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HiTech Group Australia Limited
A.B.N. 41 062 067 878
Annual Report 2017
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
CONTENTS
Corporate Directory
Chairman’s Report to Shareholders
Corporate Governance Statement
Directors’ Report
Auditor’s Independence declaration
Directors’ Declaration
Independent Audit Report
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the Financial Statements
Stock Exchange Information
Top 20 Shareholders
1
2
3-11
12-17
18
19
20-23
24
25
26
26
27-44
45
46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
CORPORATE DIRECTORY
HiTech Group Australia Limited’s (“the Company’s”) shares are quoted on the official list of the
Australian Securities Exchange Limited.
The ASX code for the Company’s ordinary fully paid shares is “HIT”.
Directors
Ray Hazouri – Chairman
Elias Hazouri – Chief executive officer
George Shad – Non-executive director
Company Secretaries
Ray Hazouri
Elias Hazouri
Registered office and principal place of business
Level 7
9 Young Street
Sydney NSW 2000
Telephone: (02) 9241 1919
Facsimile: (02) 9241 1731
Internet: www.hitechaust.com
E-mail:info@hitechaust.com
Share registry
Computershare Investor Services Pty Ltd
Level 3,
60 Carrington Street,
Sydney NSW 2000
Telephone: (02) 8234 5000
Auditors
Raymond Yi Kuen Lee
Suite 272,
Level 2, The Miramar
398-408 Pitt Street
Sydney NSW 2000
Bankers
St George Bank Limited
4-16 Montgomery Street
Kogarah NSW 2217
Page 1 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
CHAIRMAN’S REPORT TO SHAREHOLDERS
Dear Shareholder,
It is with pleasure that the directors present this 18th annual report of HiTech Group Australia Limited
(‘HiTech’) since the listing of the company on the Australian Securities Exchange (“ASX”) on 17 April,
2000.
For the financial year ended 30 June 2017, the consolidated entity’s operating revenue is $23,345,598,
an increase of 27% over the previous corresponding period (pcp). The high margin permanent
placement income was 13% higher and contracting revenue was 28% higher.
Gross Profit is $4,705,131, an increase of 21% over pcp (FY16:$ 3,892,918).
• Underlying EBITDA is $3,429,014, an increase of 36%
• Underlying NPAT is $2,414,725, an increase of 34%
• Underlying full diluted EPS is 6 cents, an increase of 23%
•
FY17 underlying growth represents the removal of the impact of realised and unrealised
investment gains in FY16 and FY17, which are non-core HiTech
Our Net tangible Assets (NTA) is $0.19 per share.
The directors declared a fully franked dividend of 3 cents per share. The dividend was paid on 14
September 2017 to shareholders registered on close of business on 31 August 2017.
The Australian job market, particularly the ICT sector, has seen renewed demand for quality talent. We
have succeeded in retaining our valued clients, winning new business, diversifying and ensuring that
operating costs are kept to a minimum. Throughout FY2017, we have been successful in being retained
as preferred suppliers to additional government departments including the NSW state government and
new Federal Government supply panels. This will provide us with an opportunity to further diversify our
revenue base. We are constantly evolving and improving our systems and productivity to provide a
better service to our clients and candidates.
HiTech remains a resilient and strong company with a strong balance sheet and no debt which is unique
in our industry. We are committed to improving our revenues and profitability.
Our major revenue is still generated from our core ICT recruitment and contracting business and we
are active in non-ICT areas of recruitment. We have been active in securing clients all around Australia
so that we can further develop our client base. HiTech has a proven business model that has evolved
over the past 24 years. I am confident that our commitment to growth and profitability will enhance value
for all our shareholders in the future.
We are ready to take advantage of market opportunities and EPS accretive acquisitions to increase
stakeholder returns. The future for HiTech has never looked brighter. Our results are the best in our
market sector in terms of profitability.
The directors extend their appreciation to all our dedicated team members for their efforts during the
year, shareholders, candidates and our valued clients.
Yours sincerely,
Raymond Hazouri
Chairman and Chief Executive Officer
03 October 2017
Page 2 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
CORPORATE GOVERNANCE STATEMENT
HiTech Group Australia Limited is committed to good corporate governance and disclosure. The
Company has substantially adopted the ASX Corporate Governance Council’s “Corporate Governance
Principles and Recommendations’ (Third edition March 2014) for the entire FY2017 financial year.
Where the ASX Corporate Governance Council’s recommendations have not been adopted by the
Company, this has been identified and explained below.
Complied
Note
1.1 (a) Disclose the respective roles and responsibilities of its board and
Yes
management.
(b) Disclose those matters expressly reserved to the board and those
delegated to management.
1.2 (a) Undertake appropriate checks before appointing a person, or
putting forward to security holders a candidate for election, as a
director; and
(b) Provide security holders with all material information in its
possession relevant to a decision on whether or not to elect or re-elect
a director.
1.3 Have a written agreement with each director and senior executive
setting out the terms of their appointment.
1.4 The company secretary of a listed entity should be accountable
directly to the board, through the chair, on all matters to do with the
proper functioning of the board.
1.5 (a) Have a diversity policy which includes requirements for the board
or a relevant committee of the board to set measurable objectives for
achieving gender diversity and to assess annually both the objectives
and the entity’s progress in achieving.
(b) Disclose the diversity policy or a summary of it.
(c) Disclose as at the end of each reporting period the measurable
objectives for achieving gender diversity set by the board or a relevant
committee of the board in accordance with the entity’s diversity policy
and its progress towards achieving them, and either:
Yes
Yes
Yes
Yes
Yes
No
N/A
N/A
1
1
2
2
2
2
7
(1) the respective proportions of men and women on the board, in
Yes
7
senior executive positions and across the whole organisation
(including how the entity has defined “senior executive” for these
purposes)
(2) if the entity is a “relevant employer” under the Workplace Gender
Equality Act, the entity’s most recent “Gender Equality Indictors”,
as defined in and published under that Act.
1.6 (a) Have and disclose a process for periodically evaluating the
performance of the board, its committees and individual directors; and
(b) Disclose, in relation to each reporting period, whether a
performance evaluation was undertaken in the reporting period in
accordance with that process.
N/A
Yes
Yes
2
2
Page 3 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
CORPORATE GOVERNANCE STATEMENT (continued)
Note
Complied
1.7 (a) Have and disclose a process for periodically evaluating the
performance of its senior executives.
(b) Disclose, in relation to each reporting period, whether a
performance evaluation was undertaken in the reporting period in
accordance with that process.
2.1 (a) Have a nomination committee.
(b) If it does not have a nomination committee, disclose that fact and
the processes it employs to address board succession issues and to
ensure that the board has the appropriate balance of skills,
knowledge, experience, independence and diversity to enable it to
discharge its duties and responsibilities effectively.
Yes
Yes
No
Yes
2.2 A listed entity should have and disclose a board skills matrix setting
No
out the mix of skills and diversity that the board currently has or is
looking to achieve in its membership.
2.3 (a) Disclose the names of the directors considered by the board to be
Yes
independent directors,
(b) Disclose if a director has an interest, position, association or
relationship but the board is of the opinion that it does not
compromise the independence of the director, the nature of the
interest, position, association or relationship in question and an
explanation of why the board is of that opinion.
(c) Disclose the length of service of each director.
2.4 A majority of the board of a listed entity should be independent
directors.
2.5 The chair of the board should be an independent director and, in
particular, should not be the same person as the CEO of the entity.
2.6 Have a program for inducting new directors and provide appropriate
professional development opportunities for directors to develop and
maintain the skills and knowledge needed to perform their role as
directors effectively.
3.1 (a) Have a code of conduct for its directors, senior executives and
employees.
(b) Disclose the code of conduct or a summary of it.
Yes
Yes
No
No
Yes
Yes
Yes
2
2
3
3
2
4
4
4
4
5
2
6
6
Page 4 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
CORPORATE GOVERNANCE STATEMENT (continued)
Note
Complied
4.1 (a) Have an audit committee which:
(1) has at least three members, all of whom are non-executive
directors and a majority of whom are independent directors;
(2) is chaired by an independent director, who is not the chair of
the board, and disclose:
(3) the charter of the committee;
(4) has the relevant qualifications and experience of the members
of the committee.
(5) In relation to each reporting period, the number of times the
committee met throughout the period and the individual attendances
of the members at those meetings.
(b) If it does not have an audit committee, disclose that fact.
4.2 The board of a listed entity should, before it approves the entity’s
financial statements for a financial period, receive from its CEO and
CFO a declaration that, in their opinion, the financial records of the
entity have been properly maintained and that the financial statements
comply with the appropriate accounting standards and give a true and
fair view of the financial position and performance of the entity and
that the opinion has been formed on the basis of a sound system of
risk management and internal control which is operating effectively.
Yes
No
Yes
Yes
Yes
Yes
N/A
Yes
4.3 Ensure that its external auditor attends its AGM and is available to
answer questions from security holders relevant to the audit.
Yes
5.1 (a) Have a written policy for complying with its continuous disclosure
Yes
obligations under the Listing Rules and
(b) Disclose that policy or a summary of it.
6.1 Provide information about itself and its governance to investors via its
website.
6.2 Design and implement an investor relations program to facilitate
effective two-way communication with investors.
6.3 Disclose the policies and processes it has in place to facilitate and
encourage participation at meetings of security holders.
6.4 Give security holders the option to receive communications from, and
send communications to, the entity and its security registry
electronically.
Yes
Yes
Yes
Yes
Yes
8
8
8
8
8
8
9
8
10
10
10
11
11
11
Page 5 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
CORPORATE GOVERNANCE STATEMENT (continued)
Note
Complied
7.1 (a) have a committee or committees to oversee risk, each of which:
(1) has at least three members, a majority of whom are
independent directors; and
(2) is chaired by an independent director, and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the number of times the
committee met throughout the period and the individual attendances
of the members at those meetings; or
(b) if it does not have a risk committee or committees that satisfy (a)
above, disclose that fact and the processes it employs for overseeing
the entity’s risk management framework.
Yes
No
Yes
Yes
Yes
Yes
N/A
7.2 (a) Review the entity’s risk management framework at least annually
Yes
to satisfy itself that it continues to be sound
(b) Disclose, in relation to each reporting period, whether such a
review has taken place.
Yes
7.3 (a) if it has an internal audit function, how the function is structured
No
and what role it performs; or
(b) If it does not have an internal audit function, that fact and the
processes it employs for evaluating and continually improving the
effectiveness of its risk management and internal control processes.
