'most likely amount' method. The measurement of variable consideration is subject to a
constraining principle whereby revenue will only be recognised to the extent that it is highly probable
that a significant reversal in the amount of cumulative revenue recognised will not occur. The
measurement constraint continues until the uncertainty associated with the variable consideration is
subsequently resolved. Amounts received that are subject to the constraining principle are
recognised as a refund liability.
Sale of goods
Revenue from the sale of goods is recognised at the point in time when the customer obtains control
of the goods, which is generally at the time of delivery.
Rendering of services
Revenue from a contract to provide services is recognised over time as the services are rendered
based on either a fixed price or an hourly rate.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a
method of calculating the amortised cost of a financial asset and allocating the interest income over
the relevant period using the effective interest rate, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to the net carrying amount of the
financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Harris Technology Group Limited Annual Report 2019/20 | 37
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
2.
(f)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Discontinued operations
A discontinued operation is a component of the group that has been disposed of or is classified as
held for sale and that represents a separate major line of business or geographical area of operations,
is part of a single co-ordinated plan to dispose of such a 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 statement of profit or loss and other comprehensive income.
(g)
Income tax and other taxes
Current income tax expense is the tax payable on the current year’s taxable income. This is based on
the applicable income tax rate adjusted by changes in deferred tax assets and liabilities.
Deferred tax assets and liabilities are recognised for temporary differences between the tax bases of
assets and liabilities and their carrying amounts in the financial statements. No deferred tax asset or
liability is recognised in relation to temporary differences arising from the initial recognition of an
asset or a liability if they arose in a transaction, other than a business combination, that at the time
of the transaction did not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for temporary differences and unused tax losses only when it is
probable that future taxable amounts will be available to utilise those temporary differences and
losses.
Current and deferred tax balances attributable to amounts recognised directly in equity are also
recognised directly in equity.
Tax consolidation
Harris Technology Group Limited and its wholly-owned subsidiaries have formed an income tax
consolidated group under tax consolidation legislation.
The head entity, Harris Technology Group Limited and the controlled entities in the tax consolidated
group continue to account for their own current and deferred tax amounts. The Group has applied
the Group allocation approach in determining the appropriate amount of current taxes and deferred
taxes to allocate to members of the tax consolidated group.
In addition to its own current and deferred tax amounts, Harris Technology Group Limited also
recognizes the current tax liabilities (or assets) and the deferred tax assets arising from unused tax
losses and unused tax credits assumed from controlled entities in the tax consolidated group.
Harris Technology Group Limited Annual Report 2019/20 | 38
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(g)
Income tax and other taxes (Cont.)
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are
recognised as amounts receivable from or payable to other entities in the Group.
Any difference between the amounts assumed and amounts receivable or payable under the tax
funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax
consolidated entities.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
When the GST incurred on a purchase of goods and services is not recoverable from the
taxation authority, in which case the GST is recognised as part of the cost of acquisition of
the asset or as part of the expense item as applicable.
Receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as
part of receivables or payables in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST
component of cash flows arising from investing and financing activities, which is recoverable
from, or payable to, the taxation authority is classified as part of operating cash flows.
(h)
Cash and cash equivalents
Cash and cash equivalents include cash on hand and at banks, short-term deposits with an original
maturity of three months or less held at call with financial institutions and bank overdrafts. Bank
overdrafts are shown within short-term borrowings in current liabilities on the statement of financial
position.
Cash and cash equivalents also include amounts collected in respect of online sales during the period
by agents on behalf of the Company where clear title of ownership exists.
(i)
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost
using the effective interest method, less any allowance for expected credit losses. Trade receivables
are generally due for settlement within 30 days.
The group has applied the simplified approach to measuring expected credit losses, which uses a
lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been
grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Harris Technology Group Limited Annual Report 2019/20 | 39
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
2.
(j)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Business combinations
The Group accounts for its business combinations using the acquisition method. The cost of an
acquisition is measured as the aggregate of the consideration transferred measured at acquisition
date fair value. Acquisition-related costs are expensed as incurred and included in administrative
expenses.
The Group recognises identifiable assets acquired and liabilities assumed in a business combination
regardless of whether they have been previously recognised in the acquiree’s financial statements prior
to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition-
date fair values.
(k)
Intangibles assets other than goodwill
Intangible assets acquired separately are initially measured at cost. The cost of intangible assets
acquired in a business combination is at its fair value as at the date of acquisition. Following initial
recognition, intangible assets are carried at cost less any accumulated amortisation and any
accumulated impairment losses. Internally generated intangibles, excluding capitalised development
costs, are not capitalised and the related expenditure is reflected profit or loss in the period which
the expenditure is incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite.
Intangible assets with finite lives are amortised over their useful life and tested for impairment
whenever there is an indication that the intangible asset may be impaired. The amortisation period
and the amortisation method for an intangible asset with a finite useful life is reviewed at least at
each financial year end. Changes in the expected useful life or the expected pattern of consumption
of future economic benefits embodied in the asset are accounted for prospectively by changing the
amortisation period or method, as appropriate, which is a change in accounting estimate. The
amortisation expense on intangible assets with finite lives is recognised in profit or loss in the
expense category consistent with the function of the intangible asset. The estimated useful life of
each class of intangible asset is as follows:
Software Development
2 years
Harris Technology Group Limited Annual Report 2019/20 | 40
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(k)
Intangibles assets other than goodwill (Cont.)
Impairment of other intangible assets
Other intangible assets that have an indefinite useful life are not subject to amortisation and are
tested annually for impairment, or more frequently if events or changes in circumstances indicate
that they might be impaired. Other intangible assets are reviewed 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.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The
value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-
tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that
do not have independent cash flows are grouped together to form a cash-generating unit.
(l)
Property, plant and equipment
Property, plant and equipment is stated at cost, net of accumulated depreciation and / or any
accumulated impairment losses, if any.
The carrying amount of plant and equipment is reviewed for impairment annually by the Directors
for events or changes in circumstances that indicate the carrying value may not be recoverable. If
any such indication exists and where the carrying value exceeds the estimated recoverable amount,
the assets are written down to their recoverable amount.
Depreciation
The depreciable amounts of fixed assets are depreciated on a straight-line basis over their estimated
useful lives of the assets as follows:
Motor vehicles
5 - 6 years
In the case of leasehold property, expected useful lives are determined by reference to comparable
owned assets or over the term of the lease, if shorter.
Harris Technology Group Limited Annual Report 2019/20 | 41
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(m)
Impairment of property, plant, equipment, goodwill and intangible assets
The Group assesses at each reporting date whether there is an indication that an asset may be
impaired. The assessment will include the consideration of external and internal sources of
information. If such an indication exists, an impairment test is carried out on the asset by comparing
the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell or
value in use, to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable
amount is expensed to the statement of comprehensive income, unless the asset is carried at
revalued amount in which case the impairment loss is treated as a revaluation decrease.
(n)
Right-of-use-assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset 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 commencement date net of any lease incentives received,
any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of
costs expected to be incurred for dismantling and removing the underlying 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 group expects to obtain
ownership of the leased asset at the end of the lease term, the depreciation is over its 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.
