Houston We Have Limited
And Controlled Entities
(formerly Veriluma Limited)
ABN: 48 142 901 353
CONSOLIDATED FINANCIAL REPORT
For the Year Ended 30 June 2020
Contents
Corporate Directory
Directors’ Report
Auditor’s Independence Declaration
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
Directors’ Declaration
Independent Auditor’s Report
Corporate Governance Statement
Additional ASX Information
2
3
18
19
20
21
22
23
53
54
59
60
Houston We Have Limited and Controlled Entities
1
Corporate Directory
Directors
Andrew Grover
Elizabeth Whitelock
Steven Formica
Company Secretary
Ben Secrett
Executive Chairman
Managing Director and Chief Executive Officer
Non-Executive Director
Principal Place of Business
Level 3, 33-35 Atchison Street
St Leonards NSW 2065
Telephone: +61 9146 4742
Registered Office
Level 11, London House
216 St Georges Terrace
Perth WA 6000
Telephone: +61 8 9481 0389
Website & Email
www.houstonwehave.ai
investor@houstonwehave.ai
Share Registry*
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth WA 6000
Telephone: 1300 850 505
Facsimile: +61 3 9415 4000 (outside Australia)
Website www.investorcentre.com
Auditors
KPMG
Level 11, Corporate Centre One
Cnr Bundall Road and Slater Avenue
Bundall QLD 4217
Stock Exchange Listing
Australian Securities Exchange [ASX: HWH]
www.asx.com.au
Incorporation
Incorporated in Australia as a public company limited by shares
ACN: 142 901 353
ABN: 48 142 901 353
* This entity is included for information purposes only, and has not been involved in the preparation of this
Annual Report.
Houston We Have Limited and Controlled Entities
2
Directors’ Report (Continued)
The Directors present the financial report of the Group for the year ended 30 June 2020, together with the
audit report thereon. The Group consists of Houston We Have Limited (the Company, formerly Veriluma
Limited until 11 December 2019) and the entities it controlled at period end or from time to time during the
financial period.
1 Directors
The names of Directors who held office during or since the end of the period:
Andrew Grover
Executive Chairman
Andrew has 25 years’ experience in management, business development, sales & marketing,
administration and technology across a diverse range of industries. As a founder and investor in
numerous innovative companies, Andrew’s businesses have been featured in BRW Fast 100 and Deloitte’s
Fast 50 over several years. Andrew has had several successful exits and has consulted to medium and top
100 companies. Andrew was also CEO of an executive recruitment agency which was acquired by an ASX
listed company.
Andrew has served as a Director for 16 months since 24 May 2019.
Andrew has no former or other current ASX listed directorships.
Elizabeth Whitelock
Managing Director and Chief Executive Officer
Elizabeth is a co-founder of Houston We Have Software Pty Ltd and is the Group’s CEO. Elizabeth started
her career in the UK working for the Metropolitan Police Force and has over 25 years’ experience in senior
management and CEO roles. Elizabeth has worked with organization such as IBM, Information Builders,
SAS, Ingres and Microstrategy. These roles have all shared a focus on Information Management Products
and Services and have highlighted her strengths in strategic communications, sales, marketing partner
programs while cementing customer relationships.
Elizabeth has served as a Director for 4 years since 8 September 2016.
Elizabeth has no former or other current ASX listed directorships.
Steven Formica
Non-Executive Director
Steven brings to the Group practical management and business development experience. He has been a
successful businessman and operations manager for over 30 years in several privately held business
ventures including manufacturing, construction, landscape contracting, property development and
integrated wholesale and retail businesses. More recently he has been a successful investor and non-
executive director in mineral resource companies.
Steve has served as a Director for 2 years 3 months since 2 July 2018.
Steve is currently Chairman of Ragnar Metals Ltd and is a director of High Grade Metals Limited and
Bowen Coal Limited, and in the past 3 years has been a director of Lindian Resources Limited and Orminex
Limited.
Antanas Guoga
2020)
Non-Executive Director (appointed 25 February 2020, resigned 25 September
Antanas is an entrepreneur, philanthropist and the founder of the Blockchain Centre in Vilnius, Lithuania.
He was a member of the European Parliament for Lithuania (2014-2019) including being a member of the
European People’s Party Group and worked on a range of digital policies in the Internal Market and
Consumer Protection Committee. Tony has also held roles as investment advisor to the Mayor of Vilnius
and Olympic Attache for the Lithuanian Team at the 2012 London Olympic Games. Tony contributes
experience in digital start-ups, business development, management and venture capital.
Antanas served as a Director for 7 months.
Antanas has no former or other current ASX listed directorships.
Houston We Have Limited and Controlled Entities
3
Directors’ Report (Continued)
Arunava Sengupta
Non-Executive Director (resigned 10 September 2019)
Arunava has over 30 years’ experience working in the financial markets, private equity and the corporate
finance sector. He began his career working in Treasury at Westpac Banking Corporation before starting
his own trading business in 1992 and has been involved in a broad range of corporate advisory, funds
management and principal investment activities. He has been involved in private equity and the
establishment, fundraising and operation of ASX listed companies.
2 Company Secretary
Ben Secrett held office as the Company Secretary during and since the end of the period.
Ben has over 10 years of experience providing corporate advisory, legal, risk and governance services to
Australian and foreign listed and unlisted entities, having worked as a corporate lawyer and also as a
Principal Adviser in ASX Listings Compliance. Ben has qualifications in economics, law and corporate
governance.
3 Meetings of Directors
The number of meetings held during the year and the number of meetings attended by each Director was
as follows:
Director
Andrew Grover
Elizabeth Whitelock
Steven Formica
Antanas Guoga
Arunava Sengupta
Number
attended
Number held &
eligible to attend
5
4
5
2
0
5
5
5
3
1
The Group does not have an Audit, Remuneration or Nomination Committee with the full Board carrying
out the functions that would otherwise be dealt with by such committees.
4 Principal Activities
The principal activities of the Group are the product development, marketing and commercialisation of
software products and services. The Group is focused on opportunities in Defence and National Security
and Health Insurance, and is pursuing opportunities in the Financial Services and Insurance sectors.
5 Operating and Financial Review
Review of Operations
The Directors are pleased to provide this corporate and operational overview of the Group for the financial
year ended 30 June 2020.
The financial year has been a transformational year for the Group, characterised by a new brand and
corporate identity, a stronger Board and management team being put in place, the geographical footprint
expanded, new contracts secured and existing contracts extended, joint venture agreements established
and our proprietary technology offering greatly enhanced.
Early in the financial year, the Group introduced its new brand and corporate identity - Houston We Have.
This has allowed the Company to match a memorable brand with a technology solution that exceeds what
is currently available on the market and allows us to compete with well-established and respected firms that
have a similar capability.
Houston We Have Limited and Controlled Entities
4
Directors’ Report (Continued)
The Group completed a $5.4m capital raise in September 2019, the more specific details of which are
outlined under Corporate Activities below. These funds have provided the Group with necessary financial
flexibility to pursue growth opportunities domestically and internationally, while continually innovating the
product offering.
To support growth initiatives, the Group established an industry leading advisory board and has further
strengthened its Board and management team.
On 31 October 2019, the Group acquired 100% of the shares in Prometheus Information Pty Ltd, a
company that provides professional services and software to the health insurance sector. The
consideration paid for Prometheus was $500,000 in cash, $100,000 in shares, and there is contingent
consideration of $73,099 payable not before 30 June 2020 subject to certain milestones being achieved
(linked to employment, as detailed in the notes to the financial statements). This amount was settled in
July 2020 based on the prescribed milestones being achieved.
To broaden exposure to the banking, automotive and telecommunications sectors, Houston We Have
established Data Distillery Pty Ltd (“Data Distillery”) via a 50/50 joint venture with Potentiate Pty Ltd.
(“Potentiate”) Data Distillery combines Houston We Have’s technology and skills in data science and AI with
Potentiate’s understanding of customer experience to deliver differentiated technology solutions. Potentiate
continues to market the solution to its global client base and is building a strong pipeline of opportunities
which have the potential to generate significant revenue.
The Group extended its contract with the Australian Department of Defence in October. The extension
followed an initial contract secured in March 2019. Delivery of the services began immediately and runs
through to March 2022, with an option to extend for a further two years.
Furthering international expansion initiatives, the Group has continued to build a strong presence in the
United Kingdom. The pipeline of opportunity in the UK has grown substantially with strong engagement
across government and corporate sectors and the Group is confident of developments in the UK in the near
term.
In July 2020, a Master Terms & Conditions Agreement was secured with the Australian arm of leading global
professional services company Accenture. Under the agreement, Accenture will sell the Company’s
proprietary prescriptive AI technology to their blue chip and government clients in Australia. This is an
outstanding development and provides significant validation of the Company’s technology and follows a
six-month comprehensive due diligence process.
The agreement opens a major sales channel for the Group and gives it access to a client base and pipeline
that would take many years to establish in its own right. Accenture Australia will sell the Groups’ technology
as part of its broader artificial intelligence and analytics capabilities.
Results Overview
The Group reported a loss for the year ended 30 June 2020 of $2,683,801 (30 June 2019: loss of $474,916).
Included in the loss for the financial year were non-cash Share Based Payments expenses of $1,191,582 for
performance shares and options issued (as outlined in detail in notes 23 and 24 to the financial
statements).
Operating revenue for the financial year totalled $679,872 and operating expenses (excluding Share Based
Payments expense) totalled $2,264,882.
The Group successfully applied for the Australian Government’s Jobkeeper payment, which applied to all
of the Group’s eligible employees. The Group has also received the Federal Government’s Cash Boost
incentive. The Company received $152,400 of subsidies over the financial year 2020 period.
Houston We Have Limited and Controlled Entities
5
Directors’ Report (Continued)
Segment Overview
Subsequent to the acquisition of Prometheus Information Pty Ltd, the Group has commenced reporting
segment information on the same basis as the Group’s internal management reporting structure at
reporting date. Commentary on the two segments follows.
Houston We
Have Software
Operating
revenue
Segment profit
or (loss)1
FY20
$
296,238
FY19
$
824,530
Change
%
-64%
(641,135)
209,723
n.a
Prometheus
Information
Operating
revenue
Segment profit
or (loss)1
FY20
$
383,634
FY19
$
-
Change
%
n.a
116,964
-
n.a
1 Segment profit or loss excludes certain corporate overhead costs that are not allocated at segment level.
Houston We Have Software operating revenue in financial year 2020 reflects the new and ongoing services
and solutions provided to the Australian Department of Defence. In FY19, initial software licensing and
installation fee revenue of $745,600 was earned. From a cost point of view, and further to the Group’s
capital raising, there has been investment in resources to grow the business, as outlined in the Results
Overview.
Prometheus Information operating revenue and segment profit is for a part financial year only, from
November 2019 through to June 2020. This segment operates exclusively in the Health Insurance sector
and the Prometheus business has performed as expected since it was acquired. Opportunities to bring the
proprietary software of Houston We Have to the Prometheus client base in a complementary and value-
adding manner have arisen and continue to be explored.
Financial Position and Cash Flow
The net assets of the Group have increased to $3,124,222 at 30 June 2020 from a net asset deficit of
$464,694 at 30 June 2019, driven in large part by capital raising activities as noted in the Corporate
Activities section below.
The net cash inflow for the Group for the year totalled $2,763,065 (30 June 2019: net cash inflow of
$240,184).
Cash outflows from operations totalled $1,103,690 compared with outflows $202,212 for 30 June 2019.
The capital raising of the Group has allowed for investment in resources to support business growth plans.
Capital expenditure was $88,540 for the period. A further $500,000 was paid in cash for the acquisition of
Prometheus, and $1 was paid to establish the Data Distillery joint venture. The total of investing cash
outflows (net of Prometheus cash acquired on acquisition of $245,740) was $342,801.
Net cash inflows from financing activities totalled $4,209,556 for the financial year. This includes the
inflow of $5,400,000 from capital raising, less $407,698 in cash settled capital raising costs, and the
repayment of $782,746 in borrowings.
Corporate Activities
Capital Raising and Reinstatement to Official Quotation
In March 2019, the Consolidated Entity received commitments from several sophisticated and professional
investors for an aggregate of $500,000 financing by way of a short-term convertible note facility (Facility)
which was entered into on 28 March 2019. As at 30 June 2019 the Facility was drawn to $430,000. The
convertible notes issued were convertible on or before 28 March 2020 at a conversion price of not less
than $0.002 (pre-consolidation price – on 15 August 2019 the Company effected a consolidation of its
issued capital on a 10:1 basis). Conversion was subject to obtaining shareholder approval and this was
received at the Annual General Meeting on 9 August 2019. The funds were fully repaid during the year
ended 30 June 2020.
Houston We Have Limited and Controlled Entities
6
Directors’ Report (Continued)
On 24 July 2019 the Group resolved to enter into a lead manager and corporate advisory mandate with
Taurus Capital Group Pty Ltd for Taurus Capital to act as lead manager of the capital raising.
This Company issued a prospectus dated 26 July 2019 (as supplemented by a supplementary prospectus
dated 30 August 2019) for the capital raising, and the raising was approved by shareholders at the Annual
General Meeting on 9 August 2019. The Company closed the capital raising offer on 3 September 2019
after issuing 180 million shares at 3 cents raising the maximum subscription of $5,400,000. The
Consolidated Entity’s securities were reinstated to official quotation and trading on ASX Limited on 9
September 2019.
6 Dividends
No dividends were paid during the period and no recommendation is made as to payment of dividends.
7
Significant Changes in the State of Affairs
Other than the developments reported elsewhere in this report there were no significant changes in the
state of affairs of the Group during the financial year ended 30 June 2020.
8
Environmental Regulation
The Group’s operations are not regulated by any particular or significant law of the Commonwealth or of a
State or Territory of Australia relating to the environment.
9
Economic, Environmental and Social Sustainability Risks
The Group does not consider that it has any material exposures to environmental and social sustainability
risks.
The Group’s July 2019 recapitalisation prospectus disclosed the risks that may have a material impact on its
financial performance and the market price for its shares. This disclosure included possible material exposure
to a decline in economic conditions and the general economic outlook. The Group recognises that the
COVID
19 pandemic has and may continue to have a negative impact on the Australian and global
economies and may have a negative impact on the financial performance of the Group’s clients.
‑
To date the Group has not seen a deterioration in its business development opportunities, nor experienced
19 pandemic. However, in response to the pandemic, the Group
a negative financial impact, from the COVID
essential operating and
is maintaining discipline in its cash flow management, identifying and deferring non
capital expenditure, and ensuring the timely collection of accounts receivable, while also remaining vigilant
in monitoring and assessing any developments which may cause clients to reduce the size or extent of their
engagement of the Group. The Group’s client base of resources, infrastructure and defence entities and
organisations appears to be continuing to perform with minimal adverse impact from the COVID
19
pandemic, and the Group will continue to monitor developments.
‑
‑
‑
10 Events Subsequent to Reporting Date
On 30 January 2020, the spread of novel coronavirus (“COVID-19”) was declared a Public Health Emergency
of International Concern by the World Health Organisation (“WHO”). Subsequently, on 11 March 2020, WHO
characterised COVID-19 as a pandemic affecting worldwide.
The entity will continue to monitor the impact of COVID-19 but at the date of this report it is too early to
determine the full impact this virus may have on the entity. Should this emerging macro-economic risk
continue for a prolonged period, there could be potentially adverse financial impact to the entity.
On 29 July 2020, 4,000,000 fully paid ordinary shares at a deemed issue price of $0.03 were issued to
Director, Mr Andrew Grover, in lieu of cash payments for his director’s remuneration (excluding
superannuation) for the first 12 months following reinstatement of the Company’s securities to official
quotation. The Company obtained approval at its Annual General Meeting of shareholders held on 9
August 2019, together with a waiver from ASX, to issue these shares after the remuneration liability
Houston We Have Limited and Controlled Entities
7
Directors’ Report (Continued)
accrued.
