Harris Technology Group Limited Annual Report
Year Ended 30 June 2022
ABN: 93 085 545 973
Harris Technology Group Limited 2022 Annual Report 1
Harris Technology Group Growth Strategy
Leverage
rapid growth
from major
e-Commerce
Platforms
Become the
leading Tech
Seller on all
major
e-Commerce
marketplaces
Expand into
other
catagories
and grow
market share
Harris Technology Group Limited 2022 Annual Report 2
Chairman and CEO Letter
Dear Shareholders,
We hereby present the review of operations and Annual Report for Harris Technology Group Limited for the
financial year ended 30 June 2022.
We are disappointed with the result which has been exacerbated by the taking of provisions against inventory
in the light of slowing demand and the uncertain economic climate.
Review and Results of Operations
Continuous growth
The Company has continued to grow sales over the past year, posting a 21% increase in YoY sales to $50M after
having posted a 206% increase in sales in FY21.
All marketplaces experienced similar growth trends and the Company is expanding its presence on new and
emerging platforms as well as enhancing its own website with the launch of HTHome.com.au. Amazon remains
a key channel for Harris Technology and our position and rating continue to be excellent, thus helping us to
maintain a preferred status in claiming the “buy-box”. Whilst good sales results were experienced during Prime
Day and other online events, the company focused more on maintaining margins than sales increases as well as
exiting underperforming products and suppliers.
Challenging trading conditions
As the situation resulting from the pandemic stabilised and the economy entered into a period of uncertainty
contributed to by inflationary trends, we experienced a slowdown in demand and traffic across most channels
as can be seen in the revenue trend chart, particularly from January onwards when margins narrowed as a
result of increased competition discounting. This trend has affected the general eCommerce sector worldwide.
Strengthening the balance sheet
The team have been focused on improving margins and managing inventory levels, which have been under
pressure as a result of the prevailing trading conditions. This will remain a focus going forward with the
Company having executed a management review of all brands sold and reduced ongoing exposure to
underperforming ones.
The trading loss for the year is disappointing given the trajectory the Company is on, however we believe the
challenges experienced have been contained by the progress made in moving to higher margin categories and
the product review, with a turnaround in sight.
Inventory and working capital levels have been reduced year-on-year despite higher trading levels and we are
confident that the company is able to meet its expected working capital requirements in the next financial year.
Conclusion
We believe the company remains strongly positioned to capitalise on the widespread adoption towards online
shopping with our move into higher margin categories and with improvement in the economic sentiment, the
company will again return to strong financial performance.
Sincerely,
Alan Sparks (Chairman)
Garrison Huang (CEO)
Harris Technology Group Limited 2022 Annual Report 3
FY22 Summary
Full year profit and loss summary
Revenue from continuing
operations
Sales revenue
Other income
Total revenue and other income
Net profit/(loss) after tax
FY22
($m)
50.30
0.00
50.30
(1.46)
FY21
($m)
41.80
0.06
41.86
1.75
Change
($m)
8.50
(0.06)
8.44
(3.21)
Harris Technology Group Limited 2022 Annual Report 4
- 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000Jul-21Aug-21Sep-21Oct-21Nov-21Dec-21Jan-22Feb-22Mar-22Apr-22May-22Jun-22Revenue and Cost of SalesSalesCost of Goods
Full year profit and loss summary - underlying
Financial results include:
Gross profit
Total operating expenses
Profit/(loss) before income tax
Total comprehensive profit/(loss)
Balance Sheet
Cash and cash equivalents
Inventories
Net assets
FY22
($m)
7.46
8.92
(1.46)
(1.46)
FY21
($m)
7.67
6.55
1.13
1.75
Change
($m)
(0.21)
2.37
(2.59)
(3.21)
30 Jun 22
($m)
30 Jun 21
($m)
2.39
9.79
6.29
3.26
10.77
7.66
Harris Technology Group Limited 2022 Annual Report 5
Cash position
Cash and cash equivalents of $2,385,803 as at 30 June 2022.
Based on the cash position at end of FY22 and as a result of a stringent budgeting process as well
as the review of underperforming products, the Company believes it is in a position to meet its
working capital requirements throughout FY23.
Cash and Cash Equivalent from June 2021 to June 2022
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
-
Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22
Harris Technology Group Limited 2022 Annual Report 6
Management Team
Garrison Huang
Executive Director & Chief Executive Officer
• +20 years’ experience in management in the IT Importing and
Distribution industry
• Co-Founder of Anyware Corporation Pty Ltd – a leading IT
importing &
accessory distributor with well-established
distribution channels
• Appointed Executive Director and Chief Executive Officer on
19 July 2016
Harris Technology Group Limited 2022 Annual Report 7
Corporate Information
Non-Executive Chairman
Executive Director & CEO
Non-Executive Director
DIRECTORS
Mr Alan Sparks
Mr Garrison Huang
Mr Guy Polak
COMPANY SECRETARY
Mr Brett Crowley
REGISTERED OFFICE
124 Abbott Road
Hallam Victoria 3803
Tel: 1300 13 99 99
AUDITORS
EXCHANGE LISTING
ShineWing Australia
Level 10, 530 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
CBA
Level 20, Tower 1 Collins Square
727 Collins Street Melbourne, VIC 3008
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 2022 Annual Report 8
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2022)
The Directors present their report together with the financial report of the consolidated entity
consisting of Harris Technology Group Limited (the Company) and its controlled entities (the Group),
for the financial year ended 30 June 2022 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
year unless otherwise stated.
Names, qualifications, experience, and special responsibilities
Alan Sparks, Independent, Non-Executive Chairman
Mr. Sparks was appointed to the Board on 1 December 2020 as an Independent Non-Executive
Director. Mr Sparks assumed the role of Executive Chairman from 1 April 2021.