Yes
12
12
12
12
12
12
12
12
12
12
7.4 Disclose whether it has any material exposure to economic,
Yes
13
environmental and social sustainability risks and, if it does, how it
manages or intends to manage those risks.
8.1 (a) have a remuneration committee which:
(1) has at least three members, a majority of whom are
independent directors; and
(2) is chaired by an independent director, and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period, the number of times the
committee met throughout the period and the individual attendances
of the members at those meetings; or
(b) if it does not have a remuneration committee, disclose that fact
and the processes it employs for setting the level and composition of
remuneration for directors and senior executives and ensuring that
such remuneration is appropriate and not excessive.
14
No
N/A
N/A
N/A
N/A
N/A
Yes
14
Page 6 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
CORPORATE GOVERNANCE STATEMENT (continued)
Complied
Note
8.2 Should separately disclose its policies and practices regarding the
Yes
14
remuneration of non-executive directors and the remuneration of
executive directors and other senior executives.
8.3 A listed entity which has an equity-based remuneration scheme
should:
(a) have a policy on whether participants are permitted to enter into
transactions (whether through the use of derivatives or otherwise)
which limit the economic risk of participating in the scheme; and
Yes
14
(b) Disclose that policy or a summary of it.
Yes
14
Notes
1.
The directors of the Company are accountable to shareholders for the proper management of the
business and affairs of the Company. The role of the board is to approve the strategic direction of
the Group, guide and monitor the management of HiTech in achieving its strategic plans, and
oversee good governance practice.
The express responsibilities of the board include:
•
•
•
•
•
•
establishing, monitoring and reviewing corporate strategies and performance objectives;
appointing and when necessary replacing the CEO, Company Secretary and senior
management;
reviewing the performance and composition of the board and approving board, CEO and
executive succession planning and remuneration frameworks;
approving and monitoring financial reporting and Company performance, including the
external audit and ensuring continuous material disclosure;
approving
raising/restructures;
ensuring that appropriate risk management systems, internal compliance and control,
reporting systems, codes of conduct, and legal compliance measures are in place and
effective; and
dividends, major
expenditure,
acquisitions
capital
capital
and
• monitoring progress in relation to the Company’s diversity objectives and compliance with
its diversity policy.
The managing director and Chief Executive Officer (CEO), Mr. E Hazouri, is a member of the board.
The CEO has responsibility for the day-to-day operations of the Company and is supported in these
functions by senior management. The board maintains ultimate responsibility for strategy and
control of the Company.
The board has delegated day-to-day responsibility for the management of the Company to the
CEO/Chairman, including:
•
•
•
implementing corporate strategies and making recommendations to the board on
significant corporate strategic initiatives;
implementing and maintaining appropriate risk management and compliance frameworks;
and
keeping the board updated on the performance of the Company, including financial
reporting and continuous disclosure information.
Page 7 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
CORPORATE GOVERNANCE STATEMENT (continued)
2.
The board oversees the appointment and induction process for directors and committee members,
and the selection, appointment and succession planning process of the Company’s executive
management team. When a vacancy exists or there is a need for particular skills, the board
determines the selection criteria based on the required skills. The appropriate skill mix, education,
experience, personal qualities, and diversity are factors taken into account in each case, and the
appropriate checks are made into the candidate’s background. If these criteria are met and the
board appoints the candidate as a director, that director must have their appointment approved by
shareholders at the next annual general meeting. The skills, experience and expertise relevant to
the position of each director in office during the year ended 30 June 2017 are detailed on pages 12
– 13 of this report.
The board aims through the notices of meeting for annual general meetings to provide shareholders
with all material information known to the board relevant to a decision on whether or not to elect or
re-elect a director, as well as a statement as to whether the board supports the election or re-
election of the director.
Senior executives, including the CEO and the Company Secretaries, have a formal job description
and letter of appointment describing their term of office, duties, rights and responsibilities. The
appointment letter is consistent with the ASX Recommendations.
There is no formal process for periodic evaluation of
the board, board
committees, individual directors and senior executive. While no performance evaluation of the
Board or management was carried out during the reporting period, this is continually monitored by
the Chairman and the Board. The Chairman also speaks to each director individually regarding
their role as a director
The Company Secretaries have responsibility for the company secretarial duties,
including
coordination of all Board business, including agendas, Board papers, minutes, communication with
regulatory bodies and ASX, and all statutory and other filings, and are accountable directly to the
board, through the Chairman. The decision to appoint or remove company secretaries are made by
the board.
the performance of
3.
The company does not have a nomination committee as the size of the company and the board
does not warrant such a committee. All board nomination matters are considered by the whole
board, including board succession, continuing development of board members and performance
evaluation.
4. Of the three directors, Mr. G. Shad is a non-executive and an independent director. While a majority
of the board members are not independent directors, the board believes that the people on the
board can and do make independent judgements in the best interests of the company at all times.
No independent director of the Company has any interest, position, association or relationship that
may compromise the independence of the director based on the criteria described in Box 2.3 of
the Corporate Governance Principles and Recommendations (Third edition March 2014).
5. The chairman is an executive director and a major shareholder and therefore is not an independent
director. The Board believes that even though the chairman is not an independent director the
chairman is able to make quality and independent judgements on all relevant issues falling within
the scope of the role of a chairman.
The roles of Chairman and Chief Executive Officer are currently exercised by the same individual
which is believed to be appropriate given the size of the Company.
The length of service of each director is set out in the following table:
Director
Length of Service
Mr. R. Hazouri
Mr. E. Hazouri
Mr. G. Shad
24 years
24 years
14 years
Page 8 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
CORPORATE GOVERNANCE STATEMENT (continued)
6. The consolidated entity recognises the need for directors and employees to observe the highest
standards of behaviour and business ethics. All directors and employees are required to act in
accordance with the law and with the highest standard of propriety.
The Company has adopted a code of conduct to guide compliance with legal and other obligations
to stakeholders of
the Company which may be accessed on the Company’s website
(https://www.hitechaust.com). This code provides guidance to directors and management on
practices necessary to maintain confidence in the integrity of the Company.
7. The Board has not yet established objectives in relation to gender diversity but is committed to a
continuation of current employment practices where employees are selected on merit. The aim is to
achieve greater diversity not only in gender but also in matters of age, disability, ethnicity, marital or
family status, religious or cultural background, sexual orientation and gender identity within director
and senior executive positions as they become vacant and appropriately skilled candidates are
available.
Details of female representation in the company are set out below:
Number of women employees in the whole organisation
Number of women in senior executive positions*
Number of women on the Board
Number
6
1
-
%
60%
33%
-
* Senior executive positions include senior managers, executive Directors and Company Secretaries.
The Company is not a “relevant employer” under the Workplace Gender Equality Act.
8. The Company has established an Audit Committee with an independent chairman Mr George Shad
and one other member who is an executive director. The board has established an Audit and Risk
Management Committee which provides assistance to the board in fulfilling the corporate governance
and oversight responsibilities of the board to verify and safeguard the integrity of the financial
reporting of the Company. During the financial year, the audit and risk committee met 2 times.
A formal charter of the audit and risk management committee has been approved by the Board a
copy of which can be viewed on the Company’s website (http://www.hitechaust.com).
As required by Section 250T of the Corporations Act 2001 the company's auditor attends annual
general meetings of
those meetings allows a reasonable
opportunity for members to ask questions of the auditor concerning the conduct of the audit and the
preparation and content of the auditor's report.
the company and the chairman of
9. The board requires the managing director and the employees who jointly perform the function of the
chief financial officer (CFO) to state in writing to the board that in their opinion, the financial records
of the entity have been properly maintained and that the financial statements comply with the
appropriate accounting standards and give a true and fair view of
the financial position and
performance of the entity and that the opinion has been formed on the basis of a sound system of
risk management and internal control which is operating effectively.
10.The Company has established procedures designed to ensure compliance with the ASX Listing
Rules so that Company announcements are made in a timely manner, are factual, do not omit
material information and are expressed in a clear and objective manner that allows investors to
assess the impact of the information when making investment decisions.
Established policies which can be viewed on the Company’s website also ensure accountability at
a senior management level for ASX compliance. The Board approves all disclosures necessary to
ensure compliance with ASX Listing Rule disclosure requirements.
Page 9 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
CORPORATE GOVERNANCE STATEMENT (continued)
11.The Company has a communications strategy and an established policy on stakeholder
communication and continuous disclosure to promote effective communication with shareholders,
subject to privacy laws and the need to act in the best interests of the Company by protecting
commercial information.
The Company’s policy on communication with shareholders is set out in the Company’s ‘Policy on
stakeholder communication and continuous disclosure’ which can be viewed on the Company’s
website
Investors are able to access information about the company and its governance via the company’s
website (https://www.hitechaust.com)
relations
representatives of HiTech are available to meet with shareholders from time to time, and respond to
queries addressed to our investor relations email address (info@hitechaust.com). Security holders
are able to send and receive communications electronically to the Company and our share registry
via our share registry, Computershare.
HiTech aims to actively engage with shareholders and other stakeholders at the Annual General
Meeting. At each AGM, discussion is encouraged regarding the performance of the company,
prospects, management and the board, and any other area of interest or concern. Security holders
who are unable to attend the AGM are able to ask questions and make comments ahead of the
meeting, for response both individually and as a discussion item at the AGM.
in the Investor Relations section.
Investor
12. The board has established policies on risk oversight and management which may be viewed on the
Company website (https://www.hitechaust.com). The audit and risk committee oversees both the
audit and risk management of
independence and
membership of the committee can be found under the section 4.1 of this document, as related to the
audit function of the committee, and the committee charter may be found on the HiTech website.
The board continually monitors areas of significant business risk with input from the audit and risk
committee. Practices have been established to ensure:
the company. Details of
the composition,
•
•
•
•
•
•
•
capital expenditure and revenue commitments above a certain size obtain prior Board
approval;
financial exposures are controlled, including the use of derivatives. Further details of the
Company’s policies relating to interest
forward exchange rate
management and credit risk management are included in the financial statements;
occupational health and safety standards and management systems are monitored and
reviewed to achieve high standards of performance and compliance with regulations;
business transactions are properly authorised and executed;
the quality and integrity of personnel;
financial
framework; and
crisis management policies are in effect.
reporting accuracy and compliance with the financial
reporting regulatory
rate management,
Systems of internal financial control have been put in place by the management of the Company
and are designed to provide reasonable, but not absolute protection against fraud and material
misstatement. These controls are intended to identify, in a timely manner, control issues that require
attention by the board or audit and risk committee.