There has not been any other matter or circumstance that has arisen since the end of the financial year
that has significantly affected, or may significantly affect, the operations of the entity, the results of those
operations, or the state of affairs of the entity in future financial years.
11 Likely Developments
Information on likely developments in the operations of the Group and the expected results of operations
have not been included in this report because the Directors believe it would be likely to result in
unreasonable prejudice to the Group. However, the Directors and management of the Group intend to
continue operations as conducted during the financial year and in a manner consistent with the Group’s
business model and growth strategy (which includes organic and acquisitive growth).
12 Directors Interests
The relevant interest of each Director in the shares and rights or options over such interests issued by
companies within the Group, as notified by the Directors to the ASX in accordance with S205G(1) of the
Corporations Act 2001, at the date of this report is as follows:
Director
Andrew Grover1
Elizabeth Whitelock
Steven Formica2
Antanas Guoga
13 Share Options
Houston We Have Limited
Options over
ordinary shares
6,000,000
4,000,000
4,000,000
10,000,000
Performance rights
over ord. shares
5,000,000
5,451,560
-
-
Ordinary shares
17,116,414
4,515,602
7,833,335
30,257,487
At the date of this report unissued shares of the Group under option are:
Number of options
2,000,000
39,500,000
1,500,000
42,000,000
2,000,000
Exercise price
$0.03
$0.04
$0.05
$0.08
$0.04
Expiry date
4 April 2022
30 June 2022
30 June 2022
30 June 2023
1 November 2024
Listed or Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
No shares were issued as a result of the exercise of the options as at the date of this report.
14 Performance Shares
At the date of this report the following performance shares were on issue:
Number of
perf. Shares
1,500,000
5,000,000
5,000,000
Class
C
Expiry date
8 September 2020
Listed or Unlisted
Unlisted
D
E
30 August 2022
Unlisted
30 August 2022
Unlisted
Conditions
Sales revenue in excess of
$10m
30 day VWAP not less than
$0.083
30 day VWAP not less than
$0.123
1 These securities are directly held by A22 Pty Limited, a company wholly owned and controlled by Mr Grover’s spouse. Mr Grover has no
relevant interest in these securities, and this disclosure is made in the interest of good governance practices.
2 These securities are held by Stevsand Investments Pty Ltd.
3 Further details of conditions are outlined in section 19, the Remuneration Report - Audited
Houston We Have Limited and Controlled Entities
8
Directors’ Report (Continued)
15 Indemnification and Insurance of Directors and Officers
The Group has indemnified, to the extent permitted by law, the Directors and officers of the
Group against any liability incurred by a Director or officer in or arising out of the conduct of the business
of the Group or in or arising out of the discharge of that officer’s duties. No amount was paid pursuant to
these indemnities during the financial year, nor subsequently to the date of this Annual Report.
During the financial year the Group paid, as permitted by law, a premium in respect of a contract to insure
the Directors and officers of the Group against a liability (including legal costs) incurred by a Director or
officer in or arising out of the conduct of the business of the Group or in or arising out of the discharge of
that officer’s duties. Under the terms of that contract, the details of the nature and extent of the liabilities
insured against and the amount of premiums paid are confidential.
16 Proceedings on Behalf of the Group
No person has applied to a court under section 237 of the Corporations Act 2001 for leave, or been
granted leave, to bring proceedings on behalf of the Company, or to intervene in any proceedings to
which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or
part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company pursuant to section 236
with leave of the Court under section 237 of the Corporations Act 2001.
17 Non-Audit Services
The Group has not, during or since the end of the financial year, indemnified or agreed to indemnity the
auditor of the Group against a liability incurred by the auditor. During the financial year, the Group has not
paid a premium in respect of a contract to insure the auditor of the Group. KPMG continues in office in
accordance with the Corporations Act 2001.
No Director has been a partner in an audit firm or a director of an audit firm that is an auditor of the
Group. There was no non-audit services provided by KPMG, the Group’s auditor, during the year ended 30
June 2020.
18 Lead Auditor’s Independence Declaration
The auditor’s independence declaration for the year ended 30 June 2020 has been received and is included
within the financial statements.
Houston We Have Limited and Controlled Entities
9
Directors’ Report (Continued)
19 Remuneration Report – Audited
The Directors present the Remuneration Report for the Group for the year ended 30 June 2020. This
Remuneration Report forms part of the Directors’ Report in accordance with the requirements of the
Corporations Act 2001 and its regulations.
19.1 Principles used to determine the nature and amount of remuneration
The remuneration policy of Houston We Have Limited and its controlled entities has been designed to
align key management personnel (KMP) objectives with shareholder and business objectives by
providing a fixed remuneration component and offering specific long-term incentives based on key
performance areas affecting the Group's financial results. The Board of Houston We Have Limited and
its controlled entities believes the remuneration policy to be appropriate and effective in its ability to
attract and retain the best key management personnel to run and manage the Group, as well as create
goal congruence between Directors, Executives and shareholders.
Key management personnel have authority and responsibility for planning, directing and controlling
the activities of the Group. Key management personnel comprise the Directors of the Group.
Remuneration levels for key management personnel are competitively set to attract and retain
appropriately qualified and experienced Directors and Executives. The Board may seek independent
advice on the appropriateness of remuneration packages, given trends in comparative companies both
locally and internationally and the objectives of the Group's remuneration strategy. The remuneration
structures are designed to attract suitably qualified candidates, reward the achievement of strategic
objectives, and achieve the broader outcome of creation of value for shareholders. Remuneration
packages include a mix of fixed compensation, equity-based compensation, as well as employer
contributions to superannuation funds. Options may only be issued to Directors subject to approval
by shareholders in a general meeting. The Board has no established retirement or redundancy
schemes.
The remuneration structure that has been adopted by the Group consists of the following components:
• Fixed remuneration being base fees as well as compulsory employer contributions to
superannuation funds; and
• Fixed remuneration being base fees exclusive of employer contributions to superannuation funds;
• Short term incentives and bonuses; and
• Long term incentives (as referred to below).
The relationship between the Company’s remuneration principles and performance is based on the
Company’s market capitalisation value. The Company is working to develop and commercialise its
software and products and does not currently generate positive earnings, and may not do so for some
time. Accordingly, the Company considers that it is appropriate to link performance based
remuneration to appreciation in its share price, with an increasing share price also increasing the value
of shareholdings in the Company. The Group’s earnings results and shareholders’ returns for this
reporting period and the previous four reporting periods4, against which KMP remuneration and the
Group’s remuneration principles and policies can be discussed, are detailed below.
Revenue
Net loss after
tax
Dividends
Share price
changes (high
and low)
FY16
7,500
(946,199)
FY17
146,266
(14,424,084)
FY18
14,635
(1,537,469)
FY19
824,530
(474,916)
FY20
679,872
(2,683,801)
-
$0.098
$0.020
-
$0.115
$0.020
-
$0.024
$0.013
-
$0.015
$0.015
-
$0.054
$0.011
4 The Company commenced trading on ASX on 27 September 2016 following completion of a backdoor listing
transaction.
Houston We Have Limited and Controlled Entities
10
Directors’ Report (Continued)
Compensation levels are reviewed annually by the Board through a process that considers individual
and overall performance of the Group. In addition, external consultants may provide analysis and
advice to ensure the Directors' and senior executives' compensation is competitive in the market place.
During the period, no such remuneration consultant was used.
Service contracts
On appointment to the Board, all Non-Executive Directors enter into a service agreement with the
Company in the form of a letter of appointment. The letter summarises the Board policies and terms,
including remuneration, relevant to the office of director.
The remuneration and other terms of employment for the Managing Director and the Executive
Chairman are set out in formal service agreements as summarised below. The compensation for
executive directors was determined by the Board having considered the Company’s financial condition
and the Board’s knowledge of remuneration levels for executives with similar skills and experience in
software businesses of comparable size and complexity.
Ms Elizabeth Whitelock
Ms Whitelock is employed by the Group on the following terms:
•
from 1 July 2019 a salary of $150,000 per annum, exclusive of superannuation and other statutory
entitlements;
from 17 August 2020 a salary of $175,000 per annum, exclusive of superannuation and other
statutory entitlements;
•
• a salary review will be conducted every 12 months on the anniversary of employment contract;
• a notice period of one month subject to any greater statutory entitlement to notice under the Fair
Work Act 2009 (Cth);
four weeks' paid annual leave each year and ten days' paid personal leave per year;
•
• all intellectual property developed by Ms Whitelock during her employment will belong to the
Group; and
• a 12 month non-compete throughout Australia restricting Ms Whitelock from providing services
to a direct competitor of the Group, or soliciting or enticing away customers or employees of the
Group, during which period of restraint Ms Whitelock will be paid her usual remuneration.
The issue of the following securities were issued separate to the terms of Ms Whitelock’s agreement:
• Securities – subject to shareholder approval (which was obtained at the Company Annual General
Meeting of shareholders held on 9 August 2019), the following securities were issued to Ms
Whitelock (or her nominee/s) for no consideration as part of her remuneration on 30 August 2019:
2,000,000 Class A options exercisable at $0.04 on or before 30 June 2022 (post-
Consolidation).
2,000,000 Class B options exercisable at $0.08 on or before 30 June 2023 (post-
Consolidation).
2,500,000 Class D performance shares convertible into shares if the Company’s 30 trading
day VWAP of shares traded on ASX is not less than $0.08 on or before 3 years after the date
of issue (post-Consolidation) and continued service.
2,500,000 Class E performance shares convertible into shares if the Company’s 30 trading
day VWAP of shares traded on ASX is not less than $0.12 on or before 3 years after the date
of issue (post-Consolidation) and the continued service.
Mr Andrew Grover
On 26 July 2019, the Company entered into a formal executive employment agreement with Mr Andrew
Grover as Executive Chairman of the Group which reflects the below arrangements:
• Salary of $120,000 per annum, exclusive of superannuation, to commence from date of
reinstatement.
• On 29 July 2020, the Company issued 4,000,000 fully paid ordinary shares at a deemed issue price
of $0.03 to Mr Grover (or his nominee/s) (post-consolidation) in lieu of cash payments for his
director’s remuneration (excluding superannuation) for the first 12 months following reinstatement
of the Company’s securities to official quotation. The Company obtained approval at its Annual
Houston We Have Limited and Controlled Entities
11
Directors’ Report (Continued)
General Meeting of shareholders held on 9 August 2019 to issue these shares after the
remuneration liability has accrued.
• Salary Review – Mr Grover’s remuneration shall be reviewed by the Board acting as the
Remuneration Committee and any change to his remuneration must be approved by the Board.
Either party may terminate Mr Grover’s employment on one months’ notice, unless agreed
otherwise.
•
• Mr Grover’s employment may be terminated without notice due to serious misconduct.
The issue of the following securities were issued separate to the terms of Mr Grover’s agreement:
• Securities – subject to shareholder approval (which was obtained at the Company Annual General
Meeting of shareholders held on 9 August 2019), and in addition to the above issue of shares in
lieu of cash payment of his director’s remuneration, the following securities were issued to
Mr Grover (or her nominee/s) for no consideration as part of his remuneration on 30 August 2019:
3,000,000 Class A options exercisable at $0.04 on or before 30 June 2022 (post-
Consolidation).
3,000,000 Class B options exercisable at $0.08 on or before 30 June 2023 (post-
Consolidation).
2,500,000 Class D performance shares convertible into shares if the Company’s 30 trading
day VWAP of shares traded on ASX is not less than $0.08 on or before 3 years after the date
of issue (post-Consolidation) and the continued employment of Mr Grover.
2,500,000 Class E performance shares convertible into shares if the Company’s 30 trading
day VWAP of shares traded on ASX is not less than $0.12 on or before 3 years after the date
of issue (post-Consolidation) and the continued employment of Mr Grover.
Mr Steve Formica
• Securities – subject to shareholder approval (which was obtained at the Company Annual General
Meeting of shareholders held on 9 August 2019), the following securities were issued to Mr Formica
(or her nominee/s) for no consideration as part of his remuneration on 30 August 2019:
2,000,000 Class A options exercisable at $0.04 on or before 30 June 2022, vesting
immediately.
2,000,000 Class B options exercisable at $0.08 on or before 30 June 2023, vesting
immediately.
Mr Arun Sengupta
• Securities – subject to shareholder approval (which was obtained at the Company Annual General
Meeting of shareholders held on 9 August 2019), the following securities were issued to Mr Formica
(or her nominee/s) for no consideration as part of his remuneration on 30 August 2019:
o
o
2,000,000 Class A options exercisable at $0.04 on or before 30 June 2022, vesting
immediately.
2,000,000 Class B options exercisable at $0.08 on or before 30 June 2023, vesting
immediately.
Mr Antanas Guoga
• Securities for no consideration as part of his remuneration on 24 February 2020:
2,000,000 Class A options exercisable at $0.04 on or before 30 June 2022, vesting over a
period of 12 months from grant date.
2,000,000 Class B options exercisable at $0.08 on or before 30 June 2023, vesting over a
period of 12 months from grant date.
Performance linked compensation
Short-term incentives
No short-term incentives in the form of cash bonuses were granted during the year except for $1,945
paid to Mr Arunava Sengupta .
Long-term incentives
The Board has a policy of granting incentive options with exercise prices above market share price and
performance shares to executives. As such, incentive options and performance shares granted to
executives will generally only be of benefit if the executives perform to the level whereby the value of
the Group increases sufficiently to warrant exercising the incentive options granted, which value
increase will also benefit other shareholders.
Houston We Have Limited and Controlled Entities
12
Directors’ Report (Continued)
Securities received not performance related
Effective from 12 March 2018 Non-Executive Directors were entitled to receive $10,000 of their $50,000
per annum directors’ fees as non-performance related, share based remuneration. This arrangement
was not continued for financial year 2020.
No comments were made on the Group’s 2019 remuneration report at the 2019 annual general
meeting.
There were no loans made, guaranteed or secured by the Group with a Director, KMP or a close family
member of a Director or KMP during the financial year or as at the date of this Remuneration Report.
There were no other Director or KMP transactions.
Houston We Have Limited and Controlled Entities
13
Directors’ Report (Continued)
19.2 Directors’ and Executive Officers Remuneration
Details of remuneration of Directors and Key Management Personnel of the Group are outlined below.
Short Term Benefits
Post
Employme
nt Benefits
Long Term
Benefits
Equity settled share-based payments
expense 5
Termination
Performance
Year
Salary
$
STI
$
Other
$
Super
$
Long Service
Leave $
Options
$
Ordinary
shares $
Perf. Shares
$
Payments
$
Total
$
Related
$
Name and title
Current Executive Directors
Andrew Grover
Executive Chairman
Elizabeth Whitelock
Managing Director & CEO
Current Non-Executive Directors
Steven Formica
Non-Executive Director
2020
2019
2020
2019
100,0006
-
149,038
98,645
2020
2019
45,666
35,250
-
-
9,500
-
-
-
94,364
-
16,8697
-
15,986
10,335
10,874
11,989
62,910
-
-
-
-
-
107,000
-
107,000
-
Antanas Guoga (from 25 February 2020)
Non-Executive Director
2020
2019
7,306
-
Former Non-Executive Director
Arunava Sengupta (until 10 September 2019)
Non-Executive Director
2020
2019
7,106
36,200
1,945
-
John Welsh (until 24 May 2019)
Non-Executive Director
Total Current & Former KMP
2020
2019
2020
2019
-
48,944
309,116
219,039
1,945
-
16,869
-
-
-
-
-
-
-
-
-
4,338
4,750
694
-
675
3,800
-
5,138
31,193
24,023
-
-
-
-
-
-
-
-
62,910
-
9,692
-
62,910
-
-
-
10,874
11,989
292,786
-
-
9,973
-
-
-
10,000
-
9,014
-
28,987
-
-
-
-
-
-
-
214,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
310,864
-
107,000
-
362,677
120,969
107,000
-
112,914
49,973
17,692
-
72,636
50,000
-
63,096
876,783
284,038
-
-
-
-
-
-
-
214,000
-
5 The figures provided under the equity settled share based payments columns are based on accounting values and do not reflect actual payments received by KMP.