Experience and expertise
Alan is an accomplished senior executive with over 40 years’
experience in distribution, retail and technology with a proven track
record of growing businesses and improving their efficiency. Alan is a
member of the South African Institute of Chartered Accountants and a
Graduate of the Australian Institute of Company Directors. Alan has 20
years of leadership experience in APAC, ANZ and Africa, leading
growth of businesses across these markets for global brands. Alan’s
career highlights include having served as CEO – Cellnet Group Ltd
(ASX:CLT), Vice President – Belkin Asia Pacific based in Hong Kong,
President APAC – Carrier Corporation AsiaPac, and Senior Vice
President – Philips Consumer Electronics – APAC, based in Singapore.
Other directorships held by
Director in the last 3 years
Alan is a director of Renewable Power Australia Ltd and Pacificomm
Group Ltd.
Special responsibilities
Chair of the Board
Relevant interest in Harris
Technology Group securities
as at the date of this report
Mr Sparks has a relevant interest in 680,000 fully paid ordinary shares
in Harris Technology Group Limited which are held by an entity Mr
Sparks controls.
Harris Technology Group Limited 2022 Annual Report 9
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2022)
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
acquired Harris
2015 Anyware Corporation
Technology (www.ht.com.au) from Office works, one of Australia’s
longest established and leading e-commerce businesses focusing
on technology products.
Ltd
Pty
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
CEO
Relevant interest in Harris
Technology Group
securities as at the date of
this report
Mr Huang has a relevant interest in 90,643,708 fully paid ordinary
shares in Harris Technology Group Limited which are held by an
entity that Mr Huang controls.
Guy Polak, Non -Executive Director
Mr Polak was appointed to the Board on 1 April 2021 as a Non-Executive Director.
Experience and expertise Mr Polak is a skilled retail professional with over 25 years of
experience within the industry, specialising in sales, wholesale,
distribution, buying, sourcing, merchandising and ownership. In
2014, Guy was promoted to Head of Buying at Catch Group where
he reported directly to the CEO. Guy transformed and grew the
buying department introducing structure and buying principles that
made Catch.com.au the premium destination for all branded
products across major consumer categories. The growth and
success of the buying department ensured Catch.com.au had a
unique advantage over its competitors which was a strong
attraction for the Wesfarmers acquisition of Catch.com.au in 2019.
Harris Technology Group Limited 2022 Annual Report 10
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2022)
Other directorships held
by Director in the last 3
years
During the last 3 years, Mr Polak 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 Polak has a relevant interest in 195,000 fully paid ordinary
shares in Harris Technology Group Limited which is held by an
entity Mr Polak controls and by Mr Polak personally.
Howard Chen, Non-Executive Director
Mr Chen was appointed to the Board on 19 July 2016 as a Non-Executive Director and resigned on
8 November 2021.
Experience and expertise
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 2,485,444 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 2022 Annual Report 11
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2022)
Directors’ Meetings
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. Alan Sparks
Mr. Garrison Huang
Mr. Guy Polak
Mr. Howard Chen
Board Committees
9
9
9
4
9
8
9
4
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. Alan Sparks 1
Mr. Garrison Huang 2
Guy Polak 3
Mr. Howard Chen 4
Shares
Share rights and Options
680,000
90,643,708
195,000
2,485,444
nil
1,000,000*
nil
nil
1. The shares are held by Sparks Superannuation controlled by Mr. Alan Sparks
2. The shares are held by Australian PC Accessories Pty Ltd ATF GWH A/C and Double Eight Superfund; Mr. Huang
controls these entities.
3. The shares are held by Mr. Gershon Polak controlled by Mr. Guy Polak
4. The shares are held by H & J Investment Pty Ltd which Mr. Chen controls, and by Mr. Chen personally.
•
500,000 share rights (The Rights issued under Resolution 8 will automatically convert to 500,000 fully paid ordinary
shares in the Company on the condition that the Managing Director continues to be employed by the Company on the
date that is 18 months after the date of issue of the Rights.)
•
500,000 options (The Options can be converted into a fully paid share in the Company upon the payment of 12c on the
condition that the Mr Huang continues to be employed by the Company at the time of exercise of the Option.)
Harris Technology Group Limited 2022 Annual Report 12
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2022)
Earnings Per Share
Basic and diluted earnings per share
Dividends Paid, Recommended and Declared
Cents
(0.49)
No dividends were paid, declared, or recommended since the start of the financial year ended 30
June 2022 (2021: 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 2022. The Company’s subsidiary entities are set out in note 30 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 27 employees, inclusive of casual and part-time staff as at 30 June 2022 (2021: 25).
The Group does not have consulting agreements with any contractors as at 30 June 2022 (2021: Nil).
Group EPS Performance over the five-year period
Basic earnings/(loss) per share (cents)
(0.49)
0.71
0.54
(0.46)
(1.46)
2022
2021
2020
2019
2018
Harris Technology Group Limited 2022 Annual Report 13
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2022)
Financial position
The Group had net assets of $6,286,278 as at 30 June 2022 (2021: $7,661,113).
The Group had trade and other receivables of $2,392,703 as at 30 June 2022 (2021: $3,129,379).
The Group had trade and other payables of $5,966,987 as at 30 June 2022 (2021: $7,734,915).
Cash flows
The Group generated net cash operating outflows of $1,387,263 during the year ended 30 June 2022
(2021: net cash operating outflows $4,027,757). No proceeds from share issues. Repayments of
borrowings amounts to $1,711,113 for the year ended 30 June 2022.
There was a cash balance at 30 June 2022 of $2,385,803 (2021: $3,262,107).
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. The Audit and Risk
Management Committee functions are carried out by the Board as a whole.
Significant changes in the state of affairs
The following significant changes in the state of affairs of the Group occurred during the financial
year
Appointments and resignations of office holders
Howard Chen resigned from the Board on 8 November 2021.
Significant events after the balance date
No matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may
significantly affect the consolidated entity’s operations, the results of those operations, or the
consolidated entity’s state of affairs in future financial years.
Harris Technology Group Limited 2022 Annual Report 14
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2022)
Environmental regulation
The Group’s operations are not subject to any significant Commonwealth or State environmental
regulations or laws.
Shares issued during the year
There were 500,000 fully paid ordinary shares issued. The shares were issued in lieu of cash to a
contractor to the company for services rendered.
Performance Rights issued during the year
There were 900,000 performance rights issued to a director and employees under the Company's
Long-Term Incentive plan.