The board continually monitors the Company’s risk management framework, and reviews the audit
and risk committee charter and policy on risk oversight and management annually to ensure that the
framework is robust. The Company’s risk management framework has been continuously monitored
throughout the year ended 30 June 2017, and revisions have been made as necessary on an
ongoing basis throughout the financial year.
The risk management and internal control processes of the Company are evaluated and monitored
for effectiveness by the audit and risk committee in conjunction with the board on an ongoing basis.
13. HiTech recognises the importance of ensuring the economic, environmental and social sustainability
of the Company. The board monitors sustainability issues and works closely with management to
establish best practices. The board has determined that there are no current material exposures to
economic, environmental and social sustainability risks.
Page 10 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
CORPORATE GOVERNANCE STATEMENT (continued)
14.Due to the size of the Board, the Company does not have a remuneration committee. The functions
normally carried out by such a committee are currently handled by the whole Board.
The remuneration policy, which sets the terms and conditions for the chief executive officer and
other senior executive has been approved by the board. All executives receive a base salary,
superannuation and performance incentives. The board reviews executive packages annually by
reference to company performance, executive performance, comparable information from industry
sectors and other listed companies. Executives are entitled to participate in the employees share
option arrangements. The criteria used in determining the issue of options to management include
achievement of revenue and profit targets, new business generated, loyalty and years of service
plus other criteria.
Options are issued to Directors and Company Executives as part of their remuneration. The options
are not issued based on performance criteria, but are issued to all Directors and executives of the
Company to increase goal congruence among Directors, executives and shareholders
The amount of remuneration of all directors and executives, including all monetary and non-
monetary components, is detailed in the Director’s Report. All remuneration paid and options issued
to executives are valued at a cost to the Company and expensed. Options are valued using the
Black-Scholes methodology.
If a participant in equity based remuneration scheme established by the Company enters into any
transactions (whether through the use of derivatives or otherwise) which is designed to limit the
economic risk of participating in the equity based remuneration scheme:
(a) the participant must disclose details of the transaction to the Company Secretary;
(b) the Company Secretary will disclose to the Board all details of any such economic risk
management transactions.
The board expects that the remuneration structure implemented will result in the company being
able to attract and retain the best executives to run the economic entity. It will also provide executives
with the necessary incentives to work to grow long-term shareholder value.
Page 11 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
DIRECTORS’ REPORT
The directors of HiTech Group Australia Limited present their report on the company and its controlled
entities for the financial year ended 30 June 2017.
Directors
Information on directors
The following persons were Directors of HiTech Group Australia Limited during the whole of the
financial year and up to the date of this report, unless otherwise stated.
Raymond Hazouri
Chairman, Company Secretary (appointed Company Secretary 13 February 2015)
Qualifications: BA (Sydney University), DipEd.
Experience: Founded HiTech in 1993 and has over 26 years’ experience in the IT industry. Prior to
establishing HiTech, Ray worked in a number of capacities in the information technology industry
ranging from management positions, technical IT consulting roles including systems
analysis/programming, project management and sales roles. Ray worked and consulted for a broad
range of employers in the private, multinational, SME, and public sectors.
Interest in shares and options: 17,760,000 ordinary shares in HiTech Group Australia Limited.
Other current and former directorship in last three years: Nil
George Shad
Non-executive Director.
Qualifications: Solicitor
Experience: Appointed to the Board on 30 July 2003. Principal of Shad Partners Solicitors with thirty
years’ experience as a lawyer specialising in commercial and conveyancing work.
George is a panel solicitor for a number of major banks and his expertise and contacts in the
corporate sector will assist HiTech in furthering its client base.
Special responsibilities: Chairman of the Audit and Risk Committee
Interest in shares: 250,000 ordinary shares in HiTech Group Australia Limited.
Other current and former directorship in last three years: Nil
Elias Hazouri
Executive Director, Chief Executive Officer, Company Secretary (appointed Company Secretary 13
February 2015)
Qualifications: B Sc, MBA
Experience: Appointed to the Board on 30 July, 2003 as an alternate Director representing Ray
Hazouri when he was not available. Over 27 years’ experience in IT and banking. Elias was
previously a director of HiTech from 1993-March 2000. Elias’s knowledge of HiTech’s business is
extensive.
Throughout his career, Elias has been integral to the development of many IT systems and IT support
departments. He has held roles ranging from programmer to technology support head. Elias is a key
resource and knowledge base to the HiTech account managers and is jointly responsible for
generating new business.
Elias has advised on business strategy, both from a financial and operational perspective, since the
inception of HiTech in 1993. Elias is employed in the capacity of Chief Executive Officer.
Interest in shares and options: 3,926,202 ordinary shares, 2.9M options in HiTech Group Australia
Limited beneficially owned by him.
Other current and former directorship in last three years: Nil
Page 12 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
Company Secretaries
Ray Hazouri (Director)
Elias Hazouri (Director)
Directors’ meetings
The following table sets out the number of directors’ meetings (including meeting of committees of
directors) held during the financial year and the number of meetings attended by each director (while
they were a director or a committee member). During the financial year 2 board meetings and 2 audit
committee meetings were held.
Board of Directors
Audit Committee
No eligible to
Attend
Attended
No eligible to
Attend
Attended
Mr R Hazouri (*by invitation)
Mr E Hazouri
Mr G Shad
3
3
3
3
3
3
3*
3
3
3*
3
3
Dividends
The directors declared a fully franked final dividend of 3 cents per share. The dividend was paid on 14
September,2017 to shareholders registered on close of business on 31 August 2017. Total amount
was $1,054,500.
Earnings per share
Basic and Diluted earnings per share
Cents per share
6.57
Corporate structure
HiTech Group Australia Limited is a listed public company, limited by shares, and is incorporated and
domiciled in Australia. HiTech has prepared a consolidated financial report incorporating the entities
that it controlled during the financial year.
Nature of operations and principal activities
The consolidated entity’s principal activity during the financial year was the supply of recruitment
services for permanent and contract staff to the ICT sector.
During the financial year, there were no significant changes in the nature of these operations.
Group overview
The HiTech Group currently supplies permanent and contract staff from its large, personalised,
database of over 330,000 specialised ICT, Finance and Office Support professionals which has been
developed over the past 24 years. Its main business comes from IT contracting/consulting.
The HiTech client base is well established, with strong representation by technology companies,
banking/financial services companies plus Federal & State Government departments and agencies.
HiTech has also entered into preferred supplier agreements for the supply of staff in both the public
and private sectors.
Page 13 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
Operating and financial review
Operating results
For the financial year ended 30 June 2017, the consolidated entity’s operating revenue is $23,345,598,
an increase of 27% over the previous corresponding period (pcp). The high margin permanent
placement income was 13% higher and contracting revenue was 28% higher.
Gross Profit is $4,705,131, an increase of 21% over pcp (FY16: $3,892,918).
• Underlying EBITDA is $3,429,014, an increase of 36%
• Underlying NPAT is $2,414,725, an increase of 34%
• Underlying full diluted EPS is 6 cents, an increase of 23%
•
FY17 underlying growth represents the removal of the impact of realised and unrealised
investment gains in FY16 and FY17, which are non-core HiTech
Our Net Tangible Assets (NTA) is $0.19 per share.
Permanent recruitment comprises the search and selection of candidates for full time employment and
is characterised by relatively high profit margins. ICT contracting, comprising the provision of ICT
professionals for temporary and other non-permanent staffing needs of clients for specific projects has
continued to supply HiTech with cash flow.
HiTech’s recruitment business is broadly based in this sector and operates across the full range of ICT
services, including system development, infrastructure support and networking, operation and other
skill sets. As the cycle turns, there is a growing need for skilled ICT professionals. HiTech is addressing
the demand for specialised ICT skills by making use of its database and comprehensive contacts
internationally.
HiTech has diversified into non-ICT areas of recruitment such as office support, sales, accounting, legal
and healthcare. Whilst this diversification remains minor in comparison to ICT recruitment, it marks a
start for all these other areas of business with a potential to grow further.
HiTech’s reputation for top quality service and the selection of suitable candidates for client job
requirements have resulted in HiTech establishing a small but successful niche market position. The
recruitment sector has changed with more jobs and less candidates.
HiTech’s market share of the total Australian recruitment market is relatively small. This represents a
huge growth potential. HiTech is focused on servicing existing clients by providing a complete
recruitment solution in addition to contracting.
As HiTech’s core competency is in recruitment, our strategy is to build on our existing client base and
maximize revenue from existing clients by effectively providing personnel to not only the ICT market but
also to other markets such as administration and office support, sales and marketing, finance and legal.
There is also a possibility of broadening the consolidated entity’s operations into geographical markets
in which HiTech operates.
We are working towards winning new business and ensuring that operating costs are kept to a
minimum.
Future developments, prospects and business strategies
The FY2018 growth will depend on the prevailing economic conditions at the time. There are signs of
growing business confidence coming into the market. The most significant areas for change will be the
continuation of an increase in job vacancies in ICT. Skilled professionals of top quality remain in short
supply. We cannot, at this point, forecast with any certainty the results of next year. The directors’ main
objective will be organic growth in the consolidated entity’s core business and further enhancing existing
client business.
Significant Changes in state of affairs
There were no significant changes in the state of affairs of the consolidated entity during the financial
year.
Events subsequent to reporting date
The directors declared a fully franked final dividend of 3 cents per share. The dividend was paid on 14
September 2017 to shareholders registered on close of business on 31 August 2017.(Note 27)
Page 14 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
Environmental regulations
The consolidated entity’s operations are not subject to any significant environmental regulation under a
law of the Commonwealth or of a State or Territory.
Indemnifying officers or auditor
During or since the end of the financial year, the company has given an indemnity or entered into an
agreement to indemnify, or paid or agreed to pay insurance premiums as follows:
The company has paid premiums to insure all of the directors of the company has named above, the
company secretaries and all executive officers of the company against any liability incurred as such by
a director, secretary or executive officer to the extent permitted by the Corporations Act 2001.
The contract of insurance prohibits disclosure of the nature of the liability and the amount of the
premium.
The company has not otherwise, during or since the financial year, indemnified or agreed to indemnify
an officer or auditor of the company or any related body corporate against a liability incurred as such
by an officer or auditor.
Remuneration report - Audited
This report outlines the remuneration arrangements in place for directors and executives of HiTech
Group Australia Limited. The information provided in this remuneration report has been audited as
required by section 308(3C) of the Corporations Act 2001.
The names of directors in office at any time during or since the end of the year are:-
Mr Raymond Hazouri, Mr George Shad and Mr Elias Hazouri
Remuneration Policy
The Board determine the remuneration policy applicable to each executive key management person as
and when required based on market rates and capacity to pay. Currently all executive key management
personnel are contractors to the Company except for the Chairman and Executive Director, Ray
Hazouri, and all were appointed under arm’s length agreements acceptable to both parties.