6 Relates to remuneration accrued and subsequently settled in shares on 29 July 2020 (refer service contract details under 19.1 and also item 10 of the Directors’ report).
7 Relates to annual leave entitlements during the financial year.
Houston We Have Limited and Controlled Entities
14
Directors’ Report (Continued)
19.3 Equity Instruments
19.3.1
Share Options and Performance Shares Granted as Compensation
Details on rights and options over ordinary shares that were granted as compensation to key
management personnel during the financial year are detailed in the tables below.
Fair value
at grant
date
Exercise
price per
option
Number
granted
during
year
Share Options
Current Executive Directors
Andrew Grover
Elizabeth Whitelock
3,000,000
3,000,000
2,000,000
2,000,000
Current Non-Executive Directors
Steven Formica
Antanas Guoga8
2,000,000
2,000,000
2,000,000
2,000,000
Grant
date
30-8-19
30-8-19
30-8-19
30-8-19
30-8-19
30-8-19
24-2-20
24-2-20
$0.0164
$0.0151
$0.0164
$0.0151
$0.0164
$0.0151
$0.0077
$0.0050
Former Non-Executive Director
Arunava Sengupta9
2,000,000
2,000,000
30-8-19
30-8-19
$0.0164
$0.0151
Number
granted
during
year
Performance Shares
Current Executive Directors
Andrew Grover
Elizabeth Whitelock
2,500,000
2,500,000
2,500,000
2,500,000
Grant
date
30-8-19
30-8-19
30-8-19
30-8-19
Fair value
at grant
date
$0.0231
$0.0197
$0.0164
$0.0151
$0.04
$0.08
$0.04
$0.08
$0.04
$0.08
$0.04
$0.08
$0.04
$0.08
Share
price at
grant
date
$0.03
$0.03
$0.03
$0.03
Number
vested
during
year
3,000,000
3,000,000
2,000,000
2,000,000
2,000,000
2,000,000
700,000
700,000
Expiry
date
30-6-22
30-6-23
30-6-22
30-6-23
30-6-22
30-6-23
30-6-22
30-6-23
30-6-22
30-6-23
2,000,000
2,000,000
Hurdle
price
Expiry
date
$0.08
$0.12
$0.08
$0.12
30-6-22
30-6-22
30-6-22
30-6-22
Details of the performance criteria are on pages 11 and 12 of this report, under Service Contracts.
19.3.2
Share Options
The following table sets out the details of the unlisted share option movements during the year
ended 30 June 2020.
Balance at
start of year
Granted
during year
Vested
during year
Forfeited
during year
Balance at
end of year
Current Executive Directors
Andrew Grover
Elizabeth Whitelock
Current Non-Executive Directors
-
-
6,000,000
4,000,000
6,000,000
4,000,000
Steven Formica
Antanas Guoga10
-
6,000,000
4,000,000
4,000,000
4,000,000
700,000
Former Non-Executive Director
Arunava Sengupta11
-
4,000,000
4,000,000
-
-
-
-
-
6,000,000
4,000,000
4,000,000
10,000,000
4,000,000
8 For the part of the reporting period from his appointment on 25 February 2020.
9 For the part of the reporting period to his resignation on 10 September 2019.
10 For the part of the reporting period from his appointment on 25 February 2020.
11 For the part of the reporting period to his resignation on 10 September 2019.
Houston We Have Limited and Controlled Entities
15
Directors’ Report (Continued)
19.3.3 Performance Shares
The movement during the reporting period in the number of performance shares of the Company
held directly, indirectly or beneficially, by each Director or key management personnel, including
their personally related entities is as follows:
Balance at
start of year
Granted
during year
Vested
during year
Forfeited
during year
Balance at
end of year
Current Executive Directors
Andrew Grover
Elizabeth Whitelock
-
903,120
5,000,000
5,000,000
Current Non-Executive Directors
Steven Formica
Antanas Guoga
Former Non-Executive Director
Arunava Sengupta
-
-
-
-
-
-
-
-
-
-
-
-
451,560
5,000,000
5,451,560
-
-
-
-
-
-
19.4 Key Management Personnel Transactions
19.4.1 Movements in Shares
The movement during the reporting period in the number of ordinary shares of the Company held
directly, indirectly or beneficially, by each Director or key management personnel, including their
personally related entities is as follows:
Balance at
start of year
Granted as
remuneration
Lapsed/
forfeited
Other
changes
Balance at
end of year
Current Executive Directors
Andrew Grover
Elizabeth Whitelock
1,666,667
4,515,601
Current Non-Executive Directors
Steven Formica
Antanas Guoga12
3,333,334
32,651,500
Former Non-Executive Director
Arunava Sengupta13
760,731
-
-
-
-
-
-
-
-
-
-
11,449,747
1
13,116,414
4,515,602
4,500,001
7,605,987
7,833,335
40,257,487
436,800
1,197,531
19.4.2
Transactions With Key Management Personnel
In financial year 2019, the Group had the following loan from entities that were controlled by the
members of the Group’s key management personnel as outlined in the table below. The loan
balances outstanding as at 30 June 2019 were settled in full during the year ended 30 June 2020.
KMP
Elizabeth
Whitelock
Nature of Transaction
Loan to Group (with no
interest) for funding of legal
fees under DOCA
Payable at 30
June 2019
$90,960
Transactions
($90,960)
Payable at 30
June 2020
-
There were no other Director and KMP transactions.
End of remuneration report.
12 For the part of the reporting period from his appointment on 25 February 2020.
13 For the part of the reporting period to his resignation on 10 September 2019.
Houston We Have Limited and Controlled Entities
16
Directors’ Report (Continued)
20 Rounding of Amounts
The amounts in this report and the financial statements have been rounded to the nearest dollar, in
accordance with ASIC Corporations (Rounding of Financial/Directors’ Reports) Instrument 2016/191. Any
discrepancies between totals and sums of components in tables and figures contained in this report are due
to rounding.
This report is made on 30 September 2020 in accordance with a resolution of Directors, pursuant to section
298(2)(a) of the Corporation Act 2001, and is signed for and on behalf of the Directors.
___________________
Andrew Grover
Executive Chairman
30 September 2020
Houston We Have Limited and Controlled Entities
17
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Houston We Have Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Houston We
Have Limited for the year ended 30 June 2020 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
KPMG
Adam Twemlow
Partner
Gold Coast
30 September 2020
Houston We Have Limited and Controlled Entities
18
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Year Ended 30 June 2020
Revenue
Government grant income
Interest income
Audit fees
Consulting and professional fees
Employee costs
Finance expenses
Non-Executive Directors fees
Depreciation and amortisation
Other expenses
Share based payments expenses – Directors and
consultants fees
Share of net profits/(losses) of equity accounted
associates and joint ventures
Share registry and listing fees
Acquisition costs
Voluntary administration credit/(expense)
Loss before tax
Income tax benefit/(expense)
Net loss for the year
Other comprehensive income
Total comprehensive loss for the year
Basic loss per share (cents)
Diluted loss per share (cents)
Consolidated
30 June 2020
$
Consolidated
30 June 2019
$
Note
7
9
8
10
11
679,872
176,216
16,456
(139,460)
(296,663)
(1,354,233)
(16,217)
(76,325)
(129,893)
(245,533)
824,530
54,810
183
(89,725)
(307,857)
(568,900)
(104,941)
(134,082)
-
(68,071)
23
(1,191,582)
(78,955)
119
(94,882)
(11,676)
-
(2,683,801)
-
2,140
(34,022)
-
29,974
(474,916)
-
(2,683,801)
(474,916)
-
-
(2,683,801)
(474,916)
(1.19)
(1.19)
(0.67)
(0.67)
14
12
12
The accompanying notes form part of these consolidated financial statements.
Houston We Have Limited and Controlled Entities
19
Consolidated Statement of Financial Position
As At 30 June 2020
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Total Current Assets
Non-Current Assets
Investments in associates and joint ventures
Plant and equipment
Right of use asset
Intangible assets and goodwill
Total Non-Current Assets
Total Assets
LIABILITIES
Current Liabilities
Trade and other payables
Borrowings
Lease liability
Employee benefits
Contract liabilities – unearned income
Total Current Liabilities
Non-Current Liabilities
Lease liability
Employee benefits
Total Non-Current Liabilities
Total Liabilities
Net Assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total Equity
Consolidated
30 June 2020
$
Consolidated
30 June 2019
$
Note
15
16
17
26
18
20
21
26
13
7
26
13
22
23
3,477,104
86,282
714,039
157,956
3,563,386
871,995
4,346
62,381
12,429
507,375
586,531
3,961
-
-
153
4,114
4,149,917
876,109
477,597
-
32,076
173,595
327,769
427,265
782,746
-
116,106
-
1,011,037
1,326,117
11,750
2,909
14,659
-
14,686
14,686
1,025,695
1,340,803
3,124,222
(464,694)
20,356,670
1,496,602
(18,729,050)
15,530,264
63,400
(16,058,358)
3,124,222
(464,694)
The accompanying notes form part of these financial statements.
Houston We Have Limited and Controlled Entities
20
Consolidated Statement of Changes in Equity
Year Ended 30 June 2020
Note
22
22
23
Contributed
Equity
$
15,530,264
5,513,104
(686,698)
-
-
-
Share Based
Payments
Reserve
$
Accumulated
Losses
$
63,400
-
-
1,433,202
-
-
(16,058,358)
-
-
13,109
(2,683,801)
-
Total
$
(464,694)
5,513,104
(686,698)
1,446,311
(2,683,801)
-
-
20,356,670
-
1,496,602
(2,683,801)
(18,729,050)
(2,683,801)
3,124,222
Balance at 1 July 2019
Equity issues
Capital raising costs
Share based payments
Loss for the period
Other comprehensive income
Total comprehensive loss for
the year
Balance at 30 June 2020
Contributed
Equity
$
Share Based
Payments
Reserve
$
Accumulated
Losses
$
25,400
-
38,000
-
-
(15,583,442)
-
-
(474,916)
-
Total
$
(147,389)
119,611
38,000
(474,916)
-
-
63,400
(474,916)
(16,058,358)
(474,916)
(464,694)
22
23
Balance at 1 July 2018
Equity issues
Share based payments
Loss for the period
Other comprehensive income
Total comprehensive loss for
the period
Balance at 30 June 2019
15,410,653
119,611
-
-
-
-
15,530,264
The accompanying notes form part of these consolidated financial statements.
Houston We Have Limited and Controlled Entities
21
Consolidated Statement of Cash Flows
Year Ended 30 June 2020
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Receipts from grants & subsidies
Net cash from / (used in) operating activities
Cash flows from investing activities
Purchase of plant and equipment and intangibles
Acquisition of subsidiary
Acquired cash
Investment in associate
Net cash from / (used in) investing activities
Cash flows from financing activities
Proceeds from equity issues
Payment for costs of equity issues
Proceeds from/(repayment of) convertible notes
Proceeds from related party borrowings
Repayment of lease liabilities
Repayment of borrowings
Group
30 June 2020
$
Group
30 June 2019
$
Note
889,836
(2,182,400)
16,456
(15,720)
188,138
774,530
(1,186,969)
183
(5,615)
215,659
(1,103,690)
(202,212)
(88,540)
(500,000)
245,740
(1)
(342,801)
5,400,000
(407,698)
(520,300)
-
-
(262,446)
-
-
-
-
-
67,612
-
430,000
29
-
(55,245)
15
17
19
19
22
22
Net cash provided from / (used in) financing activities
4,209,556
442,396
Net increase/(decrease) in cash held
2,763,065
240,184
Cash and cash equivalents at beginning of the period
714,039
473,855
Cash and cash equivalents at period end
15
3,477,104
714,039
The accompanying notes form part of these consolidated financial statements.
Houston We Have Limited and Controlled Entities
22
Notes to the Financial Statements
For the Year Ended 30 June 2020
1. Reporting Entity
The condensed consolidated financial report covers Houston We Have Limited and its controlled entities
('the Group’). Houston We Have Limited is a listed public company limited by shares, incorporated and
domiciled in Australia. The Group is a for-profit entity primarily involved in product development,
marketing and commercialisation of software, products and services. Each of the entities within the Group
prepare their financial statements based on the currency of the primary economic environment in which
the entity operates (functional currency). The financial report was authorised for issue by the Directors on
30 September 2020.
2. Basis of Accounting
The consolidated financial statements are general purpose financial statements which have been prepared
in accordance with Australian Accounting Standards (AASBs) adopted by the Australian Accounting
Standards Board and the Corporations Act 2001. The consolidated financial statements comply with
International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards
Board (IASB).
Details of the Group’s accounting policies are included in note 32.
This is the first set of the Group’s annual financial statements in which AASB 16 Leases has been applied.
Changes to significant accounting policies are described in note 5.
Going concern
The financial statements have been prepared on a going concern basis which assumes continuity of
normal business activities and realisation of assets and the settlement of liabilities in the ordinary course
of business. The Group recorded a loss for the period ended 30 June 2020 of $2,683,801 (2019: loss of
$474,916) and used $1,103,690 of cash in operations. The Group had cash and cash equivalents of
$3,477,104 (30 June 2019: $714,039), net assets of $3,124,222 at 30 June 2020 (30 June 2019: deficiency of
$464,694), and a net current asset position of $2,552,349.
Management have prepared cash flow projections for the period up to 30 September 2021 that support
the Consolidated Entity’s ability to continue as a going concern. These cash flows assume the
Consolidated Entity will incur net operating cash outflows in the 2021 financial year, as it continues to
invest in the research, development and commercialisation of its technology and that the Consolidated
Entity maintains expenditures in line with available funding. Sufficient cash reserves are forecast to be
maintained during the forecast period.
The Directors believe the Group has the ability to meet its debts as and when they fall due for the reasons
outlined above.
3. Functional and Presentation Currency
These financial statements are presented in Australian dollars, which is the Group's functional currency.
4. Use of Judgements and Estimates
The Directors make estimates and judgements during the preparation of these consolidated financial
statements regarding assumptions about current and future events affecting transactions and balances.
These judgments include the impact of the COVID-19 pandemic in determining the amounts recognised in
the financial statements based on conditions existing at balance date, recognising uncertainty still exists in
relation to the duration of the COVID-19 pandemic-related restrictions. These estimates and judgements
are based on the best information available at the time of preparing the financial statements, however as
additional information is known then the actual results may differ from the estimates. The significant
estimates and judgements made have been described below.
Houston We Have Limited and Controlled Entities
23
Notes to the Financial Statements
For the Year Ended 30 June 2020
Key estimates: receivables
The receivables at reporting date have been reviewed to determine whether there is any objective evidence
that any of the receivables are impaired. An impairment provision is included for any receivable where the
entire balance is not considered collectible. The impairment provision is based on the best information at
the reporting date.