Share options (listed and unlisted)
There were 980,000 options issued to a director and employees under the Company's Long-Term
Incentive plan.
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 officers of the Company or any related entity.
Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, ShineWing
Australia, 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
ShineWing Australia 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.
Harris Technology Group Limited 2022 Annual Report 15
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2022)
Remuneration Report (Audited)
This Remuneration Report for the year ended 30 June 2022 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 2021 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.
Key Management Personnel (KMP) disclosed in this report
Remuneration governance
Executive remuneration arrangements
Non-executive Director remuneration arrangements
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 Alan Sparks***
Mr Guy Polak**
Chairman (non-executive)
Director (non-executive)
*Garrison Huang appointed Executive Director and CEO on 19 July 2016.
**Guy Polak appointed as Non-Executive Director on 01st of April 2021
***Alan Sparks temporarily appointed Executive Director on 01st of December 2020, assumed regular duties as
Non-Executive Chairman on 01 April 2021.
****Howard Chen resigned from Non-Executive Director position effective on 08th November 2021.
Harris Technology Group Limited 2022 Annual Report 16
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2022)
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. The Nomination and Remuneration Committee 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 and
shares where applicable.
Harris Technology Group Limited 2022 Annual Report 17
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2021)
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.
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 1
2022
2021
131,538
83,077
Non-Executive
Directors
Mr. Guy Polak 4
2022
2021
2022
2021
2022
2021
Mr Alan Sparks
2
Mr Howard
Chen 3
Other Key
Management
Personnel
33,330
14,999
50,000
27,677
6,666
35,000
Mr Brett
Crowley 5
2022
2021
36,000
36,000
Total KMP
2022
257,534
2021
196,753
-
-
-
-
-
-
-
-
-
-
-
-
13,154
7,892
-
-
-
-
-
-
-
-
13,154
7,892
-
-
-
-
-
-
-
-
-
-
-
-
Shares
$
-
-
-
-
-
-
-
-
-
-
-
-
144,692
90,969
33,330
14,999
50,000
27,677
6,666
35,000
36,000
36,000
270,688
204,645
-
-
-
-
-
-
-
-
-
-
-
1. Garrison Huang appointed Executive Director and CEO on 19 July 2016.
2. Alan Sparks assumed his role as Non-Executive Chairman on 01st April 2021, after acting as Executive Director from 1st December
2020 to 31st March 2021.
3. Howard Chen appointed Non-Executive Director on 19 July 2016 resigned from position on 08th November 2021
4. Guy Polak appointed Non-Executive Director on 01st of April 2021
5.
Brett Crowley appointed Company Secretary in December 2018
Harris Technology Group Limited 2022 Annual Report 18
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2022)
Remuneration Report (Cont.) (Audited)
6.
a.
Additional disclosures relating to options and shares
Performance rights holdings of key management personnel
As at the end of FY22 there 500,000 rights granted to KMP under the LTIP.
Shares issued on exercise of options.
There were no shares issued to KMP during the year upon the exercise of options.
b.
Shareholdings of key management personnel
Balance at
1 July 2021
Acquired / (dis-
posed) during
the year
No.
No.
Other
movements
Balance at
30 June 2022
No.
Executive Directors
Mr Garrison Huang 1
Non-Executive Directors
Mr Alan Sparks 2
Mr Howard Chen 3
Mr Guy Polak 4
Other Key
Management
Personal
86,643,708
4,000,000
680,000
4,543,968
(2,058,524)
195,000
-
Mr. Brett Crowley
1,035,000
(1,035,000)
-
-
-
-
-
90,643,708
680,000
2,485,444
195,000
-
1. The shares are held by Australian PC Accessories Pty Ltd ATF GWH A/C and Double Eight Super fund; Mr Huang
controls these entities.
2. The shares are held by Sparks Superannuation controlled by Mr. Alan Sparks
3. The shares are held by Mr Chen personally and by H & J Investment Pty Ltd ; Mr Chen
controls this entity resigned from his position on 08th November 2021
4. The shares are held by Mr. Polak Gershon control by Mr. Guy Polak
Harris Technology Group Limited 2022 Annual Report 19
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2022)
Remuneration Report (Cont.) (Audited)
Share-based compensation
Issue of shares
There were no shares issued to Directors and other key management personnel as part of
compensation during the year ended 30 June 2022.
Options
As per ASX announcements, there are 500,000 unlisted options under the Company’s Long-Term
Incentive Plan (LTIP) on issue for key management personnel.
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:
($)
Name of director
Garrison Huang
2022
2021
3,071,705
1,806,425
Harris Technology Group Limited 2022 Annual Report 20
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2022)
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
Directors’ Salaries
Total related party purchases
2022
$
97,734
(5,371)
91,111
2021
$
60,000
51,138
39,913
257,534
196,753
441,008
347,804
($)
2022
2021
Current payables to entities controlled by KMP
Trade payables – Inventories
Current receivables from entities controlled by KMP
Trade receivables – Inventories
-
-
15,709
9,583
1. Rental to Garrison Huang and his controlling entity was $97,734 in FY22 (2021: $60,000);
2.
Inventories purchased returned by Howard Chen’s controlling entity were ($5,371) in FY22 (2021: $51,138);
3. The Group accrued $91,111 interest expense in FY22 for loans from Garrison Huang and his controlling
entities. (2021: $39,913)
This concludes the remuneration report, which has been audited.
Harris Technology Group Limited 2022 Annual Report 21
Directors’ Report
(FOR THE YEAR ENDED 30 JUNE 2022)
Tax consolidation
Harris Technology Group and its 100% owned subsidiaries are part of an income tax consolidated
group.
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 29 to the consolidated 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 29 to the consolidated 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.
Rounding of amounts
The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian
Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been
rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in
certain cases, the nearest dollar.