(o)
Inventories
Inventories, consisting of products available for sale, are primarily accounted for using the latest
purchase price method, and are valued at the lower of cost or net realisable value. This valuation
requires the group to make judgements, based on currently available information, about the likely
method of disposition and expected recoverable values of each disposition category.
Net realisable value is the estimated selling price in the ordinary course of business, less the
estimated cost necessary to make the sale.
All inventories carried are finished goods, ready for sale.
Harris Technology Group Limited Annual Report 2019/20 | 42
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(p)
Financial instruments
Classification
The Group classifies its financial instruments in the following categories: loans and receivables and
financial liabilities. The classification of investments depends on the purpose for which the
investments were acquired. Management determines the classification of its investments at initial
recognition.
Financial liabilities
The Group’s financial liabilities include trade payables, other payables and loans from third parties
including inter-company balances and loans from or other amounts due to director-related entities.
The Group’s financial liabilities are recognised at fair value and carried at amortised cost, comprising
original debt less principal payments and amortisation.
(q)
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of
the financial period and which are unpaid. Due to their short term nature they are measured at
amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30-
60 days of recognition.
(r)
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 group's 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 expected
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.
Harris Technology Group Limited Annual Report 2019/20 | 43
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
2.
(s)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Provisions
Provisions are measured at the estimated expenditure required to settle the present obligation,
based on the most reliable evidence available at the reporting date, including the risks and
uncertainties associated with the present obligation. Where there are a number of similar obligations,
the likelihood that an outflow will be required at settlement is determined by considering the class
of obligations as a whole.
(t)
Foreign Currencies
Functional and presentation currency
The financial statements of each group entity are measured using its functional currency, which is
the currency of the primary economic environment in which that entity operates. The consolidated
financial statements are presented in Australian dollars, as this is the parent entity’s functional and
presentation currency.
Transactions and balances
Transactions in foreign currencies of entities within the group are translated into functional currency
at the rate of exchange ruling at the date of the transaction.
Foreign currency monetary items that are outstanding at the reporting date (other than monetary
items arising under foreign currency contracts where the exchange rate for that monetary item is
fixed in the contract) are translated using the spot rate at the end of the financial year.
Resulting exchange differences arising on settlement or re-statement are recognised as revenues
and expenses for the financial year.
Group companies
The financial statements of foreign operations whose functional currency is different from the
group’s presentation currency are translated as follows:
Assets and liabilities are translated at year-end exchange rates prevailing at that reporting
date;
Income and expenses are translated at average exchange rates for the period; and
All resulting exchange differences are recognised as a separate component of equity.
Exchange differences arising on translation of foreign operations are transferred directly to the
group’s foreign currency translation reserve as a separate component of equity in the reserve
account.
Harris Technology Group Limited Annual Report 2019/20 | 44
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(u)
Employee benefits
Liabilities for wages and salaries, including non-monetary benefits, and annual leave that are
expected to be settled within 12 months of the reporting date are recognised in respect of
employees’ services up to the reporting date. They are measured at the amounts expected to be
paid when the liabilities are settled. Expenses for non-accumulating sick leave are recognised when
the leave is taken and are measured at the rates paid or payable. All other short-term employee
benefit obligations are presented as payables.
The liability for long service leave is recognised and measured as the present value of expected future
payments to be made in respect of services provided by employees up to the reporting date using
the projected unit credit method. Consideration is given to expect future wage and salary levels,
experience of employee departures, and periods of service. Expected future payments are discounted
using market yields at the reporting date on national government bonds with terms to maturity and
currencies that match, as closely as possible, the estimated future cash outflows.
Contributions to defined contribution superannuation plans are expensed in the period in which they
are incurred.
(v)
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.
(w)
Comparatives
Where necessary, comparative information has been reclassified and repositioned for consistency
with current year disclosures.
(x)
Share based payments
Equity settled transactions
The Group provides benefits to the directors and senior executives in the form of share
options/performance rights under Harris Technology Group’s Long Term Incentive Plan. These are
equity settled transactions under Australian Accounting Standards.
The cost of these equity-settled transactions with directors and senior executives is measured by
reference to the fair value of the equity instruments at the date when the grant is made using an
appropriate valuation model. The cost is recognised together with a corresponding increase in other
capital reserve in equity over the period in which the performance and / or service conditions are
fulfilled in employee benefits expense. The cumulative expense recognised for equity-settled
transactions at each reporting date until the vesting date reflects the extent to which the vesting
period has expired and the Group’s best estimate of the number of equity instruments that will
ultimately vest.
Harris Technology Group Limited Annual Report 2019/20 | 45
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(x)
Share based payments (Cont.)
Equity settled transactions
In valuing equity-settled transactions, no account is taken of any non-market vesting conditions.
The charge to the statement of comprehensive income for the period is the cumulative amount as
calculated less the amounts already charged in previous periods. There is a corresponding entry to
equity.
No expense is recognised for awards that do not ultimately vest, except for equity-settled
transactions for which vesting are conditional upon a market or non-vesting condition. These are
treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied,
provided that all other performance and / or service conditions are satisfied.
(y)
Earnings per share
Basic earnings per share is calculated as net profit attributable to members of the parent divided by
the weighted average number of ordinary shares.
Diluted earnings per share is calculated as net profit attributable to members of the parent, divided
by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted
for any bonus element.
Harris Technology Group Limited Annual Report 2019/20 | 46
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(z)
New Accounting 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 group for the annual reporting period
ended 30 June 2020. The group 's assessment of the impact of these new or amended Accounting
Standards and Interpretations, most relevant to the group , 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
January 2020 and early adoption 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 group 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 group 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 group 's financial statements.
Harris Technology Group Limited Annual Report 2019/20 | 47
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
3.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments comprise cash, receivables and other receivables,
payables and other payables.
The Group manages its exposure to key financial risks, including interest rate risk in accordance with
the Group’s financial risk management policy. The objective of the policy is to support the delivery
of the Group’s financial targets whilst protecting future financial security.
The main risks arising from the Group’s financial instruments are interest rate risk, currency risk, credit
risk and liquidity risk. The Group uses different methods to measure and manage different types of
risks to which it is exposed. These include monitoring levels of exposure to interest rate risk and
assessments of market forecasts for interest rates. Derivative financial instruments are used by the
Group to hedge exposure to exchange rate risk associated with foreign currency transactions. Ageing
analyses and monitoring of specific credit allowances are undertaken to manage credit risk. Liquidity
risk is monitored through the development of future rolling cash flow forecasts.
The Board reviews and agrees policies for managing each of these risks as summarised below.
Primary responsibility for identification and control of financial risks rests with the Board. The Board
reviews and agrees policies for managing each of the risks identified below, including the setting of
limits for interest rate risk, hedging limits, credit allowances and future cash flow forecast projections.
Risk exposures and responses
Interest rate risk
The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s
debt obligations with the floating interest rate. At reporting date, the Group had the following
financial instruments exposed to Australian variable interest rate risk.