Key management personnel are entitled to participate in the employee share option benefits at the
discretion of the Board.
Details of remuneration
Details of the remuneration of the Directors, the key management personnel of the Group (as defined
in AASB 124 Related Party Disclosures) and specified executives of HiTech Group Australia Limited
are set out in the following table:-
Remuneration - Key management personnel of the Group 2017
2017
Short-term employee
Benefits
Post-employment
benefits
Name
Cash salary and fees
Superannuation
Non-executive
directors
G. Shad*
Sub-total non-
executive directors
Executive directors
R. Hazouri**
E. Hazouri*
Sub-total
$
10,000
10,000
300,000
374,020
Executive directors
674,020
$
-
-
29,932
-
29,932
Long-term
benefits
Long service
leave
-
-
53,892
-
Total
$
10,000
10,000
329,932
374,020
53,892
703,952
Total key
management
personnel
compensation
(group)
684,020
29,932
53,892
713,952
**Excludes unpaid long service leave
Page 15 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
Remuneration - Key management personnel of the Group 2016
2016
Short-term
employee Benefits
Post-employment
benefits
Long-term benefits
Name
Non-executive directors
G. Shad*
Sub-total non-executive
directors
Executive directors
R. Hazouri
E. Hazouri*
Total key management
personnel compensation
(group)
Cash salary and
fees
Superannuation
Long service leave
Total
$
-
-
$
-
-
325,000
354,758
25,437
19,262
-
-
36,410
-
$
-
-
386,847
374,020
679,758
44,699
36,410
760,867
* Wholly paid to a related entity of the key management person
Group performance in relation to key management personnel compensation
The following table shows the performance of the Consolidated Group over the past six financial years:-
FY
2011
2012
2013
2014
2015
2016
2017
Sales
Revenue
$
8,748,895
9,583,560
7,309,770
7,975,179
15,104,907
18,322,169
22,234,598
NPAT/(NLAT)
$
648,404
556,699
164,504
Basic
EPS
Cents
2.09
1.80
0.53
Diluted
EPS
Cents
2.09
1.80
0.53
(150,658)
(0.49)
(0.49)
807,721
2,171,768
2,485,346
2.61
7.01
6.57
2.61
7.01
6.55
NTA
per
Net Equity
share Dividends
$
2,519,739
3,076,438
3,242,189
2,940,349
3,749,499
5,953,683
6,664,836
cents
8.12
10.00
10.45
9.00
12.08
19.00
19.00
$
-
-
-
155,000
-
-
1,674,500
Average
Share
Price
Cents
4.02
4.39
4.50
7.28
7.50
22.00
56.00
The outlook for FY2018 will depend on the prevailing state of the local and global economy. We cannot
forecast exact results at this point.
Employment contracts
Mr Ray Hazouri, is employed under a contract whilst the CEO, Mr Elias Hazouri, is retained as a
contractor under a service contract. Under the terms of the present contracts, these executives may
resign from their positions and thus terminate their contract by giving one year’s written notice.
The company may terminate these employment agreements by providing twelve months written notice
or by payment in lieu of the notice period based on the executives’ fixed component of remuneration.
Options Granted as Remuneration
During the reporting year, 3,150,000 options over ordinary shares were issued to employees under the
HiTech Employee Option Plan and 3,900,000 ordinary shares were issued to key management
personnel during the reporting year or since the end of the reporting year up the date of this report as
a result of the exercise of remuneration options.
Page 16 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
Auditor Independence declaration
The lead auditor’s independence declaration for the year ended 30 June, 2017, as required under
section 307C of the Corporations Act 2001, has been received and is set out on page 18 of the
financial report.
Non-audit services
The board of directors, in accordance with advice received from the audit committee, is satisfied that
the provision of non-audit services during the year is compatible with the general standard of
independence for auditor imposed by the Corporations Act 2001. The directors are satisfied that the
services disclosed below did not compromise the external auditor’s independence for the following
reasons:
•
all non-audit services are reviewed and approved by the audit committee prior to
commencement to ensure they do not adversely affect the integrity and objectivity of the
auditor; and
•
the nature of the services provided do not compromise the general principles relating to auditor
independence in accordance with APES 110: Code of Ethics for Professional Accountants set
by the Accounting Professional and Ethical Standards Board.
The following fees for non-audit services were paid/payable to the auditors for the year ended 30
June, 2017:
Taxation services
$ 6,654
Proceedings on behalf of the Company
No person has applied for leave of 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 any part of those
proceedings.
No proceedings have been brought or intervened in on behalf of the company with leave of the Court
under section 23 of the Corporations Act 2001.
Signed in accordance with a resolution of the board of directors.
Raymond Hazouri
Director
Sydney, 03 October 2017
Page 17 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
Auditor’s Independence Declaration
To The Directors of HiTech Group Australia Limited
In accordance with the requirements of section 307C of the Corporation Act 2001, as lead auditor for
the audit of HiTech Group Australia Limited for the year ended 30 June 2017, I declare that, to the best
of my knowledge and behalf, there have been:
a) no contraventions of the auditor independence requirements of the Corporation Act 2001 in relation
to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of HiTech Group Australia Limited and the entities it controlled during the
year.
Raymond Yi Kuen Lee
Registered Company Auditor
Sydney
03 October 2017
Offfice Address: Suite 272 Level 2, The Miramar,
Tel: 02-9281 9797 Fax: 02-9281 9985
398-408 Pitt Street Sydney NSW 2000
Postal Address: PO Box 20003, World Square 2002
Liability limited by a Scheme approved under Professional Standards Legislation
Page 18 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
1.
the financial statements and notes, as set out on pages 24-44, are in accordance with the
Corporations Act 2001, including:
a) Complying with Australian Accounting Standards, the Corporations Regulations 2001 and
other mandatory professional reporting requirements, and
b)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2017
and of its performance for the financial year ended on that date, and
2.
there are reasonable grounds to believe that the Group will be able to pay its debts as and when
they become due and payable.
Note 1(a) confirms that the financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
The Directors have been given the declaration by the Chief Executive Officer and Chief Financial Officer
as required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Raymond Hazouri
Director
Sydney, 03 October 2017
Page 19 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
INDEPENDENT AUDITOR’S REPORT
To the members of HiTech Group Australia Limited
REPORT ON THE FINANCIAL REPORT
OPINION
We have audited the accompanying financial report of HiTech Group Australia Limited (the Company),
which comprises the consolidated statement of financial position as at 30 June 2017, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, notes to the financial
statements, including a summary of significant accounting policies, and the directors’ declaration.
In our opinion:
(a) the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
I.
II.
giving a true and fair view of the Group’s financial position as at 30 June 2017and of its
performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
(b) the financial report also complies with International Financial Reporting Standards as disclosed in note
1.
BASIS FOR OPINION
We conducted our audit in accordance with Australian Auditing Standards. Those standards require that
we comply with relevant ethical requirements relating to audit engagements and plan and perform the
audit
is free from material
those standards are further described in the Auditor’s
misstatement. Our
responsibility section of our report.
to obtain reasonable assurance about whether
responsibilities under
the financial
report
INDEPENDENCE
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia.
We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the time
of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
KEY AUDIT MATTER
The key audit matter is the matter that, in our professional judgement, was of most significance in our
audit of the financial report of the current period. This matter was addressed in the context of our audit of
the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on the matter.
Key audit matter
matter
How our audit addressed the key audit
Page 20 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
EXISTENCE & RECOVERABILITY OF RECEIVABLES
Refer to Note 8 Trade and Other Receivables
The group has trade and other receivables of
$2,611,093 as at 30 June 2017.
This area has been designated as a key audit
matter due to the size and composition of trade
receivables.
Our Procedures included, amongst others:
•
•
•
subsequent receipts testing on a sample
of balances, whereby amounts have been
agreed to post year end bank statements
reviewing cut-off of recognised fees to
ensure they been recorded in the correct
period
reviewing aged trade receivables in order
to assess whether balances need to be
provided against as doubtful
review the books and records for any bad
debts written off during the period
OTHER INFORMATION
The directors are responsible for the other information. The other information comprises the information
included in the Company’s annual report for the year ended 30 June 2017, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
DIRECTORS’ RESPONSIBILTY FOR THE FINANCIAL REPORT
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australia Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparations of the financial
report that give a true and fair view and is free from material misstatement, whether due to fraud or error.
In note 1, the directors also state, in accordance with Australian Accounting Standards AASB 101
Presentation of Financial Statements, that the financial report complies with International Financial
Reporting Standards.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITY
Our responsibility is to express an opinion on the financial report based on our audit. Our objectives are
to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee than an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Page 21 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of
this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion,
intentional omissions, misrepresentations, or the
override of internal control.
forgery,
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Group
to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
•
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
Page 22 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
REPORT ON THE REMUNERATION REPORT
We have audited the Remuneration Report included the Directors’ Report for the year ended 30 June
2017. The Directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with Section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted with Australian
Auditing Standards.
OPINION
In our opinion, the Remuneration Report of HiTech Group Australia Limited for the year ended 30 June
2017, complies with Section 300A of the Corporations Act 2001.
RESPONSIBILITIES
The Directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with Section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australia Auditing
Standards.