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
Alan Sparks-Chairman
29 September 2022
Harris Technology Group Limited 2022 Annual Report 22
Harris Technology Group Limited 2022 Annual Report 23
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
(FOR THE YEAR ENDED 30 JUNE 2022)
($)
Sales revenue
Direct costs
Gross profit
Sales transaction expenses
Employee, contractor and director expenses
Distribution expenses
Legal, administration and registry expenses
Depreciation expenses
Finance costs
Technology expenses
Marketing expenses
Foreign exchange gain / (loss)
Other expenses
Other income
Profit/(loss) before income tax
Income tax benefit
Notes
7
2022
2021
50,295,594
41,800,861
(42,837,482)
(34,128,418)
7,458,112
7,672,443
(4,312,364)
(2,653,334)
(1,106,520)
(247,108)
(145,161)
(134,333)
(91,804)
(33,367)
11,163
(211,026)
1,007
(3,326,514)
(2,075,242)
(561,658)
(405,988)
(72,514)
(67,588)
(70,350)
(62,571)
(10,923)
46,698
59,751
(1,464,735)
1,125,544
-
627,872
8
7
9
Profit/(loss) after income tax
(1,464,735)
1,753,416
Other comprehensive income for the year
-
-
Total comprehensive profit/(loss) for the year
(1,464,735)
1,753,416
Earnings per share from profit
- Basic earnings per share
- Diluted earnings per share
10
10
(0.49)
(0.49)
0.71
0.71
Harris Technology Group Limited 2022 Annual Report 24
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(AS AT 30 JUNE 2022)
($)
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments and deposits
Total Current Assets
Non-current Assets
Property, plant and equipment
Right-of-use assets
Deferred tax assets
Total Non-current Assets
Total Assets
Current Liabilities
Trade and other payables
Borrowings
Contract liabilities
Lease liabilities
Employee benefit liabilities
Total Current Liabilities
Non-current Liabilities
Lease liabilities
Employee benefit liabilities
Total Non-current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Accumulated losses
Reserves
Total Equity
Notes
2022
2021
11
12
13
14
15
16
9
17
18
19
20
21
20
21
22
24
23
2,385,803
3,262,107
2,392,703
3,129,379
9,788,196
284,429
14,851,131
126,963
1,557,662
10,766,788
154,424
17,312,698
14,274
166,824
783,392
783,392
2,468,017
17,319,148
964,490
18,277,188
5,966,987
3,076,122
156,026
117,738
154,196
7,734,915
2,266,380
287,121
83,801
104,028
9,471,069
10,476,245
1,496,883
64,918
1,561,801
11,032,870
6,286,278
17,590,784
(11,304,506)
-
6,286,278
96,790
43,040
139,830
10,616,075
7,661,113
17,556,284
(9,954,535)
59,364
7,661,113
Harris Technology Group Limited 2022 Annual Report 25
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(FOR THE YEAR ENDED 30 JUNE 2022)
($)
Share Capital
Reserves
Accumulated
Losses
Total Equity
At 1 July 2021
Loss for the year
Other comprehensive income
Total comprehensive profit/(loss)
17,556,284
59,364
(9,954,535)
7,661,113
-
-
-
-
-
-
(1,464,735)
(1,464,735)
-
-
(1,464,735)
(1,464,735)
Contributions to equity (net of equity
raising costs)
34,500
-
-
34,500
Share based payment transactions
-
(59,364)
114,764
55,400
At 30 June 2022
17,590,784
-
(11,304,506)
6,286,278
7,803,124
11,432
(11,707,951)
(3,893,395)
At 1 July 2020
Profit for the year
Other comprehensive income
Total comprehensive profit/(loss)
-
-
-
-
-
-
-
1,753,416
1,753,416
-
-
1,753,416
1,753,416
-
-
9,753,160
47,932
Contributions to equity (net of equity
raising costs)
9,753,160
Share based payment transactions
-
47,932
At 30 June 2021
17,556,284
59,364
(9,954,535)
7,661,113
Harris Technology Group Limited 2022 Annual Report 26
CONSOLIDATED STATEMENT OF CASH FLOWS
(FOR THE YEAR ENDED 30 JUNE 2022)
($)
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Net cash flows used in operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from shares issued
Equity raising costs paid
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Net cash flows provided by financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
2022
2021
51,499,665
41,898,865
(52,886,928)
(45,926,622)
(1,387,263)
(4,027,757)
(130,194)
(14,274)
(130,194)
(14,274)
-
-
10,245,640
(648,000)
2,450,000
-
(1,711,113)
(3,432,986)
(97,734)
(31,700)
641,153
6,132,954
(876,304)
2,090,923
3,262,107
1,171,184
2,385,803
3,262,107
Harris Technology Group Limited 2022 Annual Report 27
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
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 2022 was
authorised for issue in accordance with a resolution of the Directors on 29 September 2022.
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 consolidated 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.
There were no standards adopted in the current period that had a material impact on the Group.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not
been early adopted.
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 2022. 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.
AASB 2020-3: Amendments to Australian Accounting Standards – Annual Improvements 2018-2020
and Other Amendments (applicable to annual reporting periods beginning on or after 1 January 2022)
This Standard amends a number of standards as follows:
• AASB 9: Financial Instruments to clarify the fees an entity includes when assessing whether
the terms of a new or modified financial liability are substantially different from the terms of
the original financial liability;
• AASB 116: Property, Plant and Equipment to require an entity to recognise the sales proceeds
from selling items produced while preparing property, plant and equipment for its intended
use and the related cost in profit or loss, instead of deducting the amounts received from the
cost of the asset; and
Harris Technology Group Limited 2022 Annual Report 28
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
New Accounting Standards and Interpretations not yet mandatory or early adopted (Cont.)
• AASB 137: Provisions, Contingent Liabilities and Contingent Assets to specify the costs that
an entity includes when assessing whether a contract will be loss-making.
AASB 2020-6: Amendments to Australian Accounting Standards – Classification of Liabilities as Current
or Non-current - Deferral of Effective Date
This Standard defers the mandatory effective date of amendments to AASB 101 that were originally
made in AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities
as Current or Non-Current to be applied for annual reporting periods beginning on or after 1 January
2023 instead of 1 January 2022.