2020
$
2019
$
Financial assets
Cash and cash equivalents (interest bearing)
1,171,184
778,808
Financial liabilities
Interest bearing liabilities – floating rate (current)
-
-
Interest bearing liabilities – fixed rate (current)
(918,321)
(1,408,472)
Interest bearing liabilities – fixed rate (non-current)
(3,546,027)
(3,726,553)
Net exposure on interest bearing liabilities
(3,293,164)
(4,356,217)
Non-interest bearing liabilities – non-current
(1,373,463)
-
Total net exposure on liabilities
(4,666,627)
(4,356,217)
Harris Technology Group Limited Annual Report 2019/20 | 48
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
3.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT.)
The Group constantly analyses its interest rate exposure. Within this analysis consideration is given
to potential renewals of existing positions, alternative financing and the mix of fixed and variable
interest rates.
The following sensitivity analysis is based on the interest rate risk exposures in existence at reporting
date:
At 30 June 2020, if interest rates had moved, as illustrated in the table below, with all other variables
held constant, post-tax profit / (loss) and other comprehensive income would have been affected as
follows:
Post Tax Profit/(Loss) ($)
Other Comprehensive
Income ($)
Higher / (Lower)
Higher / (Lower)
2020
2019
2020
2019
Consolidated
+1% (100 basis points)
(46,666)
(43,562)
(46,666)
(43,562)
- 1% (100 basis points)
46,666
43,562
46,666
43,562
The movements in post-tax profit / (loss) and other comprehensive income are due to a larger net
exposure as at 30 June 2020. The sensitivity is higher in 2020 than in 2019 as a result of this increased
net exposure.
Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents
and trade and other receivables. The Group’s exposure to credit risk arises from potential default of
the counterparty, with a maximum exposure equal to the carrying amount of these instruments.
Exposure at balance date is addressed in each applicable note.
It is the Group’s policy that all customers who wish to trade on credit terms are assessed as to
creditworthiness, including an assessment of their independent credit rating, financial position, past
experience and industry reputation. Risk limits are set for individual customers.
The maximum exposure to credit risk at the reporting date to recognised financial assets is the
carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement
of financial position and notes to the financial statements. The group has adopted a lifetime expected
loss allowance in estimating expected credit losses to trade receivables through the use of a
provisions matrix using fixed rates of credit loss provisioning. These provisions are considered
representative across all customers of the group based on recent sales experience, historical
collection rates and forward-looking information that is available.
Harris Technology Group Limited Annual Report 2019/20 | 49
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
3.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT.)
Foreign currency risk
The groups exposure to currency risk is minimal at this stage of its operations.
Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through
the use of private equity facility and equity raisings.
At 30 June 2020, 45.12% of the Group’s financial liabilities will mature in less than one year (2019:
48.63%).
The table below reflects all contractually fixed payables and receivables for settlement, repayments
and interest resulting from recognised financial assets and liabilities. The respective undiscounted
cash flows for the respective upcoming fiscal periods are presented. Cash flows for financial assets
and liabilities without fixed amount or timing are based on the conditions existing at 30 June 2020.
The remaining contractual maturities of the Group’s financial assets and liabilities are:
< 1 year
1-2 years
2-5 years
> 5 years
Total
Year ended 30 June
2020 ($)
Financial assets
Cash and cash
equivalents
Trade and other
receivables
1,171,184
736,549
1,907,733
Financial liabilities
Trade and other payables
3,125,641
Loan and interest payable
867,727
-
-
-
-
-
-
-
-
-
-
Lease liabilities
50,594
113,575
41,703
Directors’ loans*
-
4,764,212
-
(4,043,962)
(4,877,787)
41,703
Net maturity
(2,136,229)
(4,764,212)
-
*The repayments of directors’ loans have been irrevocably deferred for a period through to 1st July 2021
Harris Technology Group Limited Annual Report 2019/20 | 50
-
-
-
-
-
-
-
-
-
1,171,184
736,549
1,907,733
3,124,641
867,727
205,873
4,764,212
(8,963,452)
(7,055,719)
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
3.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT.)
The remaining contractual maturities of the Group’s financial assets and liabilities are:
< 1 year
1-2 years
2-5 years
> 5 years
Total
Year ended 30 June 2019
($)
Financial assets
Cash and cash equivalents
1,008,416
Trade and other receivables
347,965
1,356,381
Financial liabilities
Trade and other payables
2,068,926
Loan and interest payable
1,408,472
-
-
-
-
-
Directors’ loans
-
3,726,553
(3,477,398)
(3,726,553)
Net maturity
(2,121,017)
(3,726,553)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,008,416
347,965
1,356,381
2,068,926
1,408,472
3,726,553
(7,203,951)
(5,847,570)
Maturity analysis of financial assets and liabilities based on management’s expectation
Management’s expectation reflects a balanced view of cash inflows and outflows. The Group’s assets
mainly consist of cash and trade receivables with the liabilities consisting of trade payables from the
ongoing operations of the business. To monitor existing financial assets and liabilities as well as to
enable an effective controlling of funding for the business, the Group has established risk that reflects
expectations of management in terms of expected settlement of financial assets and liabilities.
All financial assets and most liabilities are payable within 12 months of reporting date. Accordingly,
the book value of each liability is equivalent to its fair value.
The liabilities due after 12 months are loans with fixed interest rate. The carrying values of these loans
are equivalent to their fair value.
Harris Technology Group Limited Annual Report 2019/20 | 51
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
4.
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of the Group’s consolidated financial statements requires management to make
judgements, estimates and assumptions that affect the reported amounts of revenues, expenses,
assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities.
Uncertainty about these assumptions and estimates could result in outcomes that require a material
adjustment to the carrying amount of assets or liabilities affected in future periods.
Judgements
In the process of applying the Group’s accounting policies, management has made the following
judgements, which have the most significant effect on the amounts recognised in the consolidated
financial statements:
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the
reporting date, that have a significant risk of causing a material adjustment to the carrying amount
of assets and liabilities within the next financial year, are described below. The Group based its
assumptions and estimates on parameters available when the consolidated financial statements were
prepared. Existing circumstances and assumptions about future developments, however, may change
due to market changes or circumstances arising beyond the control of the Group. Such changes are
reflected in the assumptions when they occur.
Provision for impairment of inventories
The provision for impairment of inventories assessment requires a degree of estimation and
judgement. The level of the provision is assessed by taking into account the recent sales experience,
the ageing of inventories and other factors that affect inventory obsolescence.
Allowances for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement.
It is based on the lifetime expected credit loss, grouped based on days overdue, and makes
assumptions to allocate an overall expected credit loss rate for each group. These assumptions
include recent sales experience, historical collection rates, the impact of the Coronavirus (COVID-19)
pandemic and forward-looking information that is available. The allowance for expected credit
losses, as disclosed in note 12, is calculated based on the information available at the time of
preparation. The actual credit losses in future years may be higher or lower.
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing
rate is estimated to discount future lease payments to measure the present value of the lease liability
at the lease commencement date. Such a rate is based on what the group estimates it would have
to pay a third party to borrow the funds necessary to obtain an asset of a similar value to the right-
of-use asset, with similar terms, security and economic environment.
Harris Technology Group Limited Annual Report 2019/20 | 52
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
4.
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT.)
Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and
lease liability. Judgement is exercised in determining whether there is reasonable certainty that an
option to extend the lease or purchase the underlying asset will be exercised, or an option to
terminate the lease will not be exercised, when ascertaining the periods to be included in the lease
term. In determining the lease term, all facts and circumstances that create an economical incentive
to exercise an extension option, or not to exercise a termination option, are considered at the lease
commencement date. Factors considered may include the importance of the asset to the group 's
operations; comparison of terms and conditions to prevailing market rates; incurrence of significant
penalties; existence of significant leasehold improvements; and the costs and disruption to replace
the asset. The group reassesses whether it is reasonably certain to exercise an extension option, or
not exercise a termination option, if there is a significant event or significant change in circumstances
5.
DISCONTINUED OPERATION
On 31 August 2018, the company announced that it signed a Business Asset Purchase Agreement to
sell Anyware Corporation Pty Ltd ('Anyware') to Leader Computers Pty Ltd ('Leader'). The sale was
completed on 2 October 2018 with employees and certain business assets and liabilities transferred
to Leader. The consideration received from the sale was the carrying value of the business assets
and liabilities and $200,000. The residual assets of Anyware not sold to Leader, which consist
primarily of inventory, have been impaired and will be sold under the brand name APCA in the normal
course of business.
(a) Financial Performance ($)
2020
2019
Sales revenue
Direct costs
Impairment expenses
Depreciation and amortisation expenses
Employee expenses
Finance costs
Other expenses
Gain on sale of the business
Loss from discontinued operation
-
-
-
-
-
-
-
-
-
11,027,280
(10,513,610)
(499,954)
(39,711)
(487,602)
-
(1,157,016)
200,000
(1,470,613)
Harris Technology Group Limited Annual Report 2019/20 | 53
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
5.
DISCONTINUED OPERATION (CONT.)
(b) Cashflow information – ($)
2020
2019
Net cash from operating activities
Net cash from investing activities
Net cash from financing activities
Net decrease in cash and cash equivalents from
discontinued operations
-
-
-
-
(c) Carrying amounts of assets and liabilities disposed ($)
2020
Trade and other receivables
Inventories
Trade and other payables
Employee benefit liabilities
Net assets
-
-
-
-
-
(404,913)
3,663,702
(4,323,066)
(1,064,277)
2019
382,693
3,482,067
(431,273)
(217,316)
3,216,171
(d) Details of the sale of business ($)
2020
2019
Total disposal consideration
Carrying amount of net assets sold
Gain on sale before income tax
-
-
-
3,416,084
(3,216,084)
200,000
Harris Technology Group Limited Annual Report 2019/20 | 54
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
6.
PARENT ENTITY INFORMATION
Information relating to Harris Technology Group Ltd – Parent ($)
Current assets
Non-Current Asset
Total Assets
Current liabilities
Non-Current Liabilities
Total liabilities
Net liabilities
Issued capital
Accumulated losses
Share based payments reserve
Total shareholders’ equity
Profit / (loss) after tax of the parent entity
2020
4,669
198,524
203,193
2019
1,305
-
1,305
(391,492)
(1,315,488)
(1,191,794)
(300,000)
(1,583,286)
(1,615,488)
(1,380,093)
(1,614,183)
8,899,293
8,899,293
(10,279,386)
(10,513,476)
-
-
(1,380,093)
(1,614,183)
234,090
308,780
Total comprehensive Profit / (loss) of the parent entity
234,090
308,780
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity and some of its subsidiaries are party to a deed of cross guarantee under which
each company guarantees the debts of the others. No deficiencies of assets exist in any of these
subsidiaries.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2020 and 30 June 2019.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2020
and 30 June 2019.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the group , as disclosed in
note 2, except for the following:
●
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Investments in associates are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and
its receipt may be an indicator of an impairment of the investment.
Harris Technology Group Limited Annual Report 2019/20 | 55
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
7.
REVENUE
($)
Revenue from operating activities
Sale of goods
Total sales revenue
($)
Other income
Interest receive
Sundry income
Government grants
Gain on debt forgiveness
Loss on the disposal of non-current asset
Gain on sale of business
Total other income
2020
2019
13,638,567
9,003,268
13,638,567
9,003,268
2020
2019
2,154
36,009
35,760
1,920
11,496
-
608,005
135,653
(55,831)
(15,223)
50,000
35,500
676,097
169,346
Harris Technology Group Limited Annual Report 2019/20 | 56
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
8.
EXPENSES
($)
Other expenses
Sundry expenses
Total other expenses
Depreciation
Motor vehicle
Building - Right-of-use
Total depreciation
Impairment expense
Intangible assets
Allowance for expected credit losses
Total impairment expense
Finance costs
Interest expense
Interest expense – lease liability
Total finance costs
2020
2019
18,311
18,311
3,913
54,143
58,056
41,247
41,247
20,588
-
20,588
291,866
6,947
64,961
108,576
298,813
173,537
249,246
13,525
14,741
-
262,771
14,741
Harris Technology Group Limited Annual Report 2019/20 | 57
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
9.
INCOME TAX
($)
Current tax
Deferred tax
Income tax (expense) / benefit
A reconciliation between tax expense and the product of accounting
profit/(loss) before income tax multiplied by the Group’s applicable
income tax rate is as follows:
2020
2019
-
-
-
-
-
-
Profit before income tax expense from continuing operations
1,009,522
(732,036)
Loss before income tax expense from discontinued operations
-
(1,470,614)
At the Group’s statutory income tax rate of 27.5% (2019: 30%)
277,618
(660,795)
1,009,522
(2,202,650)
Tax effect amounts which are not deductible / (taxable) in calculating
taxable income:
Impairment expense
Deferred tax assets not recognised
Tax losses utilised
Income tax (expense) / benefit
82,174
-
(359,792)
-
19,488
641,307
-
-
Unused tax losses for which no deferred tax asset has been
recognised
4,023,825
4,383,668
Tax loss deferred tax asset recognition
Deferred tax assets will only be recognised if:
a)
future assessable income is derived of a nature and amount sufficient to enable the benefit
from the deductions to be realised;
b)
the conditions for deductibility imposed by tax legislation are complied with; and
c) no changes in tax legislation adversely affect the group in realising the benefit.
Unused tax losses for which no deferred tax asset has been recognised comprise current year
estimated tax losses only and are not yet confirmed. Tax losses pre 2011 are not recognised because
they are not expected to meet the continuity of ownership or same business tests.
Harris Technology Group Limited Annual Report 2019/20 | 58
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
9.
INCOME TAX (Cont.)
Unrecognised temporary differences
At 30 June 2020 there are no temporary differences recognised in the consolidated financial position,
on the basis of an assessment that recovery through future taxable income of those amounts is not
probable at 30 June 2020 (2019: nil).
10.
EARNINGS PER SHARE
Basic earnings/(loss) per share is calculated by dividing net profit/(loss) for the year attributable to
ordinary equity holders of the parent by the weighted average number of ordinary shares
outstanding during the year.