Raymond Yi Kuen Lee
Registered Company Auditor
Sydney, 25 September 2017
Suite 2, Level 10 377-383 Sussex Street
Sydney NSW 2000
Page 23 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
For the Financial Year Ended 30 June 2017
Revenue from continuing operations
Services revenue
Cost of services
Gross Profit
Other revenue
Marketing expenses
Occupancy expenses
Insurance and legal expenses
Administration expenses
Impairment of current financial assets
Gain/(Loss) on sale of current financial assets
Other expenses from ordinary activities
Profit before Income Tax
Income tax (expense)/benefit
Profit attributable to Members of the parent entity
Other comprehensive income
Total comprehensive income for the year
Earnings per Share:
Consolidated Group
Note
2017
$
2016
$
4(a)
23,322,238
18,276,359
4(b)
(18,617,107)
(14,383,441)
4,705,131
3,892,918
23,360
(43,225)
45,810
(80,807)
(127,386)
(103,414)
(50,281)
(46,526)
(1,244,272)
(1,126,878)
-
146,987
(71,058)
870,015
(291,002)
(43,483)
3,339,256
3,116,633
6
(1,029,335)
(944,865)
2,309,921
2,171,768
-
-
2,309,921
2,171,768
Basic and diluted earnings (cents per share)
29
6.55
7.01
Notes to financial statements are included on pages 27-44
Page 24 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2017
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value through profit and loss
Other assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Plant and equipment
Deferred tax assets
Intangible assets
Other assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provision for taxation
Other current liability
Short-term provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Long Term Provision
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained earnings
TOTAL EQUITY
Notes to financial statements are included on pages 27-44
Page 25 of 46
Consolidated Group
Note
2017
$
2016
$
7
8
9
10
11
12
13
14
15
16
16
16
17
18
5,206,732
4,408,703
2,611,093
3,082,699
-
228,740
560,036
14,422
8,046,565
8,065,860
207,592
63,207
2,379
24,063
70,674
52,861
2,277
24,063
297,241
149,875
8,343,806
8,215,735
1,153,322
1,417,771
240,399
74,557
107,738
750,702
-
63,543
1,576,016
2,232,016
102,954
102,954
30,036
30,036
1,678,970
2,262,052
6,664,836
5,953,683
3,100,213
2,869,213
185,637
340,905
3,378,986
2,743,565
6,664,836
5,953,683
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Financial Year Ended 30 June 2017
Consolidated Group
Balance at 1/7/2015
Total dividends paid for the year
Total comprehensive profit for the period
Employee share options – value of employee services
Balance at 30/6/2016
Balance at 1/7/2016
Total dividends paid for the year
Total comprehensive profit for the year
Share Capital
Ordinary
Accumulated
Losses
Employee
Equity-settled
benefits Reserve
Total
$
$
$
$
2,869,213
571,797
308,489
3,749,499
-
-
-
-
2,171,768
-
-
-
2,171,768
-
32,416
32,416
2,869,213
2,743,565
340,905
5,953,683
2,869,213
2,743,565
340,905
5,953,683
-
-
(1,674,500)
2,309,921
-
-
(1,674,500)
2,309,921
Employee share options – value of employee services
231,000
-
(155,268)
75,732
Balance at 30/6/2017
3,100,213
3,378,986
185,637
6,664,836
CONSOLIDATED STATEMENT OF CASH FLOWS
STATEMENT
For the Financial Year Ended 30 June, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Dividends received
Interest received
Income tax (expense)/ refund
Note
Consolidated Group
2017
$
2016
$
26,245,607
19,657,536
(22,840,065)
(17,168,679)
-
23,360
17,128
1,656
(1,549,984)
(565,771)
Net cash provided by/ (used in) operating activities
28
1,878,918
1,941,870
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of financial assets
Proceeds from sale of financial assets
Payment of property, plant and equipment
Proceeds of sales from plant and equipment
Net cash provided by / (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid
Proceed from issue of shares
Net cash used in financing activities
Net increase/(decrease) in cash held
Cash at the beginning of the financial year
Cash at the end of the financial year
Page 26 of 46
(1,253,695)
(505,903)
1,960,720
1,189,055
(168,414)
(78,520)
-
23,470
538,611
628,102
(1,674,500)
55,000
(1,619,500)
-
-
-
798,029
2,569,973
4,408,703
1,838,730
7
5,206,732
4,408,703
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the
consolidated entity consisting of HiTech Group Australia Limited and its subsidiaries.
(a)
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting
Standards Board (AASB) and the Corporations Act 2001.
The financial report was authorised for issue on 03 October 2017 by the Board of Directors.
(i)
Compliance with IFRS
The consolidated financial statements of the HiTech Group Australia Limited Group also comply with International
Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
(ii)
Historical cost convention
These financial statements have been prepared under the historical cost convention, modified where applicable
by the measurement at fair value of selected financial assets and financial liabilities.
(b)
Financial report prepared on a going concern basis
The Directors believe that it is appropriate to prepare the financial report on a going concern basis because
a)
b)
The Group had $5,206,732 in cash at 30 June 2017;
The Group has budgeted for sales in FY2018 at the same level of FY2017 with expected new contracting income from
NSW Government contracts.
(c)
Principles of consolidation
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of HiTech Group Australia
Limited ('company' or 'parent entity') as at 30 June 2017 and the results of all subsidiaries for the year then ended. HiTech
Group Australia Limited and its subsidiaries together are referred to in this financial report as the group or the consolidated
entity.
Subsidiaries are all entities (including special purpose entities) over which the group has the power to govern the financial
and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence
and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether
the group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de-consolidated
from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the group.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted
by the group.
(d)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Board of Directors.
Page 27 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(e)
Revenue recognition
The group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic
benefits will flow to the entity and specific criteria have been met for each of the group's activities as described below. The
group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and
the specifics of each arrangement.
Revenue for the rendering of contracting and consulting services is recognised upon delivery of the service to the client
while permanent placement fees are brought to account at the time of placement rather than the day of commencement of
work. Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue
are net of returns, trade allowances, rebates and amounts collected on behalf of third parties.
Interest income is recognised using the effective interest method. When a receivable is impaired, the group reduces the
carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest
rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is
recognised using the original effective interest rate.
All Australian revenue is stated net of the amount of goods and services tax (GST).
Dividends are recognised as revenue when the right to receive payment is established. This applies even if they are paid
out of pre-acquisition profits. However, the investment may need to be tested for impairment as a consequence, refer note
1(k).
(f)
Income tax
The income tax expense or revenue for the period is the tax payable on the current period's taxable income based on the
applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the company's subsidiaries and associates operate and generate taxable income.
It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities
are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of
the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when
the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases
of investments in foreign operations where the company is able to control the timing of the reversal of the temporary
differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority.
Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either
to settle on a net basis, or to realise the asset and settle the liability simultaneously.
HiTech Group Australia and its wholly-owned Australian controlled entities have not implemented the tax consolidation
legislation.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or
directly in equity, respectively.
(g)
Leases
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the group as lessee are
classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor)
are charged to profit or loss on a straight-line basis over the period of the lease.
(h)
Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets
are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes
of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows
which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-
financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at the
end of each reporting period.
Page 28 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(i)
Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits
held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or
less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in
value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
Trade receivables
(j)
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method, less provision for impairment. Trade receivables are generally due for settlement within 30 days. They are
presented as current assets unless collection is not expected for more than 12 months after the reporting date.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written
off by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used
when there is objective evidence that the group will not be able to collect all amounts due according to the original terms
of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial
reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the
trade receivable is impaired. The amount of the impairment allowance is the difference between the asset's carrying amount
and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating
to short-term receivables are not discounted if the effect of discounting is immaterial.
The amount of the impairment loss is recognised in profit or loss within other expenses. When a trade receivable for which
an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the
allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in profit
or loss.
Investments and other financial assets
(k)
Classification
The group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans
and receivables, held-to-maturity investments and available-for-sale financial assets. The classification depends on the
purpose for which the investments were acquired. Management determines the classification of its investments at initial
recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at the end of each
reporting date.
(i)
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified
in this category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held
for trading unless they are designated as hedges. Assets in this category are classified as current assets if they
are expected to be settled within 12 months; otherwise they are classified as non-current.
(ii)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. They are included in current assets, except for those with maturities greater than 12 months
after the reporting period which are classified as non-current assets. Loans and receivables are included in trade
and other receivables (note 8) and receivables in the balance sheet.
(iii)
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed
maturities that the group's management has the positive intention and ability to hold to maturity. If the group were
to sell other than an insignificant amount of held-to-maturity financial assets, the whole category would be tainted
and reclassified as available-for-sale. Held-to-maturity financial assets are included in non-current assets, except
for those with maturities less than 12 months from the end of the reporting period, which are classified as current
assets.
Financial assets – reclassification
The group may choose to reclassify a non-derivative trading financial asset out of the held for trading category if the
financial asset is no longer held for the purpose of selling it in the near term. Financial assets other than loans and
receivables are permitted to be reclassified out of the held for trading category only in rare circumstances arising from a
single event that is unusual and highly unlikely to recur in the near term. In addition, the group may choose to reclassify
financial assets that would meet the definition of loans and receivables out of the held for trading or available-for-sale
categories if the group has the intention and ability to hold these financial assets for the foreseeable future or until maturity
at the date of reclassification.
Page 29 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(l)
Investments and other financial assets (continued)
Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortised cost
as applicable, and no reversals of fair value gains or losses recorded before reclassification date are subsequently made.
Effective interest rates for financial assets reclassified to loans and receivables and held-to-maturity categories are
determined at the reclassification date. Further increases in estimates of cash flows adjust effective interest rates
prospectively.
Recognition and derecognition
Purchases and sales of financial assets are recognised on trade-date – the date on which the group commits to purchase
or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have
expired or have been transferred and the group has transferred substantially all the risks and rewards of ownership. When
securities classified as available-for-sale are sold,
the accumulated fair value adjustments recognised in other
comprehensive income are reclassified to profit or loss as gains and losses from investment securities.
Measurement
At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair
value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Loans and receivables and held-to-maturity investments are subsequently carried at amortised cost using the effective
interest method.
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair
value. Gains or losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss'
category are presented in profit or loss within other income or other expenses in the period in which they arise.
Dividend income from financial assets at fair value through profit or loss is recognised in profit or loss as part of revenue
from continuing operations when the group's right to receive payments is established. Interest income from these financial
assets is included in the net gains/(losses).
Impairment
The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group
of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are
incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial
recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of
the financial asset or group of financial assets that can be reliably estimated. In the case of equity investments classified
as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an
indicator that the assets are impaired.
Impairment testing of trade receivables is described in note 1(j) and (t).
(m)
Plant and equipment
Plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item
can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when
replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are
incurred.
Depreciation is calculated on a diminishing balance or straight-line method to allocate their cost or revalued amounts, net
of their residual values, over their estimated useful lives. Leasehold improvements are depreciated over the shorter of
either the expired period of the lease or the estimated useful lives of the improvements. The following estimated useful
lives are used in the calculation of depreciation:
Plant and equipment
Motor vehicles
Useful Life
3-5 years
5 years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater
than its estimated recoverable amount (note 1(h)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit
or loss. When revalued assets are sold, it is group policy to transfer any amounts included in other reserves in respect of
those assets to retained earnings.
(n)
Intangible assets
Costs incurred in developing products or systems and costs incurred in acquiring software and licenses that will contribute
to future period financial benefits through revenue generation and/or cost reduction are capitalised to the Non-current asset
– Intangible Assets (Note 12). Costs capitalised include external direct costs of materials and service, direct payroll and
payroll related costs of employees’ time spent on the project. Amortisation is calculated on a diminishing balance basis
at 40% per annum.