This Standard amends AASB 101 Presentation to Financial Statements to clarify the following:
The classification as a non-current liability should be based on the existence of a ‘right’ (as opposed
to a ‘discretion’ as it was provided before this amendment) to defer the settlement of the liability for
at least twelve months after the reporting period.
The term ‘settlement’ includes issue of equity instruments in exchange of extinguishment of a
financial liability and such a settlement does not impact the classification of the liability as current or
non-current; and
Classification of a liability is unaffected by the likelihood that the entity will exercise its right to defer
settlement of the liability for at least twelve months after the reporting period.
The application of these amendments when effective is retrospective by restatement of prior periods.
Earlier application is permitted.
The Group has current and non-current liabilities that are classified based on the requirements of
AASB 101. Adoption of this amendment is not expected to change the Group’s classification of its
liabilities as current or non-current, however, it gives greater clarity to directors in making the
assessment regarding what the appropriate classification is.
AASB 2021-2: Amendments to Australian Accounting Standards – Disclosure of Accounting Policies
and Definition of Accounting Estimates (amends AASB 7, AASB 101, AASB 108, AASB 134 & AASB
Practice Statement 2) (applicable to annual reporting periods beginning on or after 1 January 2023)
This Standard amends a number of standards as follows:
• AASB 7: Financial Instruments: Disclosures to clarify that information about measurement
bases for financial instruments is expected to be material to an entity’s financial statements.
•
AASB 101: Presentation of Financial Statements to require entities to disclose their material
accounting policy information rather than their significant accounting policies;
Harris Technology Group Limited 2022 Annual Report 29
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
New Accounting Standards and Interpretations not yet mandatory or early adopted (Cont.)
• AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors to clarify how
entities should distinguish changes in accounting policies and changes in accounting
estimates;
• AASB 134: Interim Financial Reporting to identify material accounting policy information as a
component of a complete set of financial statements; and
• AASB Practice Statement 2, to provide guidance on how to apply the concept of materiality
to accounting policy disclosures.
(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.
(c)
Going concern
The consolidated 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 consolidated financial statements, the
Group made a loss of $1,464,735 (2021: profit of $1,753,416) and had net cash outflows from
operating activities of $1,387,263 (2021: net cash out flows of $4,027,757) for the year ended 30 June
2022. The Group also has material borrowings expiring within 15 months of the date of signing the
consolidated financial statements.
The Directors believe that there are reasonable grounds to believe that the Group will be able to
continue as a going concern, after consideration of the following factors:
• The Group has prepared budgets and cash flow forecasts for the next 9 months from the date
of this report which indicate the Group will have a positive cash balance during this year;
• A significant portion of the Group’s borrowings ($3.1m) are due to related parties and have
been extended post year end on 27 September 2022 to 31 December 2023.
Harris Technology Group Limited 2022 Annual Report 30
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
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 2022. 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 consolidated statement of profit or loss and other 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 2022 Annual Report 31
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
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. Dependent on the terms of the specific contract the transfer of control occurs either
upon despatch or upon delivery.
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 2022 Annual Report 32
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
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 consolidated 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 2022 Annual Report 33
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
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 consolidated statement of financial position.
• Cash flows are included in the consolidated 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 consolidated
statement of financial position.
Cash and cash equivalents also include amounts collected in respect of online sales during the year
by agents on behalf of the Group 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 2022 Annual Report 34
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
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 year 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 2022 Annual Report 35
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
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:
Office and warehouse equipment
Furniture and Fixtures
5 years
5 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 2022 Annual Report 36
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
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 consolidated statement of profit and loss and other 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 re measurement 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.
Volume rebates in relation to purchases are recognised in cost of sales when the corresponding
inventories are sold.
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 2022 Annual Report 37
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
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 year 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 2022 Annual Report 38
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(s)
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 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 year; 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 2022 Annual Report 39
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
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 wholly 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
control 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, senior executives and some third parties 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 and for third parties with reference to the fair value of the
goods/services provided. 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.
Harris Technology Group Limited 2022 Annual Report 40
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
(x)
Share based payments (Cont.)
Equity settled transactions (Cont.)
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.
In valuing equity-settled transactions, no account is taken of any non-market vesting conditions.
The charge to the consolidated statement of profit and loss and other comprehensive income for
the year 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 2022 Annual Report 41
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
3.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments comprise cash, trade and other receivables, trade 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.
($)
Financial assets
2022
2021
Cash and cash equivalents (non-interest bearing)
2,385,803
3,262,107
Financial liabilities
Interest bearing liabilities – fixed rate (current)
(3,076,122)
(2,266,380)
Net exposure
(690,319)
995,727
Harris Technology Group Limited 2022 Annual Report 42
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
3.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT.)
Risk exposures and responses (Cont.)
Interest rate risk (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 Group has no material interest rate risk 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
consolidated statement of financial position and notes to the consolidated 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 2022 Annual Report 43
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
3.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT.)
Foreign currency risk
The Group’s 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.
As at 30 June 2022, 86% of the Group’s financial liabilities will mature in less than one year (2021:
100%).
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 2022.
The remaining contractual maturities of the Group’s financial assets and liabilities are:
Year ended 30 June 2022
($)
< 1 year
Financial assets
Cash and cash equivalents
2,385,803
Trade and other receivables
2,392,703
Total
4,778,506
Financial liabilities
Trade and other payables
(5,966,987)
Third party loans
(4,417)
1-2 years
2-5 years
> 5 years
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,385,803
2,392,703
4,778,506
(5,966,987)
(4,417)
Lease liabilities
(117,738)
(300,491)
(541,287)
(655,105)
(1,614,621)
Related party loans
(3,071,705)
-
-
-
(3,071,705)
Total
(9,160,847)
(300,491)
(541,287)
(655,105)
(10,657,730)
Net maturity
(4,382,341)
(300,491)
(541,287)
(655,105)
(5,879,224)
Harris Technology Group Limited 2022 Annual Report 44
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
3.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT.)