Key estimates: other
•
•
•
•
•
Impairment assessment (see Note 18)
Fair value of intangible asset acquired (assumptions applied include time to redevelop, level of
expert required and cost per time basis)
Share based payments (see Note 23)
Right of use asset recoverability (see Note 26)
Business combinations (fair value of consideration and assets acquired and liabilities assumed
measured on a provisional basis, see Note 19)
Key judgements
In addition to the significant judgements made by management in applying the Group's accounting policies
and the key sources of estimation of uncertainty applied to the consolidated financial statements,
management has made significant judgements and estimates in relation to the following transactions that
occurred during the period:
• Going concern (see Note 2)
•
Revenue (see Note 7)
•
Business combinations (see Note 19).
Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for
both financial and non-financial assets and liabilities. The Directors have overall responsibility for overseeing
all significant fair value measurements, including level 3 fair values.
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as
possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used
in the valuation techniques as follows:
•
•
•
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: input for the asset or liability that are not based on observable market data (unobservable
inputs).
If the inputs used to measure the fair value of an asset or liability fall into different levels of the fair value
hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value
hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period
during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the following notes:
•
•
Share based payments (see Note 23)
Business combinations (see Note 19).
5. Changes in Significant Accounting Policies
AASB 16 Leases
In the current year, the Company has adopted AASB 16 Leases (as issued by the AASB in January 2016) that
is effective for annual periods that begin on or after 1 July 2019. A number of other new standards are also
effective from 1 July 2019 but they do not have a material effect on the Group’s financial statements.
AASB 16 introduces new or amended requirements with respect to lease accounting. It introduces significant
changes to lessee accounting by removing the distinction between operating and finance lease and
requiring the recognition of a right-of-use asset and a lease liability at commencement for all leases, except
for short-term leases and leases of low value assets. In contrast to lessee accounting, the requirements for
Houston We Have Limited and Controlled Entities
24
Notes to the Financial Statements
For the Year Ended 30 June 2020
lessor accounting have remained largely unchanged. Details of these new requirements are described in
note 32 (m). The impact of the adoption of AASB 16 is described below.
The date of initial application of AASB 16 for the Company is 1 July 2019.
Definition of a lease
Previously, the Group determined at contract inception whether the arrangement was or contained a lease
under AASB 117. The Group now assesses whether a contract is or contains a lease based on the definition
of a lease as explained in note 32 (m).
Impact of the new definition of a lease
The Group has made use of the practical expedient available on transition to AASB 16 not to reassess
whether a contract is or contains a lease. Accordingly, the definition of a lease in accordance with AASB 117
Leases and Interpretation 4 - Determining whether an Arrangement contains a Lease, will continue to be
applied to those contracts entered or modified before 1 July 2019.
The change in definition of a lease mainly relates to the concept of control. AASB 16 determines whether a
contract contains a lease since whether the customer has the right to control the use of an identified asset
for a period in exchange for consideration. This contrasts with the focus on 'risks and rewards' in AASB 117
and Interpretation 4. The Group applies the definition of a lease and related guidance set out in AASB 16 to
all contracts entered or changed on or after 1 July 2019 using the modified retrospective approach.
Former operating leases
The Group had no operating leases in place prior to the financial year ended 30 June 2019 and therefore
there was no impact on transition date. Subsequent to transition date the group entered into a property
lease. Please see note 26 for further details.
6. Operating Segments
The Group is organised based on its products and services and has two reportable segments as follows:
• Houston We Have Software segment, which offers products and services across Defence and
other sectors; and
• Prometheus Information segment, which offers products and services across the Health
Insurance sector.
No operating segments have been aggregated to form the above reportable segments. Segment
performance is reviewed based on operating profit or loss in the consolidated financial statements.
However, Group corporate overhead costs that are not considered to be appropriate to allocate, are not
allocated to operating segments. Transfer prices between operating segments are on an arm’s length
basis in a manner similar to transactions with third parties.
Geographical locations
All revenue and operating assets are attributed to geographic location based on the location of
customers, which are entirely in Australia.
Operating revenue
Houston We Have Software
Prometheus Information
Consolidated Group operating revenue
Segment profit/(loss) before tax
Houston We Have Software
Prometheus Information
Unallocated
Consolidated Group profit/(loss) before tax
Houston We Have Limited and Controlled Entities
30 June 2020
$
30 June 2019
$
296,238
383,634
679,872
(641,135)
116,964
(2,159,632)
(2,683,801)
824,530
-
824,530
209,723
-
(684,639)
(474,916)
25
Notes to the Financial Statements
For the Year Ended 30 June 2020
Segment net assets
Houston We Have Software
Prometheus Information
Unallocated
Consolidated Group net assets
7. Revenue
a. Details of revenue
268,920
744,945
2,110,356
3,124,222
428,587
-
(893,283)
(464,694)
Consolidated
30 June 2020
$
Consolidated
30 June 2019
$
Software licence and consulting revenue
679,872
824,530
b. Contract balances
679,872
824,530
The following table provides information about receivables, contract assets and contract liabilities from
contracts with customers:
Receivables which are included in trade and other receivables
Contract assets
Contract liabilities – unearned income
30 June 2020
$
42,033
-
(327,769)
30 June 2019
$
23,430
50,000
-
The contract assets relate primarily to the Group’s rights to consideration for work completed but not
billed at reporting date. The contract assets are transferred to receivables when the rights become
unconditional. This usually occurs when the Group issues an invoice to the customer. The contract
liabilities relate to the advance consideration received from customers for licenses or services for which
revenue is recognised over time. All of the contract liabilities at 30 June 2020 are expected to be
brought to account as revenue during the financial year ending 30 June 2021.
c. Disaggregation of revenue
The Group has reviewed its revenue streams and provides the following disaggregated information:
Performance obligation
Proof of concept revenue
Provision of software licenses,
hardware and installation
Software updates, SaaS, technical
environment and support services
Integration services
Training and consulting services
Software licenses as agent
Sundry service revenue
Timing of revenue recognition
Over time based on proportion
of work performed
Point in time on acceptance by
the customer
Over time, over the term of the
contracted service period
Point in time, on integration of
the software
Over time, as and when
services are performed
Over time, over the term of the
contracted service period
Variable by agreement
30 June 2020
$
-
30 June 2019
$
70,743
17,060
745,600
442,443
52,800
128,196
39,373
-
-
-
-
8,817
679,872
824,530
d. Accounting policy
Under AASB 15, revenue is recognised when a customer obtains control of the goods or services.
Determining the timing of the transfer of control (i.e. at a point in time or over time) requires judgement.
Houston We Have Limited and Controlled Entities
26
Notes to the Financial Statements
For the Year Ended 30 June 2020
7. Revenue (continued)
The Group assessed its revenue streams and the above noted performance obligations and
measurement methods have been identified and adopted in the preparation of these financial
statements. The Group recognises contract assets in relation to the Group’s right to consideration for
work completed but not invoiced at the reporting date. Certain arrangements with customers require
the customer to formally accept the product before an invoice can be raised.
The contract assets are transferred to receivables when the rights become unconditional. The timing of
invoicing and payment is dependent on the specific terms and conditions of the underlying contract.
However, invoices are typically payable within 30 days.
8.
Interest Income
Interest income
9. Other income
Research and development grant income
Government grant income
Other income
10. Auditors’ Remuneration
Audit of the financial statements
11. Finance Costs
Finance costs
Consolidated
30 June 2020
$
Consolidated
30 June 2019
$
16,456
16,456
11,628
152,400
12,188
176,216
183
183
54,810
-
-
-
139,460
89,725
139,460
89,725
16,217
104,941
16,217
104,941
In the prior year, an amount of $104,941 was recognised as finance expense in the profit or loss for the
in relation to convertible notes (refer Note 21).
Consolidated
30 June 2020
Consolidated
30 June 2019
12. Loss Per Share
Weighted average number of shares on issue (i)
Loss per share (cents) (ii)
225,271,385
(1.19) cents
70,414,582
(0.67) cents
(i)
(ii)
The calculation of the weighted average number of shares has taken into consideration the
10:1 consolidation that occurred on 15 August 2019. The comparative figures have also been
adjusted on a 10:1 basis (reported in the 30 June 2019 financial report as 704,145,819).
The loss per share for the prior comparative period has been restated based on the
consolidation of shares note above in (i).
Houston We Have Limited and Controlled Entities
27
Notes to the Financial Statements
For the Year Ended 30 June 2020
13. Employee Benefits
Current
Annual leave
Long service leave
Non-Current
Long service leave
14. Income Tax
A reconciliation between the income tax expense and the product of
accounting profit before income tax multiplied by the Group’s
applicable income tax rate is as follows:
Loss before tax
Statutory income tax rate for the Group at 27.5% (2019: 27.5%)
Tax effect of amounts which are not deductible /(taxable) in
calculating taxable income:
Non-deductible expenditure
Current year tax losses not recognised
Non-assessable income
Movement in unrecognised temporary differences
Deductible equity raising costs
Income tax expense reported in the statement of comprehensive
income
Consolidated
30 June 2020
$
Consolidated
30 June 2019
$
112,053
61,542
84,773
31,333
173,595
116,106
2,909
2,909
14,686
14,686
Consolidated
30 June 2020
$
Consolidated
30 June 2019
$
(2,683,801)
(474,916)
(738,045)
(130,602)
412,288
437,292
(16,947)
(56,819)
(37,769)
84,591
127,442
(62,330)
(19,101)
-
-
-
The temporary deductible differences and tax losses do not expire under the current tax legislation.
Deferred tax assets of $1,399,406 (2019: $911,372) have not been recognised in respect of these items
because it is not probable that future taxable profit will be available against which the Group can utilise
the benefits of the deferred tax asset
Houston We Have Limited and Controlled Entities
28
Notes to the Financial Statements
For the Year Ended 30 June 2020
15. Cash and Cash Equivalents
Cash at bank
Cash on hand
Reconciliation of Cashflows from Operating Activities
Loss before tax
Amortisation and depreciation
Impairment of ROU asset
Share based payments
Share of net profits of equity accounted associates
Change in trade and other receivables
Change in trade and other payables
Change in employee benefits
Change in provisions
Consolidated
30 June 2020
$
Consolidated
30 June 2019
$
3,477,005
99
713,939
100
3,477,104
714,039
(2,683,801)
129,893
20,441
1,291,583
(384)
42,718
50,147
45,713
-
(474,916)
87
-
78,955
(2,140)
155,427
(23,116)
(24,009)
87,500
Net cash used in operating activities
(1,103,690)
(202,212)
16. Trade and Other Receivables
Trade receivables
Contract assets
Government grant receivable
GST receivable
Other receivables (i), (ii)
Provision for impairment of other receivables (ii)
Prepayments
Consolidated
30 June 2020
$
Consolidated
30 June 2019
$
42,033
-
-
12,079
31,276
-
894
23,430
50,000
54,810
28,952
61,017
(61,017)
764
86,282
157,946
(i) Other receivables for the current financial year includes government grants receivable under the
Jobkeeper program.
(ii) Other receivables in the prior year included $61,017, being the balance of Toro Mining Pty Ltd share
sale proceeds receivable from the purchaser. This amount was previously been fully impaired, and
during the year ended 30 June 2020 was written off.
Houston We Have Limited and Controlled Entities
29
Notes to the Financial Statements
For the Year Ended 30 June 2020
17. Plant and Equipment
Historical Cost
Balance at beginning of period
Additions
Disposals
Balance at end of period
Accumulated Depreciation
Balance at beginning of period
Depreciation
Disposals
Balance at end of period
Carrying Amounts
Balance at beginning of period
Balance at end of period
Consolidated
30 June 2020
$
Consolidated
30 June 2019
$
-
78,830
-
78,830
-
(16,449)
-
(16,449)
-
62,381
-
-
-
-
-
-
-
-
-
-
During the period to 30 June 2020 the Group acquired computer equipment with a cost of $78,830
(2019: $nil).
18. Intangibles and Goodwill
Intellectual property
Other software
Software acquired (i)
Goodwill (ii)
Consolidated
30 June 2020
$
Consolidated
30 June 2019
$
65
9,710
358,400
139,200
507,375
153
-
-
-
153
(i)
(ii)
Fair value on acquisition of $460,800 (refer note 19) less amortisation of $102,400.
Goodwill relates to the acquisition to Prometheus Information Pty Ltd. Goodwill has been
tested for impairment on a value-in-use basis as at 30 June 2020, refer to impairment testing
below.
Impairment testing of goodwill
Goodwill acquired through the Prometheus Information Pty Ltd (PIPL) acquisition has been allocated to
a cash generating unit (CGU) that is the PIPL operating segment.
The Group has performed its first annual impairment test as at 30 June 2020. The recoverable amount of
the CGU has been determined based on a value-in-use calculation using a combination of the forecast
for the financial year ending 30 June 2021 and a growth rate increment for subsequent years.
As a result of this analysis, no impairment was identified for the CGU to which goodwill is allocated.
Houston We Have Limited and Controlled Entities
30
Notes to the Financial Statements
For the Year Ended 30 June 2020
18. Intangibles and Goodwill (continued)
Key assumptions used in value in use calculation
Discount rates
Discount rates represent the current market assessment of the risks specific to the CGU, taking into
consideration the time value of money and individual risks of the underlying assets that have not been
incorporated in the cash flow estimates. The discount rate calculation is based on the specific
circumstances of the Group and its operating segments and is derived from its weighted average cost of
capital (WACC). CGU-specific risk is incorporated into the WACC rate where it is considered appropriate.
The discount rate used for impairment testing at 30 June 2020 was 8.9%.
Growth rate estimates
Five years of cash flows have been included in the cash flow model. The cash flows include no growth
for revenue for the first five years and a 3% increase each year for costs. A long term terminal growth
rate of 2% has been used. The terminal growth rate was determined based on management’s estimate
of the long term compound annual growth rate consistent with the expected long term inflation within
the country and market in which the business operates.
The estimated recoverable amount of the CGU exceeded its carrying amount.
Sensitivity to changes in assumptions
With regard to the assessment of ‘value-in-use’, management believes that no reasonable change in any
of the above key assumptions would cause the carrying value of the units CGU to materially exceed its
recoverable amount.
19. Acquisition of Subsidiary
See accounting policy in note 32.
On 31 October 2019, the Group acquired 100% of the shares in Prometheus Information Pty Ltd (PIPL).
Taking control of PIPL is a growth opportunity to solve problems within complex, evolving environments
and to extend insights already in place, such as managing fraud risks.
In the 8 months to 30 June 2020, PIPL contributed $383,634 in revenue and profit of $116,964 to the
Group’s results. If the acquisition had occurred on 1 July 2019, management estimates that
consolidated revenue would have been $1,028,414 and the consolidated loss for the year would have
been $2,628,052.
Houston We Have Limited and Controlled Entities
31
Notes to the Financial Statements
For the Year Ended 30 June 2020
19. Acquisition of Subsidiary (continued)
a. Consideration Transferred
The following table summarises the acquisition date fair value of each major class of consideration
transferred:
Cash
Equity instruments (2,457,002 ordinary shares) (i)
Consideration $
500,000
100,000
600,000
(i)
(ii)
The fair value of the ordinary shares issued was based on the listed share price of the
Company on 30 October 2019 of $0.0407.
The Group agreed to pay the selling shareholders $73,099 on or about 30 June 2020
provided that:
a. No more than 3 clients of PIPL have terminated their relationship with the company
for the period ending 30 June 2020; and
b. The principals of the company have continued their employment until 30 June 2020.
Due to the contingent consideration amount being conditional upon the selling shareholders remaining
in employment, this amount has not been treated as consideration, rather it has been treated as
employment expenses.
The amount was expensed over the required employment period from 1 November 2019 to 30 June
2020, and noting these conditions were met, was paid to the selling shareholders in July 2020.
b. Acquisition Costs
The group incurred acquisition costs of $11,676 relating to legal fees and due diligence costs. These
amounts have been included in the condensed consolidated statement of profit or loss and other
comprehensive income.
c.