Page 30 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(o)
Trade and other payables
These amounts represent liabilities for goods and services provided to the group prior to the end of financial year which
are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are
presented as current liabilities unless payment is not due within 12 months from the reporting date. They are recognised
initially at their fair value and subsequently measured at amortised cost using the effective interest method.
(p)
Employee benefits
(i)
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits plus annual leave and long service leave expected
to be settled within 12 months after the end of the period in which the employees render the related service are
recognised in respect of employees' services up to the end of the reporting period and are measured at the amounts
expected to be paid when the liabilities are settled. The liability for annual leave is recognised in the provision for
employee benefits. All other short-term employee benefit obligations are presented as payables.
(ii)
Share-based payments
Share-based compensation benefits may be provided to directors, employees and company consultants (Note 30).
The fair value of shares or options granted is recognised as an employee benefits expense with a corresponding
increase in equity. The total amount to be expensed is determined by reference to the fair value of the shares/options
granted, which includes any market performance conditions and the impact of any non-vesting conditions but
excludes the impact of any service and non-market performance vesting conditions.
Non-market vesting conditions are included in assumptions about the number of options that are
expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the
number of options that are expected to vest based on the non-marketing vesting conditions. It recognises the impact
of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity
(q)
Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
(r)
Earnings per share
(i)
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to owners of the company, excluding any
costs of servicing equity other than ordinary shares by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary shares issued during the year
(ii)
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares; and the weighted average number of additional ordinary shares that would have been outstanding assuming
the conversion of all dilutive potential ordinary shares.
(s) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except, where the
amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised
as part of the cost of acquisition of the asset or as part of an item of expense. Receivables and payables in the balance
sheet are shown inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is
included with other receivables or payables in the balance sheet.
Cash flows are included in the statement of cash flows on a gross basis except for the GST component of cash flows
arising from investing and financing activities which are disclosed as operating cash flows.
(t)
Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation
for the current financial year.
(u)
Critical accounting estimates and judgements
The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and
best available current information. Estimates assume a reasonable expectation of future events and are based on current
trends and economic data, obtained both externally and within the group.
Key estimates – Impairment
The Group assesses impairment at each reporting date by evaluating conditions specific to the group that may lead to
impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-
use calculations performed in assessing recoverable amounts incorporate a number of key estimates.
The Group’s financial assets at fair value through profit or loss are financial assets held for trading and are shares in listed
entities which are recorded at fair value at balance date being the closing market bid price on that day.
Impairment gains
during the reporting period have been recorded as other income in the statement of comprehensive income.
Page 31 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Key judgements – impairment of receivables
The directors have reviewed outstanding debtors as at 30 June 2017 and have formed the opinion that all debtors
outstanding are collectible and have therefore decided that a provision for impairment should not be made. The major
portion of debtors outstanding at balance date was with Australian Government departments with little or no risk of default.
(v)
Parent entity financial information
The financial information for the parent entity, HiTech Group Australia Limited, disclosed in Note 26 has been prepared on
the same basis as the consolidated financial statements, except as set out below,
Investments in subsidiaries
Investments in subsidiaries are accounted for at cost in the financial statements of HiTech Group Australia Limited.
(w)
New Accounting Standards for Application in Future Periods
Accounting Standards issued by the AASB that are not yet mandatorily applicable to the Group, together with an
assessment of the potential impact of such pronouncements on the Group when adopted in future periods, are discussed
below:
AASB 9: Financial Instruments and associated Amending Standards (applicable to annual reporting periods
beginning on or after 1 January 2018).
The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below) and
includes revised requirements for the classification and measurement of financial instruments, revised recognition and
derecognition requirements for financial instruments and simplified requirements for hedge accounting.
The key changes that may affect the Group on initial application include certain simplifications to the classification of
financial assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected credit loss,
and the irrevocable election to recognise gains and losses on investments in equity instruments that are not held for
trading in other comprehensive income. AASB 9 also introduces a new model for hedge accounting that will allow greater
flexibility in the ability to hedge risk, particularly with respect to hedges of non-financial items. Should the entity elect to
change its hedge policies in line with the new hedge accounting requirements of the Standard, the application of such
accounting would be largely prospective.
Although the directors anticipate that the adoption of AASB 9 may have an impact on the Group’s financial instruments,
including hedging activity, it is impracticable at this stage to provide a reasonable estimate of such impact.
AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods beginning on or after
1 January 2018, as deferred by AASB 2015-8: Amendments to Australian Accounting Standards – Effective Date
of AASB 15).
When effective, this Standard will replace the current accounting requirements applicable to revenue with a single,
principles-based model. Except for a limited number of exceptions, including leases, the new revenue model in AASB 15
will apply to all contracts with customers as well as non-monetary exchanges between entities in the same line of business
to facilitate sales to customers and potential customers
The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange
for the goods or services. To achieve this objective, AASB 15 provides the following five-step process:
-
-
-
-
-
identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
determine the transaction price;
allocate the transaction price to the performance obligations in the contract(s); and
recognise revenue when (or as) the performance obligations are satisfied.
The transitional provisions of this Standard permit an entity to either: restate the contracts that existed in each prior period
presented per AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors (subject to certain practical
expedients in AASB 15); or recognise the cumulative effect of retrospective application to incomplete contracts on the date
of initial application. There are also enhanced disclosure requirements regarding revenue.
Although the directors anticipate that the adoption of AASB 15 may have an impact on the Group’s financial statements, it
is impracticable at this stage to provide a reasonable estimate of such impact.
AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 January 2019).
When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases
and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for
leases to be classified as operating or finance leases.
The main changes introduced by the new Standard include:
Page 32 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
-
-
-
-
recognition of a right-to-use asset and liability for all leases (excluding short-term leases with less than 12 months
of tenure and leases relating to low-value assets);
depreciation of right-to-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and
unwinding of the liability in principal and interest components;
variable lease payments that depend on an index or a rate are included in the initial measurement of the lease
liability using the index or rate at the commencement date;
by applying a practical expedient, a lessee is permitted to elect not to separate non-lease components and instead
account for all components as a lease; and
additional disclosure requirements.
-
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line
with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity on the
date of initial application.
Page 33 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
NOTES TO THE FINANCIAL STATEMENTS
NOTE 2: FINANCIAL RISK MANAGEMENT
The Groups activities expose it to a variety of financial risks: market risk (including interest rate risk and price risk), credit risk and
liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the financial performance of the Group. The Group uses different methods to measure
different types of risk to which it is exposed. These methods include analysing the effect of interest rate rises, and other price
risks, aging analysis for credit risk and comparison of the investment portfolios against the ASX All Ordinaries Index to determine
market risk.
Risk management is carried out by management under policies approved by the Board of Directors. The Board provides written
principles for overall risk management, as well as policies covering specific areas including interest rate risk, credit risk, and
investment of excess liquidity. The groups functional and presentation currency is the Australian dollars and the Group has no
foreign exchange dealings and therefore does not use derivative financial instruments.
The total for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies
to these financial statements, are as follows:
Financial Assets
Cash
Bank deposits at call
Trade and other receivables
Financial assets at fair value through profit and loss
Other Assets
Total financial assets
Financial Liabilities
Trade and other payables
Total financial liabilities
(a) Credit risk
Consolidated Group
2017
$
3,725,576
1,481,156
2,611,093
-
252,803
8,070,628
1,153,322
1,153,322
2016
$
3,653,063
755,640
3,082,699
560,036
24,063
8,075,501
1,417,771
1,417,771
Credit risk arises from cash and cash equivalents, and deposits with banks and financial institutions, as well as credit
exposure to customers as outstanding receivables. For banks and financial institutions, only independently rated parties with
a minimum rating of ‘A’ are accepted. If customers are independently rated, these ratings are used. Otherwise, if there is no
independent rating, risk control assesses the credit quality of the customers, taking into account their financial position, past
experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set
by the Group. The compliance with credit limits by customers is regularly monitored by line management. Sales to customers
are required to be settled in cash, mitigating credit risk.
The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets as summarised on
page 35.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 2: FINANCIAL RISK MANAGEMENT (continued)
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit
ratings (if available) or to historical information about counterparty default rates:
Trade receivables
Counterparts with external credit rating (Moody’s)
AAA Federal government departments and instrumentalities
1,948,205
2,442,447
Counterparts without external credit rating*
Consolidated Group
2017
$
2016
$
Group 1
Group 2
Group 3
Total trade receivables
Cash at bank and short-term bank deposits
AA2
* Group 1 — new customers (less than 6 months)
-
662,888
-
-
640,252
-
2,611,093
3,082,699
5,206,732
4,408,703
Group 2 — existing customers (more than 6 months) with no defaults in the past
Group 3 — existing customers (more than 6 months) with some defaults in the past. The default was not recovered.
Page 34 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
(b)Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding
through an adequate amount of committed credit facilities and the ability to close out market positions. The Group manages
liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets
and liabilities. Surplus funds are generally only invested in instruments that are tradeable in highly liquid markets
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its
obligations related to financial Liabilities. The Group manages this risk through the following mechanisms:
•
•
preparing forward looking cash flow analysis in relation to its operational and financing activities;
Ensuring that adequate capital raising activities are undertaken;
• maintaining a reputable credit profile; and
•
investing surplus cash only with major financial institutions.
The Group has no long term financial liabilities and uses existing cash and funds generated from operations to balance cash
flow requirements.
All financial liabilities are due to be settled in less than one year.
Weighted
average
interest
rate
NA
2.55%
NA
NA
NA
NA
2017
Financial Assets
Cash
Bank deposits at call
Trade and other
receivables
Financial assets at fair
value through profit or loss
Other Assets
Financial Liabilities
Trade and other payables
Interest
free
Floating
Fixed interest
maturing
1 year or
less
1 to 5
years
-
-
3,725,576
1,481,156
2,611,093
-
-
-
-
228,740
2,611,093
5,435,472
-
-
-
-
24,063
24,063
1,153,322
1,153,322
-
-
-
-
NOTE 2: FINANCIAL RISK MANAGEMENT (continued)
Weighted
average
interest
rate
2.0%
2.0%
NA
NA
2.0%
2016
Financial Assets
Cash
Bank deposits at call
Trade and other receivables
Financial assets at fair
value through profit or loss
Other Assets – Term
deposits
Financial Liabilities
Interest
free
Floating
Fixed interest
maturing
1 year or
less
1 to 5
years
354
-
3,082,699
3,652,709
755,640
-
560,036
-
-
-
3,643,089
4,408,349
-
-
-
-
24,063
24,063
Trade and other payables
NA
1,417,771
-
-
(c) Fair value estimation
Total
3,725,576
1,481,156
2,611,093
-
252,803
8,070,628
1,153,322
1,153,322
Total
3,653,063
755,640
3,082,699
560,036
24,063
8,075,501
1,417,771
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The fair values of financial assets and financial liabilities are presented in the following table and can be compared to their
carrying values as presented in the statement of financial position. Fair values are those amounts at which an asset could be
exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.