The remaining contractual maturities of the Group’s financial assets and liabilities are:
Year ended 30 June 2021
($)
Financial assets
< 1 year
1-2 years
2-5 years
> 5 years
Total
Cash and cash equivalents
3,262,107
Trade and other receivables
3,129,379
Total
6,391,486
Financial liabilities
Trade and other payables
(7,734,915)
Third party loans
(459,955)
-
-
-
-
-
Lease liabilities
(83,801)
(96,790)
Related party loans
(1,806,425)
-
Total
(10,085,096)
(96,790)
Net maturity
(3,693,610)
(96,790)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,262,107
3,129,379
6,391,486
(7,734,915)
(459,955)
(180,591)
(1,806,425)
(10,181,886)
(3,790,400)
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.
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 years.
Harris Technology Group Limited 2022 Annual Report 45
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
4.
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT.)
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:
Revenue recognition
The Directors have utilised judgement in determining the point of transfer of control to customers
under each revenue contact. Judgment is required as there are multiple criteria to be assessed when
determining the point of transfer of control of goods to customers.
Deferred tax assets
The Directors have utilised judgement in determining whether sufficient future taxable profits are
probable against which to offset unutilised tax losses and temporary differences.
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 obsolescence 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.
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, 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
is disclosed in note 12.
Volume rebates
Volume rebates in relation to purchases are recognised in cost of sales when the corresponding
inventory is sold. Estimation is required with respect to which inventory items volume rebates are
allocated to in determining the cost of sales.
Harris Technology Group Limited 2022 Annual Report 46
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
5.
PARENT ENTITY INFORMATION
Information relating to Harris Technology Group Limited –
Parent ($)
Current Assets
Non-Current Assets
Total Assets
Current Liabilities
Non-Current Liabilities
Total Liabilities
Net Assets
Contributed equity
Accumulated losses
Share based payments reserve
Total equity
2022
2021
35,006
1,422,437
11,929,566
16,530,560
11,964,572 17,952,997
(956,474)
(1,202,630)
(1,569,044)
(135,508)
(2,525,518)
(1,338,138)
9,439,054 16,614,859
18,835,613
18,645,593
(9,396,559)
(2,090,098)
-
59,364
9,439,054 16,614,859
Total comprehensive profit/(loss) of the parent entity
(2,822,376)
(1,869,705)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries.
The parent entity and some of its subsidiaries are party to a deed of cross guarantee under which
each company guarantees the debts of the others. No deficiencies of assets exist in any of these
subsidiaries.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as
disclosed in note 2, except for the following:
•
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
• Dividends received from subsidiaries are recognised as other income by the parent entity and
its receipt may be an indicator of an impairment of the investment.
6.
CONTINGENCIES OF THE PARENT ENTITY
The parent entity has no contingent liabilities as at 30 June 2022 and 30 June 2021.
The parent entity has no capital commitments for property, plant and equipment as at 30 June 2022
and 30 June 2021.
Harris Technology Group Limited 2022 Annual Report 47
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
7.
REVENUE
($)
Sale of goods
Total Sales revenue
($)
Interest received
Sundry income
Government grants
Total other income
8.
DEPRECIATION EXPENSES
($)
Property, plant and equipment
Right-of-use assets
Total depreciation
2022
2021
50,295,594
41,800,861
50,295,594
41,800,861
2022
-
1,007
2021
275
9,476
-
50,000
1,007
59,751
2022
17,506
127,655
145,161
2021
-
72,514
72,514
Harris Technology Group Limited 2022 Annual Report 48
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
9.
INCOME TAX
($)
Current tax
Deferred tax
Income tax benefit
2022
-
-
-
2021
-
627,872
627,872
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:
Profit/(loss) before income tax expense
(1,464,735)
1,125,544
At the Group’s statutory income tax rate of 25% (2021:
26%)
Tax effect amounts which are not deductible / (taxable)
in calculating taxable income:
Impairment expense
Prior year over/under
Losses utilised
Deferred tax assets brought into account (unutilised
losses)
Income tax benefit
Deferred Tax Asset recognition
-
-
-
-
-
-
-
292,641
-
-
(155,622)
(137,019)
627,872
627,872
The Directors have determined that the availability of sufficient future taxable profits against which
to offset unutilised tax losses and temporary differences is probable as at 30 June 2022 and
consequently have recognised an asset in this regard. The assessment of the probability of sufficient
future taxable profits will be re-assessed at each reporting date.
The total deferred tax asset of $783,392 recognised on the balance sheet comprises the $627,872
recognised in profit or loss in 2021 and the $155,520 recognised directly in equity (see below).
The deferred tax asset recognised is in respect of unutilised losses ($474,136) and temporary
differences ($309,256).
Deferred Tax recognised in equity
$155,520 of deferred tax in relation to equity raising costs has been recognised directly in equity.
Harris Technology Group Limited 2022 Annual Report 49
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
9.
INCOME TAX (CONT.)
Reconciliation of unutilised losses
($)
Brought forward
Adjustment due to reassessment of available losses
Utilised in year
Carried forward
2022
1,823,600
-
-
1,823,600
2021
4,023,825
(1,673,229)
(526,996)
1,823,600
10.
EARNINGS PER SHARE
Basic earnings per share is calculated by dividing net profit 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 per share is calculated by dividing the net profit 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 earnings per share (cents)
Basic and diluted earnings per share
Basic and diluted earnings per share from total
comprehensive income
Total comprehensive profit for the year ($)
Weighted average number of ordinary shares used in
calculating basic earnings per share
Weighted average number of ordinary shares used in
calculating diluted earnings per share
2022
(0.49)
(0.49)
2021
0.71
0.71
(1,464,735)
1,753,416
297,988,221
245,395,481
297,988,221
245,395,481
As at 30 June 2022 and 30 June 2021 the issue of potential ordinary shares was assessed to be non-
dilutive and consequently diluted earnings per share is equal to basic earnings per share.
Harris Technology Group Limited 2022 Annual Report 50
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
11.