Identifiable assets acquired and liabilities assumed
The following table summarises the recognised amounts of assets acquired and liabilities assumed at
the date of acquisition
Cash
Trade and other receivables
Software
Trade and other payables
Contract liabilities
Total net identifiable assets and liabilities acquired
Fair Value $
245,740
118,838
460,800
(40,531)
(324,047)
460,800
Trade and other receivables comprised gross contractual amounts due of $59,422, all of which
has subsequently been collected.
Fair values measured on a provisional basis
The fair value of assets and liabilities acquired has been determined on a provisional basis. The
Group will continue to consider the valuations during the measurement period and make any
adjustments deemed appropriate within 12 months of the date of acquisition.
Houston We Have Limited and Controlled Entities
32
Notes to the Financial Statements
For the Year Ended 30 June 2020
19. Acquisition of Subsidiary (continued)
Measurement of fair values
The fair value of the software has been determined using an estimated cost-to-redevelop
approach at current prices.
d. Goodwill
Goodwill arising from the acquisition has been recognised as follows:
Total consideration transferred
Less: Fair value of identifiable net assets
Goodwill
$
600,000
(460,800)
139,200
The goodwill is mainly attributable to complementary nature of the business and synergies
expected to be achieved through the introduction of additional products and services. None of
the goodwill is expected to be deductible for tax purposes.
Consolidated
30 June 2020
$
Consolidated
30 June 2019
$
100,000
57,351
39,889
157,218
73,099
50,040
25,104
72,629
-
221,529
-
108,003
477,597
427,265
-
-
-
-
520,300
171,486
90,960
782,746
20. Trade and Other Payables
Accrued share based payments – Directors’ fees
PAYG and superannuation payable
GST payable
Sundry payables and accrued expenses
Contingent consideration (i)
Trade creditors
(i) Contingent consideration relates to the acquisition of
Prometheus Information Pty Ltd as described in Note 19.
21. Borrowings
Convertible notes (i)
Related party borrowings:
Canary Capital Pty Ltd (ii)
Elizabeth Whitelock (ii)
(i) The convertible notes at 30 June 2019 were fully repaid during
the period after reinstatement of the Group to quotation on
the ASX in September 2019
(ii) The related party borrowings at 30 June 2019 included $247,829
payable in accordance with the DOCA. This amount was paid
after reinstatement of the Group to quotation on the ASX.
Houston We Have Limited and Controlled Entities
33
Notes to the Financial Statements
For the Year Ended 30 June 2020
Consolidated
30 June 2020
No. of
Ordinary
Shares
$
Consolidated
30 June 2019
No. of
Ordinary
Shares
$
22. Contributed Equity
At 1 July
Share issue: DOCA
Share issue: Performance A shares
conversion
Share issue: Corporate advisor shares
(vi)
Non-Executive Director shares to be
issued
Consolidation of capital (i)
Share issue: reinstatement to
quotation on official ASX list (ii)
Share issue: in lieu of Directors’ fees
(iii)
Share issue: acquisition of
Prometheus Information Pty Ltd (iv)
Share issue: Performance B shares
conversion (v)
Capital raising costs (ii)
741,304,799
-
15,530,264
-
359,131,459
372,173,333
15,410,653
67,611
-
-
-
(667,174,229)
-
-
-
-
180,000,000
5,400,000
1,170,134
13,104
2,457,002
100,000
7
-
-
(686,698)
7
-
10,000,000
30,000
-
-
-
-
-
-
-
22,000
-
-
-
-
-
-
Contributed equity at end of period
257,757,713
20,356,670
741,304,799
15,530,264
(i)
(ii)
(iii)
(iv)
(v)
(vi)
On 15 August 2019 the Group effected a 10:1 consolidation of its share capital.
On 3 September 2019 the Group issued 180,000,000 shares at $0.03 per share for cash totalling
$5,400,000. There were no amounts unpaid on the shares issued. Costs associated with raising
capital and issuing shares totalled $686,698.
On 30 August 2019 1,170,134 shares at $0.03 per shares were issued to directors in lieu of
directors’ fees.
On 31 October 2019 2,457,002 shares at $0.0407 per share were issued as part of the
consideration for the acquisition of Prometheus Information Pty Ltd (refer note 11).
On 31 October 2019 7 ordinary shares were issued subsequent to the expiry of Class B
Performance Shares.
In the prior year, on 4 April 2019, the Group issued 10,000,000 fully paid ordinary shares to
King Corporate for corporate advisory services.
Houston We Have Limited and Controlled Entities
34
Notes to the Financial Statements
For the Year Ended 30 June 2020
22. Contributed Equity (continued)
Performance shares
Balance at beginning of period (i)
Consolidation of capital (ii)
Lapse of performance shares (iii)
Issue of performance shares (iv)
Consolidated
30 June 2020
No.
Consolidated
30 June 2019
No.
30,000,000
(27,000,000)
(1,500,000)
10,000,000
30,000,000
-
-
-
Balance at end of period
11,500,000
30,000,000
(i)
(ii)
(iii)
(iv)
The Performance Shares balance of 30,000,000 at 30 June 2019 comprised (on a pre-consolidation
of capital basis):
a. 15,000,000 B Performance Shares. B Performance Share milestone will be taken to have been
satisfied if, on or before the 3rd anniversary of the issue of the B Performance Shares, the
Houston We Have business achieves annual sale revenues of not less than A$3 million.
b. 15,000,000 C Performance Shares. C Performance Share milestone will be taken to have been
satisfied if, on or before the 4th anniversary (30 August 2023) of the issue of the C Performance
Shares, the Houston We Have business achieves annual sale revenues of not less than
A$10 million.
On 15 August 2019 the Group effected a 10:1 consolidation of its share capital.
On 8 September 2019 the B Performance Shares lapsed as the milestone was not met.
10,000,000 Performance Shares were issued on 30 August 2019 as follows:
a. 5,000,000 D Performance Shares (2,500,000 each to Andrew Grover and Elizabeth Whitelock).
D Performance Share milestone will be taken to have been satisfied if the Company’s 30
trading day volume weighted average price of Shares as traded on ASX being not less than
$0.08 on or before that date which is 3 years after the date of issue of the Performance Shares
and continued service from the recipients. If the relevant Milestone is not achieved by the
required date, then all Performance Shares in that class held by each Holder will automatically
convert into only 1 Share. The grant date fair value of these shares was determined to be
$115,500 using a Monte Carlo simulation model (see Note 23 (ii)).
b. 5,000,000 E Performance Shares (2,500,000 each to Andrew Grover and Elizabeth Whitelock).
E Performance Share milestone will be taken to have been satisfied if the Company’s 30
trading day volume weighted average price of Shares as traded on ASX being not less than
$0.12 on or before that date which is 3 years after the date of issue of the Performance Shares
and continued service from the recipients. If the relevant Milestone is not achieved by the
required date, then all Performance Shares in that class held by each Holder will automatically
convert into only 1 Share. The grant date fair value of these shares was determined to be
$98,500 using a Monte Carlo simulation model (see Note 23 (ii)).
Unlisted options
Balance at beginning of period
Expiry of options (v)
Consolidation of capital (vi)
Options granted (note 24)
Consolidated
30 June 2020
No.
Consolidated
30 June 2019
No.
21,000,000
(1,000,000)
(18,000,000)
85,000,000
1,000,000
-
-
20,000,000
Balance at end of period
87,000,000
21,000,000
(v) On 13 July 2019 1,000,000 options (pre-10:1 consolidation) expired with vesting criteria being unmet.
(vi) On 15 August 2019 the Group effected a 10:1 consolidation of its share capital.
Houston We Have Limited and Controlled Entities
35
Notes to the Financial Statements
For the Year Ended 30 June 2020
23. Reserves
Share based payments reserve
Balance at beginning of period
Options granted (i)
Performance shares granted (ii)
Options lapsed (iii)
Performance shares lapsed (iv)
Consolidated
30 June 2020
$
Consolidated
30 June 2019
$
63,400
1,232,312
214,000
(820)
(12,290)
25,400
38,000
-
-
-
Balance at end of period
1,496,602
63,400
(i)
(ii)
(iii)
(iv)
The fair value of options at grant date is determined using the Black-Scholes model. The inputs
used in the measurement of the fair values at grant date of the options granted during the
period are set out in the table below.
The fair value of performance shares at grant date is determined using a Monte Carlo
simulation model. The inputs used in the measurement of the fair values at grant date and
vesting dates of the performance shares issued during the period are set out in the table below.
They vested immediately on grant date.
On 13 July 2019 1,000,000 options (pre 10:1 consolidation) expired with the vesting criteria
being unmet. The corresponding value of $820 has been taken to accumulated losses.
On 8 September 2019 the B Performance Shares lapsed as the milestone was not met. The
corresponding value of $12,290 has been taken to accumulated losses.
Share option program
Options are granted under the Company’s Incentive Option Scheme, and eligible participants can be
employees, consultants or advisors. Options issued pursuant to the Scheme are issued free of charge.
The ability for a participant to exercise the options is restricted in accordance with the terms and
conditions detailed in the Incentive Option Scheme. The exercise period may also be affected by other
events as detailed in the terms and conditions of the scheme. Each option entitles the holder to
subscribe for and be allotted one share. Shares issued pursuant to the exercise of options, including
bonus issues, and new issues, rank equally and carry the same rights and entitlements as other shares on
issue.
Fair value share options
The fair value of options at grant date is determined using the Black-Scholes model. The inputs used in
the measurement of the fair values at grant date of the options granted during the period are set out in
the table below.
Inputs
Number of options
Exercise price
Expiry date
Grant date
Share price at grant
date
Risk free interest rate
Volatility
Expected life (years)
Option value
Class A
Director
Options
9,000,000
$0.04
30-Jun-22
30-Aug-19
$0.03
0.67%
100%
2.8
$0.0164
Class B
Director
Options
9,000,000
$0.08
30-Jun-23
30-Aug-19
$0.03
0.67%
100%
3.8
$0.0151
Class A
Supplier &
Employee
Options
26,000,000
$0.04
30-Jun-22
03-Sep-19
$0.03
0.70%
100%
2.8
$0.0163
Class B
Supplier &
Employee
Options
26,000,000
$0.08
30-Jun-23
03-Sep-19
$0.03
0.70%
100%
3.8
$0.0151
Houston We Have Limited and Controlled Entities
Employee
Options
2,000,000
$0.04
01-Nov-24
31-Oct-19
$0.04
0.88%
121%
4.7
$0.043
36
Notes to the Financial Statements
For the Year Ended 30 June 2020
23. Reserves (continued)
Fair value share options (continued)
Inputs
Number of options
Exercise price
Expiry date
Grant date
Share price at grant
date
Risk free interest rate
Volatility
Expected life (years)
Option value
Class A
Director
Options
2,000,000
$0.04
30-Jun-22
24-Feb-20
$0.03
0.65%
61%
2.3
$0.0077
Employee
Options
1,500,000
$0.05
30-Jun-22
24-Feb-20
$0.03
0.65%
61%
2.3
$0.0060
Class B
Director &
Employee
Options
4,000,000
$0.08
30-Jun-23
24-Feb-20
$0.03
0.63%
61%
3.3
$0.0050
Employee
Options
2,500,000
$0.04
30-Jun-22
22-May-20
$0.03
0.26%
113%
2.1
$0.0158
Employee
Options
3,000,000
$0.08
30-Jun-23
22-May-20
$0.03
0.26%
84%
3.1
$0.0096
Fair value performance shares
The fair value of performance shares at grant date is determined using a Monte Carlo simulation
model. The inputs used in the measurement of the fair values at grant date and vesting dates of the
performance shares issued during the period are set out in the table below.
Inputs
Number of performance
shares
Hurdle price
Expiry date
Grant date
Share price at grant date
Risk free interest rate
Volatility
Performance share value
D Performance
Shares
5,000,000
E Performance
Shares
5,000,000
$0.08
30-Aug-22
30-Aug-19
$0.03
0.67%
100%
$0.0231
$0.12
30-Aug-22
30-Aug-19
$0.03
0.67%
100%
$0.0197
Houston We Have Limited and Controlled Entities
37
Notes to the Financial Statements
For the Year Ended 30 June 2020
23. Reserves (continued)
The terms and conditions of the options granted and on issue during the year were as follows. No options
were exercisable at the end of the financial year.
Grant
Date
13-7-16
Expiry
Date
13-7-19
Vesting
Date
13-7-16
Exercise
Price
$1.093
Grant Date
Fair Value
$819
Granted/ on
Issue
100,000
Exercised/
Cancelled
(100,000)
Balance at
30 June 20
-
4-04-19
4-04-22
4-04-19
$0.03
$38,000
2,000,000
-
2,000,000
30-08-19
30-08-22
30-08-19
$0.04
$147,217
9,000,000
-
9,000,000
30-08-19
30-08-23
30-08-19
$0.08
$135,876
9,000,000
-
9,000,000
03-09-19
30-06-22
03-09-19
$0.04
$424,614
26,000,000
-
26,000,000
03-09-19
30-06-23
03-09-19
$0.08
$391,913
26,000,000
-
26,000,000
31-10-19
01-11-24
31-07-20
$0.04
$70,460
2,000,000
24-02-20
30-06-22
24-02-21
$0.04
$15,499
2,000,000
24-02-20
30-06-22
24-02-20
$0.05
$8,971
1,500,000
24-02-20
30-06-23
24-02-20
$0.08
$9,995
2,000,000
24-02-20
30-06-23
24-02-20
$0.08
$9,995
2,000,000
22-05-20
30-06-22
22-05-20
$0.04
$39,610
2,500,000
22-05-20
30-06-23
10-08-21
$0.08
$28,815
3,000,000
-
-
-
-
-
-
-
2,000,000
2,000,000
1,500,000
2,000,000
2,000,000
2,500,000
3,000,000
Director
Options 3
Corporate
Advisor
Options (i)
Class A
Director
Options (i)
Class B
Director
Options (i)
Class A
Supplier &
Employee
Options (i)
Class B
Supplier &
Employee
Options (i)
Employee
Options (ii)
Class A
Director
Options (iii)
Employee
Options (iv)
Employee
Options (v)
Class A
Director
Options (vi)
Employee
Options (vii)
Employee
Options
(viii)
Total grant date fair value of options on issue at
30 June 2020
$1,321,784
(i)
(ii)
Vested immediately on grant date
These options vest over a 9 month period from grant date to 31 July 2020 on the condition that
continued employment is satisfied from grant date to 31 July 2020.
(iii) These options vest over a 12 month period from grant date to 24 February 2021.
(iv) These options vest immediately but have a voluntary escrow period of 18 months from grant date.
(v)
These options vest immediately but have a voluntary escrow period of 36 months from grant date.
(vi) These options vest over a 12 month period from grant date to 24 February 2021.
(vii) These options vest immediately.
(viii) These options vest on 10 August 2021.
Share Based Payment Expense
During the year, share based payment expenses of $977,583 (2019: $38,000) in relation to options issued
and $214,000 (2019: $Nil) in relation to performance shares issued was recorded in profit and loss.
Houston We Have Limited and Controlled Entities
38
Notes to the Financial Statements
For the Year Ended 30 June 2020
23. Financial Instruments & Risk Management
Financial risk management objectives and policies
The Group’s financial instruments comprise deposits with banks, receivables, other deposits, trade and
other payables, convertible notes and from time to time short term loans from related parties. The
Group does not trade in derivatives or in foreign currency. The Group manages its risk exposure of its
financial instruments in accordance with the guidance of the audit and risk management committee
and the Board of Directors. The main risks arising from the Group’s financial instruments are market
risk, credit risk and liquidity risk. This note presents information about the Group’s exposure to each
of these risks, its objectives, policies and processes for measuring and managing risk, and the Group’s
management of capital.