Diluted earnings/(loss) per share is calculated by dividing the net profit/(loss) for the year attributable
to ordinary equity holders of the parent by the weighted average number of ordinary shares
outstanding during the year plus the weighted average number of ordinary shares that would be
issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
The following reflects the income and share data used in the calculations of basic and diluted
earnings per share:
Basic and diluted (loss)/earnings per share (cents)
Continuing operations
Discontinued operation
Basic and diluted (loss)/earnings per share from total
comprehensive income
2020
2019
0.54
-
(0.46)
(0.94)
0.54
(1.40)
Total comprehensive (loss)/profit for the year ($)
1,009,522
(2,202,649)
Weighted average number of ordinary shares used in calculating basic
earnings per share
191,134,778
157,652,586
Weighted average number of ordinary shares used in calculating diluted
earnings per share
191,134,778
157,652,586
Harris Technology Group Limited Annual Report 2019/20 | 59
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
11.
CASH AND CASH EQUIVALENTS
($)
Cash at bank and on hand
Consolidated
2020
2019
1,171,184
1,008,416
1,171,184
1,008,416
Cash at bank earns interest at floating rates based on daily bank deposit rates as disclosed in note
3.
Reconciliation of net (loss) / profit after tax to net operating
cash flows
2020
$
2019
$
Net Profit / (loss) after tax from continuing operation
1,009,522
(732,036)
Operations
Net (loss) / profit after tax
Non-cash items
Depreciation and amortisation
(Gain)/loss on the disposal of non-current assets
Share based payment
Impairment expense
-
(1,470,613)
1,009,522
(2,202,649)
3,913
54,143
82,060
291,866
20,588
362,041
59,549
64,961
-
(Gain)/loss on de-recognition of AER
77,372
(Gain)/loss on debt forgiveness
(368,878)
(135,653)
Changes in operating assets and liabilities
(Increase) / decrease in trade and other receivables
(388,584)
3,989,122
(Increase) / decrease in prepayments and deposits
(2,072)
116,951
(Increase) / decrease in inventories
(2,917,862)
2,454,366
Increase / (decrease) in trade and other payables
1,056,976
(5,406,775)
Increase / (decrease) in unearned income
318,369
-
Increase / (decrease) in employee benefit liabilities
21,116
(211,651)
Net cash flows provided by/(used in) operating activities
(762,061)
(889,150)
Harris Technology Group Limited Annual Report 2019/20 | 60
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020
12.
TRADE AND OTHER RECEIVABLES
$
Trade and other receivables
Allowance for expected credit losses
Allowance for expected credit losses
Consolidated
2020
2019
993,846
654,852
(257,297)
(306,887)
736,549
347,965
The group has recognised a loss of $6,947 (2019: $306,887) in profit or loss in respect of the expected
credit losses for the year ended 30 June 2020.
Expected credit
loss rate
Carrying amount
Allowance for
expected credit
losses
2020
2019
2020
2019
2020
2019
Consolidated
Not overdue
0 to 3 months overdue
Over 3 months overdue
%
1%
10%
80%
%
1%
10%
80%
$
$
$
$
632,537
54,393
306,916
217,300
63,443
374,108
6,324
5,439
2,173
6,344
245,532 298,370
993,846
654,851
257,297 306,887
Movements in the allowance for expected credit losses as follows:
$
Opening balance
Additional provision recognised
Consolidated
2020
2019
306,887
-
6,947
306,887
Receivables written off during the year as uncollectable
(56,537)
-
Closing Balance
257,297
306,887
Harris Technology Group Limited Annual Report 2019/20 | 61
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
13.
INVENTORIES
($)
Inventories
Provision for stock obsolescence
14.
PREPAYMENTS AND DEPOSITS
($)
Prepayments
Deposits
15.
INTANGIBLE ASSETS
($)
Gross carrying amount
At 1 July 2019
Impairment
At 30 June 2020
Consolidated
2020
2019
3,912,214
1,146,273
(589,229)
(741,150)
3,322,985
405,123
Consolidated
2020
36,800
-
2019
12,154
22,573
36,800
34,727
Software
Total
291,867
291,867
(291,867)
(291,867)
-
-
In 2019, Harris Technology Limited acquired 100% of LINCD HQ Pty Ltd (LINCD) assets from First
Growth Funds Limited. LINCD is a software and services company that has developed a platform
connecting legacy software to blockchain protocols. In 2020, the intangible asset amount was fully
impaired.
Harris Technology Group Limited Annual Report 2019/20 | 62
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
16.
PROPERTY, PLANT AND EQUIPMENT
Office and
warehouse
equipment
$
Improvement
$
Computer
$
Motor
vehicles
$
Total
$
Gross carrying
amount
At 1 July 2019
Additions
Disposal
At 30 June 2020
Depreciation and
impairment
At 1 July 2019
Depreciation
charge for the year
Disposal
At 30 June 2020
Net carrying
amount
At 30 June 2020
At 30 June 2019
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
154,687
154,687
-
-
(154,687)
(154,687)
-
-
-
-
(44,943)
(44,943)
(3,913)
(3,913)
-
-
-
-
48,856
48,856
-
-
-
-
109,744
109,744
Harris Technology Group Limited Annual Report 2019/20 | 63
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
17.
RIGHT-OF-USE ASSETS
($)
Buildings – right-of-use
Less: Accumulated depreciation
At 30 June 2020
Consolidated
2020
2019
252,667
(54,143)
198,524
-
-
-
The group leases land and buildings for its office and warehouse under an agreement of 3 years.
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial
year are set out below:
($)
Balance at 1 July 2019 Recognition of Right
of use asset on adoption of AASB 16 (Note
2)
Depreciation expense
At 30 June 2020
Building
Right-of-use
252,667
(54,143)
198,524
Harris Technology Group Limited Annual Report 2019/20 | 64
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
18.
TRADE AND OTHER PAYABLES
Trade and other payables - current ($)
2020
2019
Consolidated
Trade payables
Other payables
3,125,241
2,002,377
-
66,549
3,125,241
2,068,926
Terms and conditions of the above financial liabilities:
(i)
(ii)
Trade payables are non-interest bearing and are normally settled on 30 days EOM terms.
Other creditors are non-interest bearing and are normally payable within 30 and 90 days
Fair value
Due to the short term nature of these payables, their carrying value is assumed to approximate
their fair value.
Foreign exchange and interest rate risk
Detail regarding foreign exchange and interest rate risk exposure is disclosed in note 3.
19.
FINANCIAL LIABILITY
Financial liability ($)
At 1 July 2018
Secured
Equipment finance
Unsecured
Loan and interest payable
Total Current
Secured
Equipment finance
Unsecured
Directors’ Loans (Note 26)
Total Non-current
Total
Consolidated
2020
2019
-
39,593
867,727
867,727
1,368,879
1,408,472
-
-
4,764,212
4,764,212
5,631,939
3,726,553
3,726,553
5,135,025
The payments of principal and interest on all directors’ loans have been deferred for a period through
to 1st July 2021.
Harris Technology Group Limited Annual Report 2019/20 | 65
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
20.
DEFERRED REVENUE
($)
Deferred revenue
Consolidated
2020
318,639
2019
-
AASB 15 uses the term ‘contract liabilities’. To maintain consistency in presentation with prior periods, the
Group has retained the use of ‘deferred revenue’, respectively.
21.
LEASE LIABILITY
($)
Lease liability – current
Lease liability – non-current
At 30 June 2020
Refer to note 2 for further information on AASB 16 implementation.