CASH AND CASH EQUIVALENTS
($)
Cash at bank and on hand
Total cash and cash equivalents
Reconciliation of net profit/(loss) after tax to net
operating cash flows ($)
Net profit/(loss) after tax
Non-cash items
Changes in operating assets and liabilities
(Increase)/decrease in trade and other receivables
Increase in prepayments and deposits
(Increase)/decrease in inventories
Decrease in contract liabilities
2022
2021
2,385,803
3,262,107
2,385,803
3,262,107
2022
2021
(1,464,735)
1,753,416
319,186
799,330
736,676
(2,392,830)
(130,005)
(117,624)
978,592
(7,443,803)
(131,095)
(31,248)
Increase/(decrease) in trade and other payables
(1,767,928)
4,609,674
Increase in employee benefit liabilities
72,046
69,053
Net cash flows used in operating activities
(1,387,263)
(4,027,757)
Harris Technology Group Limited 2022 Annual Report 51
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
12.
TRADE AND OTHER RECEIVABLES
($)
Trade and other receivables
Allowance for expected credit losses
Total trade and other receivables
13.
INVENTORIES
($)
Inventories
Provision for stock obsolescence
Total inventories
14.
PREPAYMENTS AND DEPOSITS
($)
Prepayments
Deposits
Total prepayments and deposits
2022
2,441,026
(48,323)
2,392,703
2021
3,177,702
(48,323)
3,129,379
2022
2021
10,299,988
10,904,732
(511,792)
(137,944)
9,788,196
10,766,788
2022
249,758
34,671
284,429
2021
97,577
56,847
154,424
Harris Technology Group Limited 2022 Annual Report 52
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
15.
PROPERTY, PLANT AND EQUIPMENT
($)
Gross carrying amount
At 1 July 2021
Additions
At 30 June 2022
Depreciation
At 1 July 2021
Depreciation for the year
At 30 June 2022
Net carrying amount
At 30 June 2021
At 30 June 2022
Office and
warehouse
equipment
Furniture &
Fixtures$
Total
14,274
126,285
140,559
-
3,909
3,909
14,274
130,194
144,468
-
16,506
16,506
-
999
999
-
17,505
17,505
14,274
-
14,274
124,053
2,910
126,963
Harris Technology Group Limited 2022 Annual Report 53
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
16.
RIGHT-OF-USE ASSETS
($)
Buildings right-of-use assets cost
Less: Accumulated depreciation
Carrying value
2022
1,683,521
(125,859)
2021
293,481
(126,657)
1,557,662
166,824
The Group leases land and buildings for its office and warehouse under an agreement of 5 years.
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous
financial year are set out below:
($)
Opening carrying value at 30 June 2021
Deductions: terminated leases
Additions: new warehouse
Depreciation expense
At 30 June 2022
17.
TRADE AND OTHER PAYABLES
($)
Trade payables
Other payables
Total trade and other payables
Buildings
right-of-use
166,824
(166,824)
1,683,521
(125,859)
1,557,662
2022
5,214,125
752,862
5,966,987
2021
7,717,302
17,613
7,734,915
Terms and conditions of the above trade and other payables:
(i)
Trade payables are non-interest bearing and are normally settled on 30 days EOM terms.
(ii) Other creditors are non-interest bearing and are normally payable within 30 and 90 days.
Fair value
Due to the short term nature of these payables, their carrying value is assumed to approximate their
fair value.
Foreign exchange and interest rate risk
Detail regarding foreign exchange and interest rate risk exposure is disclosed in note 3.
Harris Technology Group Limited 2022 Annual Report 54
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
18.
BORROWINGS
($)
Unsecured
Related party loans (Note 25)
Third party loans
Total current borrowings
19.
CONTRACT LIABILITIES
($)
Contract liabilities
Total contract liabilities
20.
LEASE LIABILITIES
($)
Lease liabilities – current
Lease liabilities – non-current
Total lease liabilities
21.
EMPLOYEE BENEFIT LIABILITIES
($)
Current
Annual leave
Long service leave
Total current
Non-current
Long service leave
Total non-current
2022
2021
3,071,705
1,806,425
4,417
459,955
3,076,122
2,266,380
2022
156,026
156,026
2021
287,121
287,121
2022
117,738
1,496,883
2021
83,801
96,790
1,614,621
180,591
2022
2021
105,188
49,008
154,196
85,068
18,960
104,028
64,918
64,918
43,040
43,040
Harris Technology Group Limited 2022 Annual Report 55
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
22.
CONTRIBUTED EQUITY
Issued and paid-up capital
($)
Ordinary shares fully paid
(net of equity raising costs)
Contributed equity
2022
2021
17,590,784
17,556,284
17,590,784
17,556,284
Movements in ordinary shares on issue
Number of Shares
$
Opening balance
297,795,481
17,556,284
Shares issued during the year
500,000
34,500
Closing balance
298,295,481
17,590,784
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 2022 Annual Report 56
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
23.
RESERVES
($)
Balance at beginning of financial year
Share based payments transfer
Balance at end of financial year
Share-based payments reserve
2022
59,364
(59,364)
2021
11,432
47,932
-
59,364
The reserve is used to recognise the value of equity benefits provided to employees and directors
as part of their remuneration, and other parties as part of their compensation for services.
24.
ACCUMULATED LOSSES
($)
Balance at beginning of financial year
Net profit for the year
Share based payments transfer
Share based payment adjustment
Balance at end of financial year
25.
RELATED PARTY LOANS
The loan balances are set out as below:
($)
Name of director
Garrison Huang
Total related party loans
2022
(9,954,535)
2021
(11,707,951)
(1,464,735)
1,753,416
59,364
55,400
-
-
(11,304,506)
(9,954,535)
2022
2021
3,071,705
1,806,425
3,071,705
1,806,425
The loans due to related parties and have been extended post year end on 27 September 2022
from 31 December 2022 to 31 December 2023. Mr Huang also committed further $1m funding
making the total facility limit from $3.5 to $4.5m.
Harris Technology Group Limited 2022 Annual Report 57
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
26.
COMMITMENTS
The Group has no material commitments as at 30 June 2022 (30 June 2021: none) that are not
recognised as liabilities.
27. CONTINGENT ASSETS AND LIABILITIES
The Group has no contingent assets and no contingent liabilities which require disclosure.
28.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
No matters or circumstances has arisen since 30 June 2022 that has significantly affected, or may
significantly affect the Group ’s operations, the results of those operations, or the Group ’s state of
affairs in future financial years.