Risk management framework
The Board has overall responsibility for the establishment and oversight of the risk management
framework. Informal risk management policies are established to identify and analyse the risks faced
by the Group. The primary responsibility to monitor the financial risks lies with the CEO and the
Company Secretary under the authority of the Board.
Credit risk
Credit risk arises mainly from the risk of counterparties defaulting on the terms of their agreements. The
carrying amounts of the following assets represent the Group’s maximum exposure to credit risk in relation
to financial assets. The Group mitigates credit risk on cash and cash equivalents by dealing with regulated
banks in Australia. Credit risk of trade and other receivables is low as it usually consists predominantly of
amounts recoverable from taxation, other government authorities and health insurance funds in Australia.
All amounts receivable as at 30 June 2020 were received after reporting date.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Group’s reputation. Ultimate responsibility for
liquidity management rests with the Board. The Group monitors rolling forecasts of liquidity on the
basis of expected fund raisings, trade payables and other obligations for the ongoing operation of the
Group. The following are the contractual maturities of financial liabilities, including estimated interest
payments:
30 June 2020
Trade & other
payables
Lease Liabilities
Borrowings
Total
30 June 2019
Trade & other
payables
Borrowings
Total
Carrying
Amount $
Contractual
Cashflows $
< 1 Year
$
1 – 5 Years
$
Interest
$
(477,597)
(477,597)
(477,597)
-
(43,826)
-
(521,423)
(43,826)
-
(521,423)
(25,552)
-
(503,149)
(18,274)
-
(18,274)
(427,265)
(427,265)
(427,265)
(782,746)
(1,210,011)
(792,954)
(1,220,219)
(792,954)
(1,220,219)
-
-
-
-
-
-
-
(10,208)
(10,208)
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or
at significantly different amounts.
Houston We Have Limited and Controlled Entities
39
Notes to the Financial Statements
For the Year Ended 30 June 2020
23. Financial Instruments & Risk Management (continued)
Market risks
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of
market risk management is to manage and control market risk exposures within acceptable parameters,
whilst optimising the return.
Interest rate risk
The Group’s income statement is affected by changes in interest rates due to the impact of such changes
on interest income from cash and cash equivalents and interest-bearing security deposits. A change of 100
basis points in interest rates throughout the reporting period would not have increased (decreased) profit
or loss by a significant amount. The Group did not have any variable interest rate financial liabilities in the
current or prior year. The Group does not have interest rate swap contracts. The Group always analyses its
interest rate exposure when considering the renewals of existing positions including alternative financing.
Currency risk
The Group is not exposed to any foreign currency risk as at 30 June 2020 (2019: nil).
Capital management
The Board’s policy is to maintain a strong capital base, where possible, so as to maintain investor, creditor
and market confidence and to sustain future development of the business. The Group is not subject to
externally imposed capital requirements.
Estimation of fair values
The carrying amounts of financial assets and liabilities approximate their net fair values, given the short time
frames to maturity and or variable interest rates.
Houston We Have Limited and Controlled Entities
40
Notes to the Financial Statements
For the Year Ended 30 June 2020
24. Interests in Controlled Entities
Company Name
HWH Software Pty Ltd
St Nicholas Mines Pty Ltd
Prometheus Information Pty Ltd
Data Distillery Pty Ltd
Niquaero LLC
Place of
Incorporation
Australia
Australia
Australia
Australia
Mongolia
% Ownership
31 December 2019
100%
100%
100%
50%
100%
% Ownership
30 June 2019
100%
100%
-
-
100%
25. Leases
a. Right of use assets
Additions due to the first time adoption of AASB 16
Additions during the year
Impairment of right of use asset (i)
Depreciation
b. Lease liabilities
Current
Non-current
Consolidated
30 June 2020
$
Consolidated
30 June 2019
$
-
43,826
(20,441)
(10,956)
12,429
32,076
11,750
43,826
-
-
-
-
-
-
-
(i)
Subsequent to year end, the Group is no longer making use of the premises and the lessor has
granted a rent reduction until they are able to find an alternative tenant at which point the
lease will terminate. Management intended to exit the lease prior to year end and therefore an
impairment provision has been raised on the right of use asset recognised at year end.
Accordingly the asset has been impaired by an amount that represents 12 months of lease
payments at the rent reduced amount based on a judgment that the tenancy will not be
replaced prior to this due to the current COVID-19 impacts on the commercial leasing industry.
The lease ends in January 2022.
The property lease accounted for above contains an extension option exercisable by the group. The
group has used the practical expedient to apply hindsight to determine whether this extension option is
reasonably certain to be exercised. As the Group had made plans to exit the lease prior to the year-end
no extension option was assumed. The Group has no termination options available.
The Group has no leases of short term or low value assets.
26. Commitments and Contingencies
a. During the year ended 30 June 2020, a lease for office space was entered into with a commencement
date of 13 January 2020 for a period of 2 years. The accounting impacts have been disclosed under
Note 27.
b.
c.
Contingent assets
There are no contingent assets as at 30 June 2020.
Contingent liabilities
There are no contingent liabilities as at 30 June 2020.
Houston We Have Limited and Controlled Entities
41
Notes to the Financial Statements
For the Year Ended 30 June 2020
27. Related party transactions
KMP compensation
Short term employee benefits
Post employment benefits
Long term benefits
Shared based payments
Total
Consolidated
30 June 2020
$
Consolidated
30 June 2019
$
330,293
31,193
19,914
506,785
248,026
24,023
11,949
-
888,185
283,998
KMP compensation
Detailed remuneration disclosures are provided in the remuneration report included in the Directors’
Report.
Transactions with related parties
In financial year 2019, the Group had the following loan from entities that were controlled by the members
of the Group’s key management personnel as outlined in the table below. The loan balances outstanding
as at 30 June 2019 were settled in full during the year ended 30 June 2020.
KMP
Elizabeth
Whitelock
Nature of Transaction
Loan to Group (with no
interest) for funding of legal
fees under DOCA
Payable at 30
June 2019
$90,960
Transactions
($90,960)
Payable at 30
June 2020
-
Outstanding balances arising from sales/purchases of goods and services
There are no outstanding balances arising from sales/purchases of goods and services at the end of the
reporting year.
Loan to Directors and their related parties
No loans have been made to any Director or any of their related parties, during the reporting year.
28. Events after the end of the reporting year
On 30 January 2020, the spread of novel coronavirus (“COVID-19”) was declared a Public Health
Emergency of International Concern by the World Health Organisation (“WHO”). Subsequently, on 11
March 2020, WHO characterised COVID-19 as a pandemic affecting worldwide.
The entity will continue to monitor the impact of COVID-19 but at the date of this report it is too early
to determine the full impact this virus may have on the entity. Should this emerging macro-economic
risk continue for a prolonged period, there could be potentially adverse financial impact to the entity.
On 29 July 2020, 4,000,000 fully paid ordinary shares at a deemed issue price of $0.03 were issued to
Director, Mr Andrew Grover, in lieu of cash payments for his director’s remuneration (excluding
superannuation) for the first 12 months following reinstatement of the Company’s securities to official
quotation. The Company obtained approval at its Annual General Meeting of shareholders held on 9
August 2019 to issue these shares after the remuneration liability accrued.
There has not been any other matter or circumstance that has arisen since the end of the financial year
that has significantly affected, or may significantly affect, the operations of the entity, the results of
those operations, or the state of affairs of the entity in future financial years.
Houston We Have Limited and Controlled Entities
42
Notes to the Financial Statements
For the Year Ended 30 June 2020
29. Parent Entity
Statement of financial position
Assets
Total current assets
Total non-current assets
Total assets
Liabilities
Total current liabilities
Total non-current liabilities
Total liabilities
Consolidated
30 June 2020
$
Consolidated
30 June 2019
$
2,351,658
1,918,512
4,270,170
390,212
-
390,212
30,208
-
30,208
923,489
-
923,489
Net assets/(deficiency)
3,879,958
(893,281)
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
20,356,670
1,496,602
(17,973,314)
15,530,264
63,400
(16,486,945)
3,879,958
(893,281)
Statement of profit or loss and other comprehensive
income
Loss for the year
(1,486,369)
(359,715)
Total comprehensive income
(1,486,369)
(359,715)
Houston We Have Limited and Controlled Entities
43
Notes to the Financial Statements
For the Year Ended 30 June 2020
32.
Significant Accounting Policies
The Group has consistently applied the following accounting policies to all periods presented in these
consolidated financial statements, except if mentioned otherwise.
(a)
Basis of consolidation
The consolidated financial statements include the financial position and performance of controlled entities
from the date on which control is obtained until the date that control is lost. When the Group loses
control over a Subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related Non-
Controlling Interest (NCI) and other components of equity. Any resulting gain or loss is recognised in
profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.
Intragroup assets, liabilities, equity, income, expenses and cashflows relating to transactions between
entities in the Group have been eliminated in full for the purpose of these financial statements.
Appropriate adjustments have been made to a controlled entity’s financial position, performance and cash
flows where the accounting policies used by that entity were different from those adopted by the Group.
All controlled entities have a June financial year end. A list of controlled entities is contained in Note 25
to the financial statements.
Subsidiaries
i.
Subsidiaries are all entities (including structured entities) over which the parent has control. Control is
established when the parent is exposed to or has rights to variable returns from its involvement with the
entity and can affect those returns through its power to direct the relevant activities of the entity.
Interests in equity accounted investees
ii.
The Group’s interests in equity-accounted investees comprise interests in associates and a joint venture.
Associates are those entities in which the Group has significant influence, but not control or joint control,
over the financial and operating policies. A joint venture is an arrangement in which the Group has joint
control, whereby the Group has rights to the net assets of the arrangement, rather than the rights to its
assets and obligations for its liabilities. Interests in associates and the joint venture are accounted for
using the equity method. They are initially recognised at cost, which includes transaction costs.
Subsequent to initial recognition, the consolidated financial statements include the Group’s share of the
profit and loss and OCI of equity-accounted investees, until the date on which significant influence or joint
control ceases.
iii. Business combinations
Business combinations are accounted for by applying the acquisition method which requires an acquiring
entity to be identified in all cases. The acquisition date under this method is the date that the acquiring
entity obtains control over the acquired entity. The fair value of identifiable assets and liabilities acquired
are recognised in the consolidated financial statements at the acquisition date. Goodwill or a gain on
bargain purchase may arise on the acquisition date, this is calculated by comparing the consideration
transferred and the amount of non-controlling interest in the acquiree with the fair value of the net
identifiable assets acquired. Where consideration is greater than the net assets acquired, the excess is
recorded as goodwill. Where the net assets acquired are greater than the consideration, the measurement
basis of the net assets are reassessed and then a gain from bargain purchase recognised in profit or loss.
All acquisition-related costs are recognised as expenses in the periods in which the costs are incurred
except for costs to issue debt or equity securities. Any contingent consideration which forms part of the
combination is recognised at fair value at the acquisition date.
If the contingent consideration is classified as equity, then it is not remeasured, and the settlement is
accounted for within equity. Otherwise subsequent changes in the value of the contingent consideration
liability are measured through profit or loss.
(b)
Foreign currency transactions
Transactions in foreign currencies are translated into the functional currency of the Group at the
exchange rates at the date of the transactions. Monetary assets and liabilities denominated in foreign
Houston We Have Limited and Controlled Entities
44
Notes to the Financial Statements
For the Year Ended 30 June 2020
currencies are translated into the functional currency at the exchange rate at reporting date. Foreign
currency differences are generally recognised in profit or loss and presented within finance costs.
(c)
Revenue from contracts with customers
Information about the Group’s accounting policies relating to contracts with customers is provided in
note 7.
(d)
Employee benefits
Short term employee benefits
i.
Short term employee benefits are expensed as the related service is provided. A liability is recognised for
the amount expected to be paid if the Group has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee and the obligation can be readily estimated.
ii. Share based payment arrangements
The Group operates equity-settled share-based payment employee share and option schemes. The fair
value of the equity to which employees become entitled is measured at grant date and recognised as an
expense over the vesting period, with a corresponding increase to an equity account. The fair value of
shares is ascertained as the market bid price. The fair value of options is ascertained using a Black-Scholes
pricing model which incorporates all market vesting conditions. The fair value of the performance shares
is ascertained using a Monte-Carlo simulation model. The amount to be expensed is determined by
reference to the fair value of the options or shares granted, this expense takes in account any market
performance conditions and the impact of any non-vesting conditions but ignores the effect of any service
and non- market performance vesting conditions. Non-market vesting conditions are taken into account
when considering the number of options expected to vest. At the end of each reporting period, the Group
revises its estimate of the number of options which are expected to vest based on the non- market vesting
conditions. Revisions to the prior period estimate are recognised in profit or loss and equity.
iii. Other long term benefits
Provision is made for the Group’s liability for employee benefits arising from services rendered by
employees to the end of the reporting period. Employee benefits that are expected to be wholly settled
within one year have been measured at the amounts expected to be paid when the liability is settled.
Employee benefits expected to be settled more than one year after the end of the reporting period have
been measured at the present value of the estimated future cash outflows to be made for those
benefits. In determining the liability, consideration is given to employee wage increases and the
probability that the employee may satisfy vesting requirements. Cashflows are discounted using market
yields on high quality corporate bond rates incorporating bonds rated AAA or AA by credit agencies,
with terms to maturity that match the expected timing of cashflows. Changes in the measurement of
the liability are recognised in profit or loss.
(e)
Finance income and finance costs
Interest income
Interest revenue is recognised using the effective interest rate method which, for floating rate financial
assets, is the rate inherent in the instrument.
Finance costs
Finance cost includes all interest-related expenses, interest expense is recognised using the effective
interest rate method.
Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a
qualifying asset are capitalised as part of the cost of that asset. All other borrowing costs are recognised
as an expense in the period in which they are incurred.
(f)
Income tax
Income tax
Houston We Have Limited and Controlled Entities
45
Notes to the Financial Statements
For the Year Ended 30 June 2020
The tax expense recognised in the consolidated statement of profit or loss and other comprehensive
income comprises of current income tax expense plus deferred tax expense. Current tax is the amount of
income taxes payable/(recoverable) in respect of the taxable profit/(loss) for the year and is measured at
the amount expected to be paid to/(recovered from) the taxation authorities, using the tax rates and laws
that have been enacted or substantively enacted by the end of the reporting period. Current tax
liabilities/(assets) are measured at the amounts expected to be paid to/(recovered from) the relevant
taxation authority. Deferred tax is provided on temporary differences which are determined by comparing
the carrying amounts of tax bases of assets and liabilities to the carrying amounts in the consolidated
financial statements. Deferred tax is not provided for the following:
•
The initial recognition of an asset or liability in a transaction that is not a business combination and
at the time of the transaction, affects neither accounting profit nor taxable profit/(tax loss).
Taxable temporary differences arising on the initial recognition of goodwill.
Temporary differences related to investment in subsidiaries, associates and jointly controlled entities
to the extent that the Group is able to control the timing of the reversal of the temporary differences
and it is probable that they will not reverse in the foreseeable future.
•
•
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted
or substantively enacted by the end of the reporting period. Deferred tax assets are recognised for all
deductible temporary differences and unused tax losses to the extent that it is probable that taxable profit
will be available against which the deductible temporary differences and losses can be utilised.
Management has assessed that this will probable when the business reaches a net taxable income
position. Current and deferred tax is recognised as income or an expense and included in profit or loss
for the period except where the tax arises from a transaction which is recognised in other comprehensive
income or equity, in which case the tax is recognised in other comprehensive income or equity
respectively.
Goods and services and sales tax
Revenue, 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 Taxation Office (ATO).