Page 35 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
Fair values derived may be based on information that is estimated or subject to judgment, where changes in assumptions
may have a material impact on the amounts estimated. Areas of judgment and the assumptions have been detailed below.
Where possible, valuation information used to calculate fair value is extracted from the market, with more reliable information
available from markets that are actively traded.
market bid prices.
In this regard, fair values for listed securities are obtained from quoted
In all cases the carrying values of financial assets and liabilities are the same as the net fair values.
Financial Instruments Measured at Fair Value
The financial instruments recognised at fair value in the statement of financial position have been analysed and classified using
a fair value hierarchy reflecting the significance of the inputs used in making the measurements. The fair value hierarchy
consists of the following levels:
- quoted prices in active markets for identical assets or liabilities (Level 1);
- inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices) (Level 2); and
- inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
Level 1
Level 2
Level 3
Total
Consolidated
2017
Financial assets
Financial assets at fair value through profit and loss:
- Listed investments
Consolidated
2016
Financial assets
$
-
$
-
-
$
-
$
-
-
560,036
Financial assets at fair value through profit and loss:
- Listed investments
560,036
Included within Level 1 of the hierarchy are listed investments. The fair values of these financial assets have been based on the
closing quoted bid prices at reporting date, excluding transaction costs.
Page 36 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
NOTE 3: SEGMENT INFORMATION
The Consolidated Group operates primarily in one geographical and in one business segment, namely the recruitment industry in
Australia and reports to the Board on the performance of the Group as a whole.
NOTE 4: REVENUE
Revenue from continuing operations
(a) Services
Note
Consolidated Group
2017
$
2016
$
- Contracting and permanent placement revenue (i)
23,322,238
18,276,359
(b) Other revenue
-
Interest received – other entities
- Dividends – other entities
- Other
Total revenue
(i) Contracting revenue includes permanent placement fees, commission earned
on contracting and contract services provided.
NOTE 5: EXPENSES
Cost of providing services
Rental expense on operating leases
- Minimum lease payments
Depreciation and amortisation of non-current assets
Plant and equipment
-
- Motor vehicles
Software
-
Net transfers (from) provisions – employee benefits
Employee option expenses
23,360
-
-
1,656
24,469
19,685
23,345,598
18,322,169
18,617,107
14,327,353
127,386
103,414
13,887
17,609
1,276
117,113
20,732
6,412
15,271
1,473
(10,575)
-
Realised gain/(loss) on disposal of financial assets at fair value through profit and
loss
(146,987)
291,002
Impairment (gain)/loss on financial assets at fair value through profit and loss
-
(870,015)
NOTE 6: INCOME TAX
(a)
Income tax expense
Current
tax
Deferred tax
Recoupment of prior year tax losses
Deferred income tax expense included:
(Increase)/decrease in deferred tax asset
(Increase)/decrease in deferred tax liability
1,039,682
(10,347)
-
1,029,335
750,702
194,163
-
944,865
11
18
10,347
244,674
-
-
10,347
244,674
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit from continuing operations before income tax expense at 30% (2016:30%)
1,001,777
934,990
Add tax effect of:
Imputation credits
Other assessable income
-
-
(2,202)
-
Non-deductible depreciation and amortisation and other non-allowable items
(7,213)
(265,815)
Less tax effect of:
Non-assessable income & imputation credit
Deductible expenses
Recoupment of prior year tax losses
DTA previously not recognised
Income tax expense/(benefit)
-
-
-
34,771
1,029,335
-
1,113
-
276,779
944,865
Page 37 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
NOTES TO THE FINANCIAL STATEMENTS
NOTE 7: CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Bank deposits at call
Note
Consolidated Group
2017
$
3,725,576
1,481,156
5,206,732
2016
$
3,653,063
755,640
4,408,703
The effective interest rate on bank deposits at call 2.55% (2016: 1.5%)
Reconciliation of cash
Cash at the end of the financial year as shown in the cash flow statement is reconciled to items
in the balance sheet as follows:
Cash and cash equivalents
Interest rate exposure
The Group and the parent entitiy’s exposure to interest rate risk is discussed in Note 2.
NOTE 8: CURRENT ASSETS - TRADE AND OTHER RECEIVABLES
Trade receivables
Provision for impairment of receivables
Other receivables
5,206,732
5,206,732
4,408,703
4,408,703
2,571,113
-
2,571,113
39,980
2,817,824
-
2,817,824
264,875
2,611,093
3,082,699
NOTE 8: CURRENT ASSETS – TRADE AND OTHER RECEIVABLES (continued)
(b) Past due but not impaired
As at 30 June 2017, trade receivables of $355,823 (2016: $375,539) were past due but not impaired. These relate to a number
of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as
follows:-
30-60 days
61-90 days
90+ days
(c) Credit terms
355,823
310,095
-
-
1,980
63,464
355,823
375,539
Credit terms which apply to trade customers are payment within 30 days from date of invoice.
(d) Fair value and credit risk
Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value.
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned
above. Refer to Note 2 for further information on the risk management policy of the Group and the credit quality of the
entity’s trade receivables.
NOTE 9: CURRENT ASSETS
Prepayment
228,740
14,422
Page 38 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
NOTES TO THE FINANCIAL STATEMENTS
NOTE 10: NON-CURRENT ASSETS – PLANT AND EQUIPMENT
As at 1 July 2016
Cost or fair value
Accumulated depreciation
Net book value
Year ended 30 June 2017
Opening net book balance
Additions
Disposal
Depreciation charge
Net book balance
As at 30 June 2017
Cost or fair value
Accumulated depreciation
Net book value
Consolidated Entity
Plant & Equipment
Leasehold
Improvements
Motor vehicles
TOTAL
$
$
$
$
232,947
(219,075)
13,872
13,872
154,779
-
(13,887)
154,764
387,726
(232,962)
154,764
32,453
(32,453)
-
-
-
-
-
-
-
-
-
70,894
(14,092)
56,802
56,802
13,636
-
336,294
(265,620)
70,674
70,674
168,415
-
(17,610)
(31,497)
52,828
207,592
84,530
(31,702)
472,256
(264,664)
52,828
207,592
Plant and equipment has been tested for impairment at 30 June 2017 resulting in no impairment loss.
NOTE 11: NON-CURRENT ASSETS – DEFERRED TAX ASSETS
The balance comprises temporary differences attributable to :
Provisions
Fair value loss adjustments
Prior year tax losses brought to account
Total deferred tax assets
NOTE 12: NON-CURRENT ASSETS - INTANGIBLE ASSETS
Note
Consolidated Group
2017
$
63,207
-
-
63,207
2016
$
24,787
28,074
-
52,861
Consolidated Group
Intangibles at cost
At 1 July 2015
Computer software at cost
Accumulated amortisation and impairment
Net book value
Year ended 30 June 2016
Opening net book balance
Additions
Accumulated amortisation and impairment
Net book value
As at 30 June 2016
Computer software at cost
Accumulated amortisation and impairment
Net book value
Year ended 30 June 2017
Opening net book balance
Additions
Accumulated amortisation and impairment
Net book value
As at 30 June 2017
Computer software at cost
Accumulated amortisation and impairment
Net book value
Page 39 of 46
1,088,925
(1,085,315)
3,610
3,610
140
(1,473)
2,277
1,089,065
(1,086,788)
2,277
2,277
1,378
(1,276)
2,379
1,090,443
(1,088,064)
2,379
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
NOTES TO THE FINANCIAL STATEMENTS
NOTE 13: NON-CURRENT ASSETS – OTHER ASSETS
Security deposit for leased premises
NOTE 14: CURRENT LIABILITIES - TRADE AND OTHER PAYABLES
Unsecured liabilities
Trade payables
Sundry payables and accrued expenses
NOTE 15: PROVISION FOR TAXATION
Current Income Tax
NOTE 16: CURRENT LIABILITIES – SHORT-TERM PROVISIONS
Unearned Revenue
Employee benefits
Reconciliation of movement in the liability is recognized in the balance sheet as follows:-
Prior year closing balance
Increase in provision
Current year closing balance
Provisions
-
-
Total current
Total non-current
Consolidated Group
2017
$
24,063
2016
$
24,063
9,580
1,143,742
1,153,322
158,989
1,258,782
1,417,771
240,399
750,702
74,557
210,692
93,579
117,113
210,692
107,738
102,954
210,692
-
104,154
104,154
(10,575)
93,579
63,543
30,036
93,579
NOTE 17: CONTRIBUTED EQUITY
35,150,000 fully paid ordinary share (2016: 31,000,000)
2,869,213
Ordinary shareholders participate in dividends and the proceeds of winding-up of the parent entity in proportion to the number of
shares held.
At the shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one
vote on a show of hands.
3,100,213
Share Options
Information relating to Group’s employee share option plan, including details of options issued, exercised and lapsed during the
financial year and options outstanding at the end of the financial year, is set out in Note 30.
Capital risk management
The Group’s objective when managing capital is to safeguard their ability to continue as a going concern, so that they can
continue to provide returns to shareholders and benefits to other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce debt. There are no externally imposed capital requirements
and the Group’s capital management strategy has not changed during the reporting period.
Page 40 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
NOTES TO THE FINANCIAL STATEMENTS
NOTE 18: RESERVES
The share option reserve records items recognised as expense on valuation of employee and director share options. Options issued
during the year to non key management personnel have been valued using the Black-Scholes options pricing model.
Movements
Balance a at 1 July
Employee option expenses
Option shares exercised
Balance 30 June
NOTE 19: DIVIDENDS
Dividends paid
Franking credits available for subsequent financial years based on a tax rate of 30%
(2016: 30%)
NOTE 20: KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Key management personnel compensation:-
Short-term employee benefits
Post-employment benefits
Long Service Leave
Consolidated Group
2017
$
340,905
20,732
(176,000)
185,637
2016
$
308,489
32,416
-
340,905
1,674,500
-
-
240,353
684,020
29,932
-
713,952
679,758
44,699
36,410
760,867
Details of key management personnel compensation are disclosed in the Remuneration Report on pages 15-16.
(b) Equity instrument disclosures relating to key management personnel
(i) Options provided as remuneration and shares issued on exercise of such options
Details of options provided as remuneration and shares issued on the exercise of such options, together with terms and
conditions of the options can be found in the Remuneration Report on pages 15-16.