Harris Technology Group Limited 2022 Annual Report 58
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
29.
AUDITOR’S REMUNERATION
($)
Audit and review of the financial report of Group for the year
Other services
Total auditors’ remuneration
2022
2021
55,500
55,500
-
-
55,500
55,500
30.
RELATED PARTY TRANSACTIONS
(a) Subsidiary
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
Lincd HQ Pty Ltd
(b) Ultimate parent
Country of
Incorporation
Australia
Australia
Australia
% of Equity interest
2022
2021
100
100
100
100
100
100
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
capital. The intercompany loans are repayable to the inter-group entities at call and no interest is
payable. At 30 June 2022, those loans have been eliminated in the consolidated balance sheet.
(d) Other related party transactions
During the financial year ended 30 June 2022, there were a total of $3,071,705 Directors’ loans
reported by the period. Refer to note 25 (2021: $1,806,425). All transactions were made on normal
commercial terms and conditions and at market rates unless otherwise stated.
Refer to section 6d of Remuneration Report for more details relating to other related party
transactions.
Harris Technology Group Limited 2022 Annual Report 59
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
31.
KEY MANAGEMENT PERSONNEL
The total remuneration paid to KMP of the Company and the Group during the year are as follows:
($)
Short-term employee benefits
Post-employment benefits
Total
Short-term employee benefits
2022
257,534
13,154
270,688
2021
196,753
7,892
204,645
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 2022 Annual Report 60
Notes to the Consolidated Financial Statements
(for the Financial Year ended 30 June 2022)
32.
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.
33.
SHARE-BASED PAYMENTS
Performance Rights
Historically, options were issued to key management personnel as per the details below. 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.
On 9 February 2021, Harris Technology Limited (HT8) issued 15,000,000 Unlisted options to a third-
party service provider in three tranches.
Grant
date
09-02-21
09-02-21
09-02-21
Total
Expiry
date
09-02-22
17-08-21
09-02-22
Exercise
Price
$0.160
$0.160
$0.200
Balance at
30-06-21
Granted
Exercised
- 2,500,000
- 7,500,000
- 5,000,000
- 15,000,000
Expired
(2,500,000)
(7,500,000)
(5,000,000)
(15,000,000)
-
-
-
-
Balance at
30-06-22
-
-
-
-
Harris Technology Group Limited 2022 Annual Report 61
Director’s Declaration
(for the Financial Year ended 30 June 2022)
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 2022 are in accordance with
the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30
June 2022 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 2022.
On behalf of the Board
Alan Sparks
Non-Executive Chairman
Melbourne 29 September 2022
Harris Technology Group Limited 2022 Annual Report 62
Harris Technology Group Limited 2022 Annual Report 63
Harris Technology Group Limited 2022 Annual Report 64
Harris Technology Group Limited 2022 Annual Report 65
Harris Technology Group Limited 2022 Annual Report 66
Harris Technology Group Limited 2022 Annual Report 67
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 28 September 2022
(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 (Fourth
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 & Garrison Huang
Number of holders
Ordinary Shares
88,643,708
29.76%
As at the Reporting Date, the number of holders in each class of equity securities:
Class of Equity Securities
Fully Paid Ordinary Shares
Options at various prices
Performance rights
Number of holders
1,842
12
12
Harris Technology Group Limited 2022 Annual Report 68
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 1,842 holders of a total of 298,295,481 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
Distribution of option holders
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
Total Units
121
310
356
819
236
19,902
1,203,938
2,868,986
31,257,816
262,944,839
%
0.01
0.40
0.96
10.48
88.15
1842
298,295,481
100.00
Holders of options
expiring April 2023
-
-
-
11
1
12
%
-
-
-
44.44
55.56
100.00
Harris Technology Group Limited 2022 Annual Report 69
Distribution of performance rights holders
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 of
performance rights
expiring April 2023
-
-
-
11
1
12
%
-
-
-
44.44
55.56
100.00
There are no persons who hold 20% or more of equity securities in each unquoted class other than under an
employee incentive scheme.
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
298,295,481
10,657,437
1,150
3.57
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.
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
Balance as at Reporting Date
%
Australian PC Accessories
82,940,872
27.85%
Mr Weiyu Zhang
12,244,086
Mr Kenneth Joseph Hall
11,550,000
BNP Paribas Noms Pty Ltd
9,951,645
4.11%
3.88%
3.34%
Harris Technology Group Limited 2022 Annual Report 70
Fu-Tien Lee
Jason Carroll
8,216,242
8,140,994
Citicorp Nominees Pty Limited
6,756,008
Cha Shin Chi Investment Co Ltd
Ping Shen
Ping Yu
Beaumy Pty Ltd
Junji Kamoshida
5,488,969
4,545,455
4,136,097
3,559,535
3,457,074
H & J Investment Pty Ltd
3,315,444
Garrison Huang and Xiaoying Tang
2,702,836
Arian Pony Pty Ltd
2,500,000
2.76%
2.73%
2.27%
1.84%
1.53%
1.39%
1.20%
1.16%
1.11%
0.91%
0.84%
0.84%
Fronton Australia Pty Ltd
H & J Investment Pty Ltd
2,500,000
2,485,444
0.835%
Ms Weili Ma
2,415,602
HSBC Custody Nominees (Australia) Ltd
1,972,851
Comsec Nominees Pty Ltd
1,966,245
Jianchao Wang
1,900,000
0.81%
0.66%
0.66%
0.64%
Total number of shares of Top 20 Holders
184,429,955
61.93%
Total Remaining Holders Balance
113,865,526
38.07%
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.
Company Secretary
The Company Secretary is Mr Brett Crowley.
Registered Office
The address and telephone number of the Company’s registered office are:
124 Abbott Road,
Hallam, Victoria 3803
Tel: 1300 13 99 99
Harris Technology Group Limited 2022 Annual Report 71
Share Registry
The address and telephone number of the Company’s share registry, Boardroom Pty Limited, are:
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 2022 Annual Report 72
Harris Technology Group Limited 2022 Annual Report 73