Receivables and payable are stated inclusive of GST. The net amount of GST recoverable from, or
payable to, the ATO is included as part of receivables or payables in the consolidated statement of
financial position. Cash flows in the consolidated statement of cash flows are included on a gross basis
and the GST component of cash flows arising from investing and financing activities which is recoverable
from, or payable to, the taxation authority is classified as operating cash flows.
(g)
Property, plant and equipment
i. Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and
accumulated impairment losses. If significant parts of an item of property, plant and equipment have
different useful lives, then they are accounted for as separate items (major components) of property,
plant and equipment. Any gain or loss on disposal of an item of property, plant and equipment is
recognised in profit or loss.
ii. Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated
with the expenditure will flow to the Group.
iii. Depreciation
Depreciation is calculated to write off the cost of property, plant and equipment less their estimated
residual values using the straight-line method over their estimated useful lives, and is generally
recognised in profit or loss. Depreciation of leasehold improvements is calculated over the shorter of the
life of the lease or the estimated useful life. The estimated useful lives of property, plant and equipment
are as follows:
Computer software/equipment
Useful Life
2 to 5 years
Method
Straight-line method
Houston We Have Limited and Controlled Entities
46
Notes to the Financial Statements
For the Year Ended 30 June 2020
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted
if appropriate.
(h)
Intangible assets and goodwill
i. Recognition and measurement
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible
assets acquired in a business combination is measured at fair value as at the date of acquisition.
Research and Development costs
Expenditure on research activities is recognised in profit or loss as incurred. Development expenditure is
capitalised only if the expenditure can be measured reliably, the product or process is technically and
commercially feasible, future economic benefits are probable and the Company intends to and has
sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognised in
profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at
cost less accumulated amortisation and any accumulated impairment losses.
Goodwill
Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets. Goodwill is
measured at cost, and is tested for impairment annually. For the purpose of impairment testing,
goodwill acquired in a business combination is, from the acquisition date, allocated to each of the
Group’s cash-generating units that are expected to benefit from the combination, irrespective of
whether other assets or liabilities of the acquiree are assigned to those units.
Other Intangible Assets
Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost
less any accumulated amortisation and any accumulated impairment losses.
ii. Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in
the specific asset to which it relates. All other expenditure is recognised in profit or loss as incurred.
iii. Amortisation
The useful lives of intangible assets are assessed to be either finite or infinite. Intangible assets with
finite lives are amortised over the useful life and tested for impairment whenever there is an indication
that the intangible asset may be impaired. The amortisation period and the amortisation method for an
intangible asset with a finite useful life are reviewed at least at the end of each reporting period.
Changes in the expected useful life or the expected pattern of consumption of future economic benefits
embodied in the asset are considered to modify the amortisation period or method, as appropriate, and
are treated as changes in accounting estimates and adjusted on a prospective basis. The amortisation
expense on intangible assets with finite lives is recognised in the profit or loss as the expense category
that is consistent with the function of the intangible assets.
Amortisation is calculated over the estimated useful life of the asset as follows:
Development costs
Computer software
Goodwill
Useful Life
2 to 5 years
2 to 4 years
Indefinite
Impairment
At each reporting date management reviews the carrying amounts of its non-financial assets included in
the scope of AASB 136 to determine whether there is any indication of impairment. If any such
indication exists than the assets recoverable amount is estimated.
Intangible assets with indefinite useful lives are tested for impairment annually either individually or at
the cash-generating unit level. Such intangibles are not amortised.
Houston We Have Limited and Controlled Entities
47
Notes to the Financial Statements
For the Year Ended 30 June 2020
(h)
Intangible assets and goodwill (continued)
Impairment (continued)
The recoverable amount of the asset or CGU is the greater of its value in use or fair value less costs of
disposal. Value in use is based on estimated future cash flows discounted to their present value using a
post-tax discount rate that reflects the current market assessments of the time value of money and the
risks specific to the asset or CGU.
An impairment expense is recognised if the carrying amount of an asset or CGU exceeds its recoverable
amount.
Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount
of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the
CGU on a pro-rata basis.
An impairment loss in respect of goodwill is not reversed. For any other assets, an impairment loss is
only reversed to the extent the carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation and amortisation, if no impairment loss had been recognised.
(i)
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s statement of financial position
when the Group becomes a party to the contractual provisions of the instrument. Financial assets and
financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to
the acquisition or issue of financial assets and financial liabilities (other than financial assets and
financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of
the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss
are recognised immediately in profit or loss.
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date
basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of
assets within the time frame established by regulation or convention in the marketplace.
All recognised financial assets are measured subsequently in their entirety at either amortised cost or
fair value, depending on the classification of the financial assets.
Financial assets
Debt instruments that meet the following conditions are measured subsequently at amortised cost:
•
•
•
the financial asset is held within a business model whose objective is to hold financial assets in
order to collect
contractual cash flows; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
Debt instruments that meet the following conditions are measured subsequently at fair value through
other comprehensive income (FVTOCI):
•
•
the financial asset is held within a business model whose objective is achieved by both
collecting contractual cash flows and selling the financial assets; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
By default, all other financial assets are measured subsequently at fair value through profit or loss
(FVTPL).
Houston We Have Limited and Controlled Entities
48
Notes to the Financial Statements
For the Year Ended 30 June 2020
Despite the foregoing, the Group may make the following irrevocable election/designation at initial
recognition of a financial asset:
•
•
the Group may irrevocably elect to present subsequent changes in fair value of an equity
investment in other comprehensive income if certain criteria are met; and
the Group may irrevocably designate a debt investment that meets the amortised cost or
FVTOCI criteria as measured at FVTPL if doing so eliminates or significantly reduces an
accounting mismatch.
Amortised cost and the effective interest rate method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of
allocating interest income over the relevant period.
For financial assets other than purchased or originated credit impaired financial assets (i.e. assets that
are credit impaired on initial recognition), the effective interest rate is the rate that exactly discounts
estimated future cash receipts (including all fees and points paid or received that form an integral part
of the effective interest rate, transaction costs and other premiums or discounts) excluding expected
credit losses, through the expected life of the debt instrument, or, where appropriate, a shorter period,
to the gross carrying amount of the debt instrument on initial recognition. For purchased or originated
credit impaired financial assets, a credit adjusted effective interest rate is calculated by discounting the
estimated future cash flows, including expected credit losses, to the amortised cost of the debt
instrument on initial recognition.
The amortised cost of a financial asset is the amount at which the financial asset is measured at initial
recognition minus the principal repayments, plus the cumulative amortisation using the effective
interest method of any difference between that initial amount and the maturity amount, adjusted for
any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial
asset before adjusting for any loss allowance.
Interest income is recognised using the effective interest method for debt instruments measured
subsequently at amortised cost and at FVTOCI. For financial assets other than purchased or originated
credit impaired financial assets, interest income is calculated by applying the effective interest rate to
the gross carrying amount of a financial asset, except for financial assets that have subsequently
become credit impaired (see below). For financial assets that have subsequently become credit
impaired, interest income is recognised by applying the effective interest rate to the amortised cost of
the financial asset. If, in subsequent reporting periods, the credit risk on the credit impaired financial
instrument improves so that the financial asset is no longer credit impaired, interest income is
recognised by applying the effective interest rate to the gross carrying amount of the financial asset.
For purchased or originated credit impaired financial assets, the Group recognises interest income by
applying the credit adjusted effective interest rate to the amortised cost of the financial asset from
initial recognition. The calculation does not revert to the gross basis even if the credit risk of the
financial asset subsequently improves so that the financial asset is no longer credit impaired.
Interest income is recognised in profit or loss and is included in the " interest received" line item.
Financial assets at FVTPL
Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI are
measured at FVTPL. Specifically:
•
Investments in equity instruments are classified as at FVTPL, unless THE GROUP designates an
equity investment that is neither held for trading nor a contingent consideration arising from a
business combination as at FVTOCI on initial recognition.
• Debt instruments that do not meet the amortised cost criteria or the FVTOCI criteria are
classified as at FVTPL. In addition, debt instruments that meet either the amortised cost criteria
or the FVTOCI criteria may be designated as at FVTPL upon initial recognition if such
designation eliminates or significantly reduces a measurement or recognition inconsistency (so
called ‘accounting mismatch’) that would arise from measuring assets or liabilities or
recognising the gains and losses on them on different bases. the Group has not designated
any debt instruments as at FVTPL.
Houston We Have Limited and Controlled Entities
49
Notes to the Financial Statements
For the Year Ended 30 June 2020
The Group recognises a loss allowance for expected credit losses on investments in debt instruments
that are measured at amortised cost or at FVTOCI, lease receivables, trade receivables and contract
assets, as well as on financial guarantee contracts. The amount of expected credit losses is updated at
each reporting date to reflect changes in credit risk since initial recognition of the respective financial
instrument.
The Group always recognises lifetime estimated credit losses (“ECL”) for trade receivables, contract
assets and lease receivables. The expected credit losses on these financial assets are estimated using a
provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are
specific to the debtors, general economic conditions and an assessment of both the current as well as
the forecast direction of conditions at the reporting date, including time value of money where
appropriate.
For all other financial instruments, the Group recognises lifetime ECL when there has been a significant
increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has
not increased significantly since initial recognition, the Group measures the loss allowance for that
financial instrument at an amount equal to 12 month ECL.
Lifetime ECL represents the expected credit losses that will result from all possible default events over
the expected life of a financial instrument. In contrast, 12 month ECL represents the portion of lifetime
ECL that is expected to result from default events on a financial instrument that are possible within 12
months after the reporting date.
Financial liabilities and equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with
the substance of the contractual arrangements and the definitions of a financial liability and an equity
instrument.
All financial liabilities are measured subsequently at amortised cost using the effective interest method
or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for
derecognition or when the continuing involvement approach applies, and financial guarantee contracts
issued by the Group, are measured in accordance with the specific accounting policies set out below.
Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent consideration of
an acquirer in a business combination, (ii) held for trading or (iii) it is designated as at FVTPL.
A financial liability is classified as held for trading if:
•
•
•
it has been acquired principally for the purpose of repurchasing it in the near term; or
on initial recognition it is part of a portfolio of identified financial instruments that the Group
manages together and has a recent actual pattern of short term profit taking; or
it is a derivative, except for a derivative that is a financial guarantee contract or a designated
and effective hedging instrument.
A financial liability other than a financial liability held for trading or contingent consideration of an
acquirer in a business combination may be designated as at FVTPL upon initial recognition if:
•
•
•
such designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise; or
the financial liability forms part of a group of financial assets or financial liabilities or both,
which is managed and its performance is evaluated on a fair value basis, in accordance with
the Group’s documented risk management or investment strategy, and information about the
Group is provided internally on that basis; or
it forms part of a contract containing one or more embedded derivatives, and IFRS 9 permits
the entire combined contract to be designated as at FVTPL.
relationship.
Financial liabilities at FVTPL are measured at fair value, with any gains or losses arising on changes in
fair value recognised in profit or loss to the extent that they are not part of a designated hedging
Houston We Have Limited and Controlled Entities
50
Notes to the Financial Statements
For the Year Ended 30 June 2020
However, for financial liabilities that are designated as at FVTPL, the amount of change in the fair value
of the financial liability that is attributable to changes in the credit risk of that liability is recognised in
other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk
in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. The
remaining amount of change in the fair value of liability is recognised in profit or loss. Changes in fair
value attributable to a financial liability’s credit risk that are recognised in other comprehensive income
are not subsequently reclassified to profit or loss; instead, they are transferred to retained earnings
upon derecognition of the financial liability.
Gains or losses on financial guarantee contracts issued by the Group that are designated as at FVTPL are
recognised in profit or loss.
Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii)
held for trading, or (iii) designated as at FVTPL, are measured subsequently at amortised cost using the
effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments (including all fees and points paid or received that form an
integral part of the effective interest rate, transaction costs and other premiums or discounts) through
the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost
of a financial liability.
The Group derecognises financial liabilities when, and only when, the Group’s obligations are
discharged, cancelled or have expired. The difference between the carrying amount of the financial
liability derecognised and the consideration paid and payable is recognised in profit or loss.
(j) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary
shares and share options which vest immediately are recognised as a deduction from equity, net of any
tax effects.
(k) Impairment
At each reporting date, the Group reviews the carrying amounts of its non-financial assets to determine
whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable
amount is estimated.
For impairment testing, assets are grouped together into the smallest group of assets that generates
cash inflows from continuing use that are largely independent of the cash inflows of other assets or
cash-generating units (CGU).
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs
to sell. Value in use is based on the estimated future cash flows, discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable
amount.
Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount
of any goodwill allocated to the CGU, and then to reduce the carrying amount of the other assets in the
CGU on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is
reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if no impairment loss had been
recognised.
Houston We Have Limited and Controlled Entities
51
Notes to the Financial Statements
For the Year Ended 30 June 2020
(l) Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past
events, for which it is probable that an outflow of economic benefits will result, and that outflow can be
reliably measured.
(m) Leases
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group
recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in
which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less)
and leases of low value assets. For these leases, the Group recognises the lease payments as an operating
expense on a straight-line basis over the term of the lease unless another systematic basis is more
representative of the time pattern in which economic benefits from the leased assets are consumed.
Lease Liability
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily
determined, the Group uses its incremental borrowing rate of 7.25% as advised by its bankers from time to
time.
Lease payments included in the measurement of the lease liability comprise:
•
•
Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable
Variable lease payments that depend on an index or rate, initially measured using the index or rate at
the commencement date
The amount expected to be payable by the lessee under residual value guarantees
The exercise price of purchase options, if the lessee is reasonably certain to exercise the options
Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to
terminate the lease.
•
•
•
The lease liability is presented as a separate line in the statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease
liability (using the effective interest method) and by reducing the carrying amount to reflect the lease
payments made.
Right of use asset
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments
made at or before the commencement day, less any lease incentives received and any initial direct costs.
They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying
asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects
that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the
useful life of the underlying asset. The depreciation starts at the commencement date of the lease.
The right-of-use assets are presented as a separate line in statement of financial position.
(n) Government grants
When the Company receives governments it performs an assessment to determine if the contract is
‘enforceable’ and contains ‘sufficiently specific’ performance obligations. In the cases where there is an
‘enforceable’ contract with a customer with ‘sufficiently specific’ performance obligations, the
transaction is accounted for under AASB 15 where income is recognised when (or as) the performance
obligations are satisfied.
Houston We Have Limited and Controlled Entities
52
Directors’ Declaration
The Directors of the Houston We Have Limited (the Group) declare that:
1. The consolidated financial statements and notes that are set out on pages 19 to 52 and the remuneration
report set out on pages 10 to 16 in the Directors’ report are in accordance with the Corporations Act
2001, including:
a. giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its
performance for the financial year ended on that date; and
b. complying with Australian Accounting Standards and the Corporations 2001; and
c.
in the Directors’ opinion, there are reasonable grounds to believe that the Group will be able
to pay its debts as and when they become due and payable.
2. The Directors have been given the declarations required by section 295A of the Corporations Act 2001
from the Chief Executive Officer and Chief Financial Officer for the year ended 30 June 2020.
3. The Directors draw attention to Note 1 in the consolidated financial statements, which includes a
statement of compliance with International Financial Reporting Standards.
Signed in accordance with a resolution of the directors.
____________________
Andrew Grover
Executive Chairman
30 September 2020
Houston We Have Limited and Controlled Entities
53
Independent Auditor’s
Report
To the shareholders of Houston We Have Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report
of Houston We Have Limited (the
Company)
In our opinion, the accompanying
Financial Report of the Company is in
accordance with the Corporations Act
2001, including:
• giving a true and fair view of the
Group's financial position as at 30
June 2020 and of its financial
performance for the year ended on
that date; and
• complying with Australian
Accounting Standards and the
Corporations Regulations 2001.