22.
EMPLOYEE BENEFIT LIABILITIES
($)
Current
Annual leave
Long service leave
Non-current
Long service leave
Consolidated
2020
50,594
155,279
205,873
2019
-
-
-
Consolidated
2020
2019
54,187
11,835
42,629
10,949
66,022
53,578
11,992
11,993
3,321
3,321
Harris Technology Group Limited Annual Report 2019/20 | 66
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
23.
CONTRIBUTED EQUITY
Issued and paid up capital
($)
Ordinary shares
Ordinary shares fully paid
Listed options
Contributed equity
Movements in ordinary
shares on issue
Opening balance
Shares issued during the year:
2020
2019
7,803,124
7,654,464
-
-
7,803,124
7,654,464
Number of Shares
$
185,001,811
7,654,464
Issue of shares in satisfaction of directors’ fees
Issue of share to consultants
Issue of shares to employees under Long Term Incentive plan
Closing balance
5,500,001
1,433,669
1,060,000
66,000
49,800
32,860
192,995,481
7,803,124
Terms and conditions of ordinary shares
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the
Company, to participate in the proceeds from the sale of all surplus assets in proportion to the
number and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either
in person or by proxy, at a meeting of the Company.
Capital management
The primary objective of the Group’s capital management is to ensure that it maintains a strong
credit rating and healthy capital ratios to support its business and maximise the shareholder’s value.
The Group manages its capital structure and makes adjustments to it in light of changes in economic
conditions. To maintain or adjust the capital structure, the Group may return capital to shareholders
or issue new shares. The Group monitors capital using a gearing ratio, which is net debt divided by
total capital plus net debt.
Harris Technology Group Limited Annual Report 2019/20 | 67
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
24.
RESERVES
($)
Share-based payments reserve
Reserves
Consolidated
2020
11,432
11,432
2019
-
-
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of
their remuneration, and other parties as part of their compensation for services.
25.
ACCUMULATED LOSSES
($)
Consolidated
2020
2019
Balance at beginning of financial year
(12,717,472)
(10,514,823)
Dividend paid
Net profit/(loss) for the year
-
-
1,009,522
(2,202,649)
Balance at end of financial year
(11,707,950)
(12,717,472)
26.
DIRECTORS’ LOANS
The loan balances as of 30 June 2020 are set out as below.
($)
2020
2019
Name of director
Entity/Shareholder
Garrison Huang
Australian PC Accessories Pty Ltd
4,764,212
3,726,553
4,764,212
3,726,553
Harris Technology Group Limited Annual Report 2019/20 | 68
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
27.
COMMITMENTS
Operating lease commitments ($)
2020
2019
Operating leases contracted
Within one year
After one year but not more than five years
More than five years
-
-
-
-
71,500
110,000
-
181,500
28. CONTINGENT ASSETS AND LIABILITIES
The Company has no contingent assets and no contingent liabilities which require disclosure.
29.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
The group completed a capital raise of $3.5m through a private placement on 11 August 2020 to
existing shareholders, sophisticated and professional investors.
Mr. Bob Xu resigned as a non-executive director of the group effective on the 2 September 2020.
On the 4 September 2020, the group completed a capital raise through a share purchase plan
resulting in 17.5m shares to be issued at 8c per share to raise a maximum of $1.4m.
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has been financially
positive for the group up to 30 June 2020, it is not practicable to estimate the potential impact,
positive or negative, after the reporting date. The situation is rapidly developing and is dependent
on measures imposed by the Australian Government and other countries, such as maintaining social
distancing requirements, quarantine, travel restrictions and any economic stimulus that may be
provided.
No other matters or circumstances has arisen since 30 June 2020 that has significantly affected, or
may significantly affect the group ’s operations, the results of those operations, or the group ’s state
of affairs in future financial years.
Harris Technology Group Limited Annual Report 2019/20 | 69
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
30.
AUDITOR’S REMUNERATION
($)
2020
2019
Amounts received or due and receivable by RSM Australia Partners
An audit or review of the financial report of the entity and any other entity
in the group paid to RSM Australia Partners
43,400
55,000
Other services
31.
RELATED PARTY DISCLOSURE
(a) Subsidiary
600
2,500
44,000
57,500
The consolidated financial statements include the financial statements of Harris Technology Group
Limited and the subsidiaries listed in the following table:
Name of entity
APCA Trading Pty Ltd
Harris Technology Pty Ltd
AER Group Pty Ltd*
Lincd HQ Pty Ltd
Country of
Incorporation
% of Equity interest
2020
2019
Australia
Australia
Australia
Australia
100
100
-
100
100
100
100
100
*AER Group Pty Ltd brand Wow Baby was sold to Witton Construction Pty Ltd
(b) Ultimate parent
The consolidated financial statements include the financial statements of Harris Technology Group
Limited and its controlled entities. Harris Technology Group Limited is the ultimate parent company.
(c) Inter-group transactions
Loans
The inter-group entities have provided or received intercompany loans within the group for working
capitals. The intercompany loans are repayable to the inter-group entities at call and no interest is
payable. At 30 June 2020, those loans have been eliminated in the balance sheet.
Harris Technology Group Limited Annual Report 2019/20 | 70
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
31.
RELATED PARTY DISCLOSURE (Cont’d)
(d) Other related party transactions
During the financial year ended 30 June 2020, there were a total of $4,764,212 Directors’ loans
reported by the Group, refer to note 26 (2019: $3,726,533).
All Transactions were made on normal commercial terms and conditions and at market rates unless
otherwise stated.
Refer to 7d. Of Remuneration Report for more details relating to other related party transactions.
32.
KEY MANAGEMENT PERSONNEL
The total remuneration paid to KMP of the company and the Group during the year are as follows:
($)
Short-term employee benefits
Post-employment benefits
Share based payments
2020
49,000
-
2019
98,881
-
85,800
30,000
134,800
128,881
Short-term employee benefits
These amounts include fees and benefits paid to the non-executive Chair and non-executive
directors as well as all salary, paid leave benefits, fringe benefits and cash bonuses awarded to
executive directors and other KMP.
Post-employment benefits
These amounts are superannuation contributions made during the year.
Share-based payments
These amounts represent the expense related to the participation of KMP in equity-settled benefit
schemes as measured by the fair value of the options, rights and shares granted on grant date.
Further information in relation to KMP remuneration can be found in the Directors' Report.
Harris Technology Group Limited Annual Report 2019/20 | 71
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
33.
SEGMENT REPORTING
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and
used by the Board of Directors (who are identified as the Chief Operating Decision Markers (CODM))
in assessing the performance of the Group and determining investment requirements. The operating
segments are based on the manner in which services are provided to the market.
The Group consists of one business segment which operates in one geographical area, being
Australia.
34.
SHARE-BASED PAYMENTS
Performance Rights
On 5 July 2017, 1,070,000 shares were issued to key management personnel at an issue price of
0.09 per share and a total transactional value of $95,800. Under the LTI plan, selected employees
may be granted performance rights which will entitle them to receive ordinary shares in the
Company, subject to the Company meeting performance objectives.