Staff
2016
Staff
(ii) Options holdings
2017
Balance
1.7.17
Granted as
Remun-
eration
2,900,000
-
Options
Exercised
(3,900,000)
-
3,900,000
-
Balance
1.7.16
3,900,000
Granted as
Remun-
eration
-
-
-
Options
Exercised
-
-
(iii) Shareholdings
2017
No of shares held by Key Management Personnel
R. Hazouri
E. Hazouri
Options
Cancelled/
lapsed
-
-
Options
Cancelled/
lapsed
-
-
Balance
30.6.17
2,900,000
-
Balance
30.6.16
3,900,000
-
Total Vested and
Exercisable
30.6.17
-
-
Total Vested and
Exercisable
30.6.16
-
-
Total un-
exercisable
30.6.17
2,900,000
-
Total un-
exercisable
30.6.16
3,900,000
-
Balance
1.7.16
Received as
Remuneration
Options
Exercised
Balance
30.6.17
18,460,000
26,202
18,486,202
-
-
-
-
3,900,000
-
17,710,000
3,926,202
21,636,202
Page 41 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
NOTE 21: REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by the auditor of the parent entity:-
Audit and review of the financial statements
Other services:
- preparation of tax return and ad hoc advice
13,400
11,845
6,654
-
20,054
11,845
Consolidated Group
2016
$
2017
$
NOTE 22: CONTINGENT ASSETS AND CONTINGENT LIABILITIES
There were no contingent assets or contingent liabilities at balance date.
NOTE 23: COMMITMENTS
Non-cancellable operating leases
The current lease is a periodic lease with rent payable monthly in advance.
NOTE 24: RELATED PARTY DISCLOSURES
(a)
(b)
Subsidiaries
Interests in subsidiaries are set out in Note 25.
Key management personnel
Disclosures relating to key management personnel are set out in Note 20.
NOTE 25: SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with
the accounting policy described in Note 1(b)
Name of entity
Country of Incorporation
Class of Shares
Parent entity
HiTech Group Australia Limited
Controlled entities
HiTech Contracting Pty Ltd*
eConsulting Australia Pty Ltd*
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Equity holding**
2017
2016
100%
100%
100%
100%
* These subsidiaries have been granted relief from the necessity to prepare financial reports in accordance with Class Order
98/1418 issued by the Australian Securities and Investments Commission.
** The proportion of ownership interest is equal to the proportion of voting power held.
NOTE 26: PARENT ENTITY FINANCIAL INFORMATION
The individual financial statements for the parent entity show the following aggregate amounts:-
Statement of Financial Position
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity
Contributed equity
Option reserve
Retained earnings
Total equity
Profit for the year
Total Comprehensive income
Page 42 of 46
Parent Entity
2017
$
2016
$
8,046,565
8,343,806
1,576,016
1,678,970
3,100,213
185,637
3,378,986
6,664,836
2,309,921
2,309,921
8,065,860
8,215,735
2,232,016
2,262,052
2,869,213
340,905
571,797
5,953,683
2,171,768
2,171,768
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
NOTES TO THE FINANCIAL STATEMENTS
NOTE 27: SUBSEQUENT EVENTS
The directors declared a fully franked final dividend of 3 cents per share. Total amount of $1,054,500 was paid on 14 September,
2017 to shareholders registered on close of business on 31 August, 2017.
NOTE 28: RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH INFLOW FROM
OPERATING ACTIVITIES
Profit/(Loss) from ordinary activities after related income tax
Depreciation and amortisation of non-current assets
Net loss/(gain) on sale of financial assets
Bad and doubtful debts
Equity settled share based payments
Unrealized (gain)/loss on financial assets
Gain in disposal of plant and equipment
Decrease/(Increase) in assets
Current receivables
Prepayments
Deferred tax assets
Increase/(Decrease) in liabilities
Provisions
Trade payables
Provision
Deferred tax liability
Consolidated Group
2017
$
2016
$
2,309,921
2,171,769
32,772
(146,987)
8,760
-
-
-
246,938
-
-
(510,301)
(179,298)
117,113
-
23,156
291,002
-
32,416
(870,015)
(17,117)
(446,458)
8,295
244,674
129,987
384,737
(10,575)
-
Net cash flows (used in)/from operating activities
1,878,918
1,941,870
NOTE 29: EARNINGS PER SHARE
Basic earnings per share
Cents per ShareCents per Share
6.57
7.01
Diluted earnings per share
Basic earnings per share
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:-
$
6.55
7.01
$
Earnings (i)
2,309,921
2,171,768
No
35,150,000
Earnings used in the calculation of basic earnings per share are net profit after tax as per the income statement.
Weighted average number of ordinary shares (ii)
(i)
No.
31,000,000
(ii) The options outstanding are considered to be potential ordinary shares and therefore have not been included in the
determination of basic earnings per share. Where dilutive, these potential ordinary shares are included in the determination
of diluted earnings per share on the basis that each option will convert to one ordinary share (refer below).
Diluted earnings per share
(a) Earnings used in the calculation of diluted earnings per share reconciles to net profit in the income statement as follows:
Net profit
$
$
2,309,921
2,171,768
(b) Weighted average number of ordinary shares and potential ordinary shares used in the calculation of diluted earnings per
share reconciles to the weighted average number of ordinary shares used in the calculation of basic earnings per share as
follows:
WWeighted average number of ordinary shares outstanding during the year used in
calculating basic EPS
WWeighted average number of options outstanding
WWeighted average number of ordinary shares outstanding during the year used in
calculating diluted EPS
No
No
35,150,000
115,969
31,000,000
-
35,265,969
31,000,000
Page 43 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
NOTES TO THE FINANCIAL STATEMENTS
NOTE 30: SHARE-BASED PAYMENTS
Employee option plan
The Company has established an employee share option plan in respect of which share options may be issued to participating
employees and executive directors. Options issued to directors are approved by shareholders at annual general meetings.
The directors consider that the option plan provides employees and directors invited to take part in the plan, with an opportunity
and an incentive to participate in the company’s future growth and success.
The allocation of options to an employee or directors under the option plan is based on his or her potential future contributions to
the growth and profitability of the company. Options generally lapse on the employee’s resignation or termination.
When the options are converted to shares they carry full dividend and voting rights.
The closing share price of an ordinary share of HiTech Group Australia Limited on the Australian Stock Exchange at 30 June 2017
was 6.4 cents.
Balance at beginning of financial year (i)
Granted during the financial year (ii)
Exercised during the financial year
Lapsed/cancelled during the financial year (iii)
Outstanding at end of financial year (iv)
Exercisable at end of financial year (iv)
Fair value of options granted
No
2017
Weighted
Average
Exercise
Price
No
2016
Weighted
Average
Exercise Price
0.03
0.04
0.06
0.22
2,900,000
1,000,000
1,600,000
250,000
2,900,000
(250,000)
(2,900,000)
(1,000,000)
-
4,500,000
-
0.04
0.06
0.22
0.22
0.22
0.22
0.04
0.06
400,000
2,900,000
1,000,000
1,600,000
-
(400,000)
5,500,000
-
The assessed fair value at grant date of options granted during the year was determined using a Black-Scholes option pricing
model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date
and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of
the option.
(i) Balance at beginning of financial year
Option series
No.
Grant Date
Exercise Date
Expiry date
Issued 2016
Issued 2007
Issued 2004
1,600,000
2,900,000
1,000,000
4,900,000
(ii)
Issued during the financial year
17/2/2016
5/06/2007
1/11/2004
5/06/2007
1/11/2004
17/2/2019
05/06/2017
1/11/2019
Exercise Price
$
0.22
0.04
0.06
Option series
No.
Grant Date
Exercise Date
Expiry date
Exercise Price
Issued 2017
Issued 2017
250,000
2,900,000
3,150,000
(iii)
Lapsed/cancelled during the financial year
No options were lapsed during the financial year.
28/11/2016
28/11/2016
27/02/2017
25/11/2020
25/11/2020
0.22
0.22
Page 44 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
STOCK EXCHANGE INFORMATION
Statement of quoted securities as at 3 October 2017
DISTRIBUTION
•
There are 373 shareholders holding a total of 35,150,000 ordinary fully paid shares on issue by the Company.
•
•
The twenty largest shareholders between them hold 83.64% of the total issued shares on issue.
Voting rights for ordinary shares are that on a show of hands each member present in person or by proxy or attorney or
representative shall have one vote and upon a poll every member so present shall have one vote for every fully paid
share held and for each partly paid share held shall have a fraction of a vote pro-rata to the amount paid up on each
partly paid share relative to its issue price.
Distribution of quoted securities as at 3 October 2017
Ordinary fully paid shares
Range of holding
Number of holders
1 -
1,001 -
1,000
5,000
5,001 -
10,000
10,001 -
100,000
100,001 -
and over
Total holders
34
199
72
125
24
454
There are 16 shareholders holding less than a marketable parcel.
Substantial shareholdings as at 3 October 2017 of Fully Paid Ordinary Shares
Ordinary shareholder
Total relevant interest notified
% of total voting rights
Rayhazouri Nominees Pty Limited
and Raymond Hazouri
E. Hazouri
S. Hazouri
17,760,000 ordinary shares
3,926,202 ordinary shares
1,980,000 ordinary shares
50.53%
11.17%
5.63%
Directors' share and option holdings
As at 3 October 2017, directors of the Company held a relevant interest in the following shares and options issued by the
Company.
Director
R. Hazouri
G. Shad
E. Hazouri
Shares
17,760,000
250,000
3,926,202
Options
2,900,000
On-market buy-backs
There is no on-market buy back currently in place in relation to the securities of the company.
Material differences to Appendix 4E
There are no material differences to the financial statements set out in this report when compared to the information set out in the
Company’s Appendix 4E preliminary final statement released to the ASX on 15 August 2017.
Restricted securities
There are no restricted securities on issue by the Company.
Page 45 of 46
HiTech Group Australia Limited and Controlled Entities
A.B.N. 41 062 067 878
STOCK EXCHANGE INFORMATION
TOP TWENTY SHAREHOLDERS as at 3rd October 2017
Rank
Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
RAYHAZOURI NOMINEES PTY LTD
MR ELIAS HAZOURI
RAYMOND HAZOURI
SALEM HAZOURI
MR JOHN RICHARD SNELL
HAROLD CRIPPS HOLDINGS PTY LTD
NATIONAL NOMINEES LIMITED
DORRAN PTY LTD
GATTENSIDE PTY LTD Continue reading text version or see original annual report in PDF
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