Basis for opinion
The Financial Report comprises:
• Consolidated statement of financial position as at 30
June 2020
• Consolidated statement of profit or loss and other
comprehensive income, Consolidated statement of
changes in equity, and Consolidated statement of cash
flows for the year then ended
• Notes including a summary of significant accounting
policies
• Directors' Declaration.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during
the financial year.
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for
the audit of the Financial Report section of our report.
We are independent of the Group in accordance with the 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 fulfilled our other ethical responsibilities in accordance with the Code.
Houston We Have Limited and Controlled Entities
54
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
Key Audit Matters
The Key Audit Matters we identified
are:
• Revenue recognition of provision of
software and software related services
• Recoverability of intangible assets
including goodwill
• Accounting for business combinations
Key Audit Matters are those matters that, in our
professional judgement, were of most significance in our
audit of the Financial Report of the current period.
These matters were addressed in the context of our audit of
the Financial Report as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
Revenue recognition of provision of software and software related services AUD $679,872
Refer to Note 7 to the financial report
The key audit matter
How the matter was addressed in our audit
Revenue from the provision of software and
software related services is a key audit matter
due to the significant audit effort and judgement
we have applied in assessing the Group’s
recognition and measurement of revenue.
This was driven from the:
• Multiple revenue types with different
recognition criteria across different products
and services, increasing the possibility of the
Group inappropriately identifying
performance obligations and incorrectly
recognising revenue using AASB 15 Revenue
from Contracts with Customers (‘AASB 15’).
• Complexity arising from the various terms
and conditions included in the contracts with
customers acquired through the acquisition
of Prometheus Information Pty Ltd. The
complex terms and conditions increases the
risk of interpretational differences in
accounting outcomes against the principles
based criteria contained in AASB 15.
We involved senior audit team members in
addressing this key audit matter.
Our procedures included:
• Considering the appropriateness of the Group’s
revenue recognition policies against the
requirements of AASB 15 and our
understanding of the business;
• Reading the executed contracts to understand
the key terms and conditions. We clarified
elements of our understanding of the contract
through inquiries with the Group;
• Comparing the relevant features of the
underlying contracts to the criteria in the
accounting standard, those in the Group’s
policies, and against what the Group identified
as performance obligations;
• Checked the timing of revenue recognised by
the Group for the provision of software and
software-related services to underlying
documentation and against the Group’s
revenue recognition policies;
• Using statistical sampling for each significant
revenue type we checked the timing of
revenue recognised by the Group to underlying
documentation such as signed customer
contracts and customer timesheets against the
Group's revenue recognition policies;
• Using statistical sampling for certain revenue
types we recalculated the amount of revenue
recognised by the Group. This necessitated
also assessing how the Group allocated
revenue to separately identified performance
obligations from the same transaction or
contract. We used underlying documentation
obtained from our audit procedures above, such
as, signed revenue contracts, proof of
acceptance from the customer and criteria in
the accounting standards for allocation of
revenue. We compared our assessment to the
Houston We Have Limited and Controlled Entities
55
amount recorded by the Group. We also
checked customer receipts to the Group's bank
statements;
• Assessing the adequacy of the Group’s
revenue disclosures using our understanding
obtained from our testing against the
requirements of AASB 15
Recoverability intangible assets including goodwill $507,375
Refer to Note 18 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The carrying value of intangible assets, including
the Group’s annual testing of goodwill for
impairment, was identified as a key audit matter
due to the:
• size of the balance; and
• significant level of judgement required to
assess the Group’s forecasts and discounted
future cashflows, including higher estimation
uncertainty arising from the impact of the
COVID-19 global pandemic.
We focussed on the significant forward-looking
assumptions the Group applied its value in use
model, including:
• Forecast operating cash flows, growth rates
and terminal growth rates;
• Discount rates – these are complicated in
nature and vary according to the conditions
and environment the Cash Generating Unit
(CGU) is subject to from time to time, and
the model’s approach to incorporating risks
into the cash flows or discount rates. The
Group’s modelling is sensitive to changes in
the discount rate.
We involved senior audit team members in
addressing this key audit matter.
Our procedures included:
• We considered the appropriateness of the
value-in-use method applied by the Group to
perform its annual impairment testing of
goodwill against the requirements of the
relevant accounting standards. We:
- Assessed the Group’s determination of
CGUs based on our understanding of the
operations of the Group’s business
including the impact of the Prometheus
Information Pty Ltd acquisition and how
independent cash inflows were generated,
against the requirements of the relevant
accounting standards;
- Assessed the Group’s determination of
CGU assets for consistency with the
assumptions used in the forecast cash
flows and the requirements of the
accounting standards;
- Compared forecast cash flows in the
model to historical trading performance;
- Assessed the accuracy of previous Group
forecasts to inform our evaluation of
forecasts incorporated in the model.
• We considered the sensitivity of the model by
varying key assumptions, such as forecast
growth rates, terminal growth rates and
discount rates, within a reasonably possible
range, to identify possible impairment and to
focus our further procedures;
• Working with our valuation specialists we:
- Developed a discount range using publicly
available market data for comparable
entities, adjusted by risk factors based on
the size and location of the Group’s CGU;
and
- Assessed the integrity of the model used,
including the accuracy of the underlying
Houston We Have Limited and Controlled Entities
56
calculation formulas.
• We assessed the disclosures in the financial
report using our understanding obtained from
our testing and against the requirements of the
relevant accounting standards.
Accounting for business combinations
Refer to Note 19 to the financial report
The key audit matter
How the matter was addressed in our audit
On 31 October 2019, the Group acquired 100%
of the shares in Prometheus Information Pty Ltd
for consideration of $600,000 resulting in the
recognition of software intangible assets of
$460,000 and goodwill of $139,200.
This transaction is considered to be a key audit
matter due to the:
• Size of the acquisition having a significant
impact on the Group’s financial statements;
and
• Group’s judgement and complexity relating to
the determination of the fair values of assets
and liabilities acquired in the transaction
requiring significant audit effort.
We involved our corporate finance specialists and
senior audit team members in addressing this
key audit matter.
Our procedures included:
• We evaluated the acquisition accounting by the
Group against the requirements of the
accounting standards;
• We read the underlying transaction agreements
to understand the terms of the acquisition and
the nature of the assets and liabilities acquired;
• We assessed the accuracy of the calculation
and measurement of consideration paid to
acquire Prometheus Information Pty Ltd;
• We evaluated the valuation methodology used
by the Group to determine the fair value of
assets and liabilities acquired, considering
accounting standard requirements and
observed industry practices;
• We recalculated the goodwill balance
recognised as a result of the transactions and
compared it to the goodwill amount recorded
by the Group; and
• We assessed the adequacy of the disclosures
in the financial report using our understanding
obtained from our testing and against the
requirements of the accounting standard.
Other Information
Other Information is financial and non-financial information in Houston We Have Limited’s annual
reporting which is provided in addition to the Financial Report and the Auditor’s Report. The
Directors are responsible for the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do
not express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other
Information. In doing so, we 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.
We are required to report if we conclude that there is a material misstatement of this Other
Information, and based on the work we have performed on the Other Information that we obtained
prior to the date of this Auditor’s Report we have nothing to report.
Houston We Have Limited and Controlled Entities
57
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001
• implementing necessary internal control to enable the preparation of a Financial Report that gives
a true and fair view and is free from material misstatement, whether due to fraud or error
• assessing the Group and Company's ability to continue as a going concern and whether the use of
the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless they either intend
to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do
so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
• to obtain reasonable assurance about whether the Financial Report as a whole is free from
material misstatement, whether due to fraud or error; and
• to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it
exists.
Misstatements can arise from fraud or error. They 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 the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
Auditor’s Report.
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration
Report of Houston We Have Limited
for the year ended 30 June 2020,
complies with Section 300A of the
Corporations Act 2001.
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 responsibilities
We have audited the Remuneration Report included in pages
10 to 16 of the Directors’ report for the year ended 30 June
2020.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
Adam Twemlow
Partner
Gold Coast
30 September 2020
Houston We Have Limited and Controlled Entities
58
Corporate Governance Statement
The Board is committed to achieving and demonstrating high standards of corporate governance. The Board
has implemented corporate governance policies and practices which it considers appropriate for the scale
and maturity of the Group’s business and operations.
The Group has reviewed its corporate governance practices against the ‘Corporate Governance Principles
and Recommendations (3rd Edition)’ published by the ASX Corporate Governance Council.
The Group’s Corporate Governance Statement for the financial year ended 30 June 2020 has been approved
by the Board and is dated 28 October 2019. The Group’s Corporate Governance Statement and Corporate
Governance Plan are both available on the Group’s website at www.houstonwehave.ai.
Houston We Have Limited and Controlled Entities
59
Additional ASX Information
The Group sets out below additional information required by ASX Listing Rule 4.10 and not disclosed
elsewhere in this report, along with information required to be disclosed as a condition of ASX Listing Rule
waivers and confirmations given to the Group by ASX. This information is current as at 31 August 2020.
Substantial Shareholders
Shareholder
Mr Antanas Guoga
JP Morgan Chase & Co
A22 Pty Limited
Number of Shares
30,257,487
20,000,000
17,116,414
Top 20 Shareholders
Details of the 20 largest holdings of quoted fully paid ordinary shares are set out below.
Rank
Shareholder
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
20
Mr Antanas Guoga
Ecapital Nominees Pty Limited Accumulation A/C>
Richmond Bridge Superannuation Pty Ltd
A22 Pty Limited
Shah Nominees Pty Ltd
Arredo Pty Ltd
Mr Brian Glynn
Stevsand Investments Pty Ltd
Mr Ugnius Simelionis
Mr Gregory Wilson
Mr Paul Cozzi
Ms Elizabeth Whitelock
A22 Pty Ltd
Ms Laura Bailey
Lake Springs Pty Ltd
National Nominees Limited
Mr Marcel Reuben
Mr Paul Madden
Shanti Capital Pty Ltd
Corby Investments Pty Ltd
First One Realty Pty Ltd
Total Largest Holders
Other Holders
Total
Number of
Shares
30,257,487
20,000,000
13,500,000
13,116,414
10,000,000
9,000,000
7,050,801
6,166,668
6,000,000
5,493,900
5,025,001
4,515,602
4,000,000
3,850,000
3,533,333
3,484,570
3,000,000
2,919,886
2,700,000
2,500,000
2,500,000
158,613,62
103,144,051
261,757,713
%
11.56
7.65
5.16
5.01
3.82
3.44
2.69
2.36
2.29
2.10
1.92
1.73
1.53
1.47
1.35
1.33
1.15
1.12
1.03
0.96
0.96
60.60
39.40
100.00
Houston We Have Limited and Controlled Entities
60
Additional ASX Information
Number and Distribution of Holders
s
e
r
a
h
S
i
y
r
a
n
d
r
O
d
a
P
i
y
l
l
u
F
l
d
e
h
s
e
r
a
h
s
f
o
%
d
n
A
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
124
(0.03%)
162
(0.17%)
113
(0.36%)
321
(5.08%)
197
(94.35%)
917
s
e
r
a
h
S
e
c
n
a
m
r
o
f
r
e
P
D
s
s
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u
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e
s
f
o
%
d
n
A
0
0
0
0
s
e
r
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S
e
c
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a
m
r
o
f
r
e
P
E
s
s
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l
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d
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h
s
e
i
t
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r
u
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e
s
f
o
%
d
n
A
0
0
0
0
2
(100%)
2
2
(100%)
2
)
2
2
0
2
/
4
/
4
,
.
3
0
0
$
(
s
n
o
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p
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%
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)
2
2
0
2
/
6
/
0
3
,
.
4
0
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$
(
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%
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)
4
2
0
2
/
1
1
/
1
,
.
4
0
0
$
(
s
n
o
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p
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)
2
2
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2
/
6
/
0
3
,
.
5
0
0
$
(
s
n
o
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%
d
n
A
)
3
2
0
2
/
6
/
0
3
,
.
8
0
0
$
(
s
n
o
i
t
p
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d
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h
s
e
i
t
i
r
u
c
e
s
f
o
%
d
n
A
0
0
0
1
(2.5%)
2
(97.5%)
2
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
20
(100%)
20
2
(100%)
2
2
(100%)
2
22
(100%)
22
There are 406 holders holding less than a marketable parcel of fully paid ordinary shares.
Voting Rights
Fully paid ordinary shares: every member present at a meeting in person or by proxy has one vote on a show
of hands, and one vote for each share on a poll.
Performance shares and options: no voting rights.
Unquoted Equity Securities
Class
Class D Performance
Shares
Number of
Securities
5,000,000
Number of
Holders
2
Class E Performance
Shares
5,000,000
2
2,000,000
3
41,500,000
20
2,000,000
1,500,000
2
2
Options ($0.03,
4/4/2022)
Options ($0.04,
30/6/2022)
Options ($0.04,
1/11/2024)
Options ($0.05,
30/6/2022)
Options ($0.08,
30/6/2023)
Holders of 20% or More
Name
A22 Pty Limited
Ms Elizabeth
Whitelock
A22 Pty Limited
Ms Elizabeth
Whitelock
King Corporate Pty
Ltd
Incito Equity Solutions
Pty Ltd
-
Number of
Securities
2,500,000
2,500,000
2,500,000
2,500,000
1,000,000
950,000
-
Mr Daryel Akerlind
1,000,000
Mr George Preston
-
1,000,000
-
44,000,000
22
-
-
Houston We Have Limited and Controlled Entities
61
Additional ASX Information
Restricted Securities
The Group has no restricted securities and 4,000,000 ordinary shares subject to voluntary escrow (until the
issue of a cleansing notice) on issue.
Other
The Group is not currently conducting an on-market buy-back. There are no issues of securities approved
for the purposes of item 7 of section 611 of the Corporations Act which have not yet been completed. No
securities were purchased on-market during the reporting period in respect of an employee incentive
scheme.
The Group has used its cash and assets in a form readily convertible to cash that it had at the time of
reinstatement to quotation on 9 September 2019 in a way consistent with its business objectives (as detailed
in the Company’s prospectus dated 26 July 2019) for the period of time between reinstatement and
30 June 2020.
Waiver and Confirmation Conditions
ASX confirmed to the Company that the terms of the Company’s performance shares are appropriate and
equitable pursuant to ASX Listing Rule 6.1. The Company is required to provide the following information
as a condition of the confirmation being given.
•
1,500,000 Class C, 5,000,000 Class D and 5,000,000 Class E performance shares were on issue during
the reporting period.
The full terms and conditions of the Class C performance shares are set out in Schedule 1 of the
Company’s notice of general meeting dated 8 June 2019. The full terms and conditions of the Class D
and Class E performance shares are set out in Schedule 7 of the Company’s notice of annual general
meeting dated 25 June 2019. Each Class B, Class C, Class D or Class E performance share converts into
1 Share upon satisfaction of the relevant performance milestone.
o
Class C: the software business operated by Veriluma Software Pty Ltd achieves sales revenue of
not less than $10,000,000 on or before 8 September 2020.
Class D: the Company’s 30 trading day volume weighted average price (VWAP) of shares traded
on ASX is not less than $0.08 on or before 3 years after the date of issue.
Class E: the Company’s 30 trading day VWAP of shares traded on ASX is not less than $0.12 on
or before 3 years after the date of issue.
o
o
No Class C, Class D or Class E performance shares were converted or cancelled during the reporting
period.
None of the performance milestones for the Class C, Class D or Class E performance shares were met
during the period.
•
•
•
Houston We Have Limited and Controlled Entities
62