Set out below are summaries of options granted under the plan:
2019
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/ Balance at
the end of
forfeited/
the year
other
5/7/2017
5/7/2020
$0.09
100,000
100,000
-
-
-
-
-
-
100,000
100,000
2018
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/ Balance at
the end of
forfeited/
the year
other
5/7/2017
5/7/2020
$0.09
1,070,000
-
-
-
(350,000)
(620,000)
(350,000)
(620,000)
100,000
100,000
Harris Technology Group Limited Annual Report 2019/20 | 72
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
34. SHARE-BASED PAYMENTS (Cont.)
Options
In June 2020, Harris Technology Limited (HT8) awarded 1,100,000 options to employees in
recognition of their performance for no cash consideration. The 11 employees did not include any
directors or related parties of HT8. The exercise price of the options are as follows:
100,000 options to be exercised at 1.7c each.
100,000 options to be exercised at 3.4c each.
900,000 options to be exercised at 4c each.
The following specific terms and conditions will apply to the options:
The expiry date of each option shall be 12 months from the date of issue.
Each option shall lapse upon the termination of employment of the individual
Each share issued on exercising the option shall be subject to voluntary escrow for 12
months from the date of issue
In August 2019, Harris Technology Limited (HT8) entered into an agreement with First Growth Funds
(FGF) to a acquire 100% of Lincd HP Pty Ltd (Lincd), a software and services company that has
developed a platform connecting legacy software to blockchain protocols. The acquisition terms
included:
30,000,000 of HT8 shares to be issued to FGF.
20,055,334 of HT8 options with exercise price of $0.025 to FGF, when Lincd generates no
less then $1.35m in revenue within 24 months of the issue date.
20,000,000 of HT8 options with exercise price of $0.025 to FGF, when Lincd generates no
less than $1.35m in revenue within 24 months of the issue date.
Set out below are summaries of options granted:
2020
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/ Balance at
forfeited/ the end of
the year
other
24/5/2019
24/5/2019
25/6/2020
25/6/2020
25/6/2020
24/6/2021
24/6/2021
25/6/2021
25/6/2021
25/6/2021
$0.025
$0.035
$0.017
$0.034
$0.040
20,055,334
20,000,000
-
-
-
-
-
100,000
100,000
900,000
40,055,334
1,100,000
-
-
-
-
-
-
- 20,055,334
- 20,000,000
100,000
-
100,000
-
900,000
-
- 41,155,334
Harris Technology Group Limited Annual Report 2019/20 | 73
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2020)
34. SHARE-BASED PAYMENTS (Cont.)
2019
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/ Balance at
forfeited/ the end of
the year
other
24/5/2019
24/5/2019
24/6/2021
24/6/2021
$0.025
$0.035
- 20,055,334
- 20,000,000
- 40,055,334
-
-
-
- 20,055,334
- 20,000,000
- 40,055,334
Harris Technology Group Limited Annual Report 2019/20 | 74
Directors’ Declaration
(For the Financial Year Ended 30 June 2020)
In accordance with a resolution of the directors of Harris Technology Group Limited and its controlled
entities, I state that:
1.
In the opinion of the directors:
(a)
the financial statements and notes of Harris Technology Group Limited and its
controlled entities for the financial year ended 30 June 2020 are in accordance with
the Corporations Act 2001, including:
(i) giving a true and fair view of the group ’s financial position as at 30 June 2020
and of its performance for the year ended on that date; and
(ii) complying with Accounting Standards and the Corporations Regulations 2001;
(b)
(c)
the financial statements and notes also comply with International Financial Reporting
Standards as disclosed in Note 2(b); 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.
2.
This declaration has been made after receiving the declarations required to be made to the
directors by the chief executive officer in accordance with section 295A of the Corporations
Act 2001 for the financial year ended 30 June 2020.
On behalf of the Board
Andrew Plympton
Non-Executive Chairman
Melbourne 30 September 2020
Harris Technology Group Limited Annual Report 2019/20 | 75
RSM Australia Partners
Level 21, 55 Collins Street Melbourne VIC 3000
PO Box 248 Collins Street West VIC 8007
T +61 (0) 3 9286 8000
F +61 (0) 3 9286 8199
www.rsm.com.au
INDEPENDENT AUDITOR’S REPORT
To the Members of Harris Technology Group Limited
Opinion
We have audited the financial report of Harris Technology Group Limited (the Company), and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and
the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including
a summary of significant accounting policies, and the directors’ declaration.
In our opinion the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial
performance for the year then ended; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Harris Technology Group Limited Annual Report 2019/20 | 76
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the
RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
How our audit addressed this matter
Stock Obsolescence
Refer to Note 13 in the financial statements
The Group’s inventory balance, as disclosed in Note
13, consists primarily of finished goods of various
technology products and solutions.
Inventory is valued at the lower of cost or net
realisable value. The assessment of
the net
realisable value of inventory requires a significant
includes
degree of management
assumptions
for
concerning
obsolescence, as well as future market conditions
based on changing customer needs and market
trends.
It
provision
judgment.
the
On the basis of the factors set out above, the
valuation of inventory was considered to be a Key
Audit Matter.
Going Concern
Refer to Note 2 (c) in the financial statements
The financial statement have been prepared on a
going concern basis as disclosed in Note 2(c).
Historically, the Group has been loss making, with
operating cash outflows, net current liabilities, and
net liabilities.
We included the going concern assumption as a Key
Audit Matter as it relies on existing cash reserves,
continued support
its debt holders, and
continued revenue growth and profitability.
from
Our audit procedures included:
Evaluating management
assumptions
and
estimates applied to the provision for obsolescence
through analysis of historical sales levels by
inventory product from the date the product was
purchased
the
quantity of products;
in conjunction with assessing
Assessing the Group’s application of its policy for
determining the provision for obsolescence;
Performing analytical procedures in respect of
inventory holdings and inventory turnover; and
Testing the sales prices of inventory to ensure
inventory is not being sold at less than cost.
Our audit procedures included:
Assessing the cash flow requirements of the Group
through to September 2021 based on budgets and
forecasts and considering potential downside
scenarios and the resultant impact on available
funds;
Understanding what
is
committed and what could be considered
discretionary;
forecast expenditure
Considering the successful capital raising events
subsequent to the end of the financial year; and
Considering the terms of debt facilities and the
impact of the deferral of monthly loan repayments
on loans from directors.
Harris Technology Group Limited Annual Report 2019/20 | 77
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Group's annual report for the year ended 30 June 2020 but does not include the financial report and the
auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This description
forms part of our auditor's report.
Harris Technology Group Limited Annual Report 2019/20 | 78
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors' report for the year ended 30 June 2020.
In our opinion, the Remuneration Report of Harris Technology Group Limited, for the year ended 30 June 2020,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
RSM AUSTRALIA PARTNERS
B Y CHAN
Partner
Dated: 30 September 2020
Melbourne, Victoria
Harris Technology Group Limited Annual Report 2019/20 | 79
Additional Information
In accordance with ASX Listing Rule 4.10, the Company provides the following information to shareholders not
elsewhere disclosed in this Annual Report. The information provided is current as at 29 September 2020
(Reporting Date).
Corporate Governance Statement
The Company’s Directors and management are committed to conducting the Group’s business in an ethical
manner and in accordance with the highest standards of corporate governance. The Company has adopted
and substantially complies with the ASX Corporate Governance Principles and Recommendations (Third
Edition) (Recommendations) to the extent appropriate to the size and nature of the Group’s operations.
The Company has prepared a statement which sets out the corporate governance practices that were in
operation throughout the financial year for the Company, identifies any Recommendations that have not been
followed, and provides reasons for not following such Recommendations (Corporate Governance Statement).
In accordance with ASX Listing Rules 4.10.3 and 4.7.4, the Corporate Governance Statement will be available
for review on Harris Technology Group Limited’s website (www.ht8.com.au/investor-relations/corporate-
governance) and will be lodged together with an Appendix 4G with ASX at the same time that this Annual
Report is lodged with ASX.
The Appendix 4G will particularise each Recommendation that needs to be reported against by Harris
Technology Group Limited and will provide shareholders with information as to where relevant governance
disclosures can be found.
The Company’s corporate governance policies and charters are all available on Harris Technology Group
Limited’s website (www.ht8.com.au/investor-relations/corporate-governance).
Substantial holders
As at the Reporting Date, the names of the substantial holders of Harris Technology and the number of equity
securities in which those substantial holders and their associates have a relevant interest, as disclosed in
substantial holding notices given to Harris Technology, are as follows:
Holder of Equity Securities
Class of Equity Securities
Number of Equity Securities
held
% of total, issued
securities capital in
relevant class
Australian PC
Accessories Pty Ltd
Number of holders
Ordinary Shares
81,777,156
32.070%
As at the Reporting Date, the number of holders in each class of equity securities:
Class of Equity Securities
Fully Paid Ordinary Shares
eStore vendor shares held in voluntary escrow until further notice
Options at various prices
Number of holders
2,945
1
6
Harris Technology Group Limited Annual Report 2019/20 | 80
Voting rights of equity securities
The only class of equity securities on issue in the Company which carries voting rights is ordinary shares.
As at the Reporting Date, there were 2,945 holders of a total of 254,995,481 ordinary shares of the Company.
At a general meeting of Harris Technology, every holder of ordinary shares present in person or by proxy,
attorney or representative has one vote on a show of hands and on a poll, one vote for each ordinary share
held. On a poll, every member (or his or her proxy, attorney or representative) is entitled to vote for each fully
paid share held and in respect of each partly paid share, is entitled to a fraction of a vote equivalent to the
proportion which the amount paid up (not credited) on that partly paid share bears to the total amounts paid
and payable (excluding amounts credited) on that share. Amounts paid in advance of a call are ignored when
calculating the proportion.
Distribution of holders of equity securities
The distribution of holders of equity securities on issue in the Company as at the Reporting Date is as follows:
Distribution of ordinary shareholders
Holdings Ranges
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – 9,999,999,999
Totals
Holders
1,453
355
222
722
103
Total Units
158,331
1,030,555
1,810,021
24,932,273
%
0.06
0.40
0.71
9.78
227,064,301
89.05
2,945
254,995,481
100.00
Distribution of options holders
Holdings Ranges
Holders of Options
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – 9,999,999,999
Totals
-
-
-
6
-
6
-
-
-
-
-
-
%
-
-
-
100
-
100
Harris Technology Group Limited Annual Report 2019/20 | 81
Distribution of escrowed shares
Holdings Ranges
Holders
Total Units
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – 9,999,999,999
Totals
-
-
-
-
1
1
-
-
-
-
321,661
321,661
%
-
-
-
-
100
100
Less than marketable parcels of ordinary shares (UMP Shares)
The number of holders of less than a marketable parcel of ordinary shares based on the closing market price
at the Reporting Date is as follows:
Total Securities
UMP Shares
UMP Holders
% of issued shares held by UMP holders
254,995,481
989,464
1,769
0.388
Voluntary escrow
Class of restricted securities
Type of restriction
Number of securities
End date of escrow period
Ordinary Shares
Voluntary escrow
321,661
Until further notice
Unquoted equity securities
The number of each class of unquoted equity securities on issue, and the number of their holders are as
follows:-
Class of restricted securities
Number of unquoted
Equity Securities
Number of Holders
Options
600,000
6
There are no person who hold 20% or more of equity securities in each unquoted class other than under an
employee incentive scheme.
On-market buyback
The Company is not currently conducting an on-market buy-back.
On-market purchase of securities under employee incentive scheme
No securities were purchased on-market during the reporting period under or for the purposes of an employee
incentive scheme; or to satisfy the entitlements of the holders of options or other rights to acquire securities
granted under an employee incentive scheme.
Harris Technology Group Limited Annual Report 2019/20 | 82
Twenty largest shareholders
The Company only has one class of quoted securities, being ordinary shares. The names of the 20 largest
holders of ordinary shares, and the number of ordinary shares and percentage of capital held by each holder
is as follows:
Holder Name
Australian PC Accessories
Mr Weiyu Zhang
Welland Industrial Co Ltd
Cha Shin Chi Investment Co Ltd
Aza International (Aust)
Ping Shen
Ping Yu
Citicorp Nominees Pty Limited
Hunter Capital Advisors Pty Ltd
BNP Paribas Noms Pty Ltd
LTL Capital Pty Ltd
H & J Investment Pty Ltd
David Davidson
Alistair Campbell & Karen Campbell
Mr Junji Kamoshida
Adrian Pony Pty Ltd
Evaneu (Nominees) Pty Ltd & Ricneu
Nominees Pty Ltd
Mr Guo Qiang Xia
Beaumy Pty Ltd
Sargon Ct Pty Ltd
Total number of shares of Top 20
Holders
Total Remaining Holders Balance
Balance as at Reporting Date
%
81,777,156
32.07
8,844,086
8,216,242
5,488,969
5,098,920
4,545,455
4,136,097
3,863,186
3,650,000
3,614,536
3,350,000
3,315,444
3,000,000
2,790,625
2,583260
2,500,000
2,450,000
2,415,602
2,399,535
2,300,000
3.46
3.22
2.15
2.00
1.78
1.62
1.51
1.43
1.41
1.31
1.30
1.17
1.09
1.01
0.98
0.96
0.94
0.94
0.90
156,339113
61.31%
98,656,368
38.69%
Item 7 issues of securities
There are no issues of securities approved for the purposes of item 7 of section 611 of the Corporations Act
which have not yet been completed.
Harris Technology Group Limited Annual Report 2019/20 | 83
Company Secretary
The Company’s secretary is Mr. Brett Crowley
Registered Office
The address and telephone number of the Company’s registered office are:
Unit 6, 94 Abbott Road,
Hallam, Victoria 3803
Tel: 1300 13 99 99
Share Registry
The address and telephone number of the Company’s share registry, Boardroom Pty Limited, are:
Boardroom Pty Limited
Level 12, 225 George Street
Sydney New South Wales 2000
Tel: 1300 737 760
Stock Exchange Listing
Harris Technology’s ordinary shares are quoted on the Australian Securities Exchange (ASX issuer code: HT8).
Harris Technology Group Limited Annual Report 2019/20 | 84
Harris Technology Group Limited Annual Report 2019/20 | 85