APPENDIX 4E
PRELIMINARY FINAL REPORT
Name of Entity:
ABN:
Reporting period:
Previous corresponding period:
MOQ LIMITED
94 050 240 330
Financial year ended 30 June 2020
Financial year ended 30 June 2019
For personal use only APPENDIX 4E
Results for Announcement to the Market
Set out below are the results for MOQ Ltd (“MOQ” or the “Company”) and its controlled entities for the year ended 30 June 2020
based on the audited accounts in the attached annual report.
Revenue from ordinary activities
EBITDA (before impairment)
Net profit / (loss) from ordinary activities after tax
attributable to members
FY 2019
FY 2018
Movement %
65,185,592
67,870,016
2,880,865
(14,490,519)
1,334,190
2,288,023
(4%)
116%
(733%)
Net profit / (loss) after tax attributable to members
(14,490,519)
2,288,023
(733%)
Interim dividend per share
Final dividend per share
Basic Earnings/(Loss) per share (cents per share)
- Continuing operations
- Discontinuing operations
Diluted Earnings/(Loss) per share (cents per share)
- Continuing operations
- Discontinuing operations
Net Tangible Asset Backing per share (cents per share)
Dividend information
Interim dividend
Final dividend
The company does not have a dividend reinvestment plan.
Additional information
n/a
n/a
(8.30)
-
(8.30)
-
(0.77)
n/a
n/a
1.42
-
1.35
-
3.89
-
-
(685%)
-
(715%)
-
(120%)
Amount
(cents per share)
Record Date
Payment Date
n/a
n/a
n/a
n/a
n/a
n/a
Additional Appendix 4E disclosures can be found in the Notes accompanying the Statement of Profit or Loss and other
comprehensive income and Statement of Financial Position.
This Appendix 4E is based on the 30 June 2020 financial report, which has been audited by Stantons International Audit and
Consulting Pty Ltd (Stantons International).
02
MOQ DIGITAL ANNUAL REPORT - APPENDIX 4EFor personal use only Annual Report 2020
FOR THE YEAR ENDED 30 JUNE 2020
01
MOQ LIMITED
AND ITS CONTROLLED ENTITIES
ABN: 94 050 240 330
MOQ ANNUAL REPORTXXXXXXXXXXFor personal use only CONTENTS
Corporate Directory
Directors’ Report
Statement of Corporate Governance
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
Auditor independence declaration
Independent Auditor’s Report
ASX Additional Information
3
4
21
22
23
24
25
26
53
54
55
60
02
MOQ ANNUAL REPORT
For personal use only CORPORATE DIRECTORY
Board of Directors
Mr David Shein
Mr Joe D’Addio
Non Executive Chairman
Executive Director and Chief Executive Officer
Mr Scott McPherson
Executive Director and Chief Operating Officer
Mr Joey Fridman
Mr Michael Pollak
Non Executive Director
Non Executive Director and Joint Company Secretary
Mr Alexander White
Non Executive Director
Joint Company Secretaries
Mr (Danny) Wan Yee Loh and Mr Michael Pollak
Auditors
Stantons International Audit and Consulting Pty Ltd
6 Middlemiss St, Lavender Bay, NSW 2060
Solicitors
Thomson Geer
Level 25, 1 O’Connell Street
Sydney NSW 2000
Bankers
Westpac Banking Corporation
94 Church Street
Middle Brighton VIC 3186
St George Bank
Locked Bag 1
Kogarah NSW 1485
Registered Office
Suite 1, Ground Floor
3-5 West Street
North Sydney NSW 2060
Share Registry
Link Market Services Limited
Level 4 Central Park 152 St Georges Terrace
PERTH WA 6000
Investor Enquiries:
Facsimile:
1300 554 474
+61 2 9287 0303
Stock Exchange Listing
Securities of MOQ Limited are listed on the Australian Securities Exchange (ASX).
ASX Code: MOQ
Website
www.MOQ.com.au
03
MOQ ANNUAL REPORTFor personal use only DIRECTORS’ REPORT
Your directors present their report on the consolidated entity (referred to herein as the “Group” or “Company”) consisting of
MOQ Limited and its controlled entities for the financial year ended 30 June 2020. The information in the proceeding operating and
financial review forms part of this directors’ report for the financial year ended 30 June 2020 and is to be read in conjunction with
the following information.
General Information
Officers and Directors
The names and particulars of the Directors during or since the end of the financial year are:
Name
Particulars
Mr David Shein
Mr Joe D’Addio
Mr Scott McPherson
Mr Joey Fridman
Mr Michael Pollak
Mr Alexander White
Mr Danny Loh
Non Executive Chairman
Executive Director and Chief Executive Officer
Executive Director and Chief Operating Officer
Non Executive Director
Non Executive Director and Joint Company Secretary
Non Executive Director
Joint Company Secretary
The above named Directors held office during and since the financial year, except as otherwise indicated.
Particulars of each director’s experience and qualifications are set out later in this report.
Meetings of Directors
During the financial year, 15 meetings of directors (including committees of directors) were held:
Director
Board Member
Since
Attended
Eligible
Board
Meetings
Eligible
Audit
and Risk
Meetings
Attended
Eligible
Remuneration
Meeting
Attended
Mr David Shein
17 February 2014
Mr Joe D'Addio
29 May 2015
Mr Scott McPherson
29 May 2015
Mr Joey Fridman
17 February 2014
Mr Michael Pollak
17 February 2014
Mr Alexander White
1 June 2019
13
13
13
13
13
13
12
12
11
12
13
13
2
2
2
-
2
2
2
1
-
-
-
-
-
-
-
-
-
-
-
-
Information Relating to Directors and Company Secretary
David Shein (Non Executive Chairman)
In June 1987, David, having recently migrated from South Africa, founded Com Tech Communications as a specialist supplier of
networking and communications products. 14 years later, Com Tech was sold to Dimension Data at an enterprise value of over
$1billion. At the time of sale, Com Tech employed over 1,400 people, had offices Australia wide and achieved revenues of $700 million
with no external debt. David prides himself on the recognition Com Tech achieved being regularly recognised as one of the leading
companies to work for in Australia. Since then, David has been actively involved in mentoring young management teams. David firmly
believes while products and technologies come and go, what remains constant is the requirement for any company to build a company
that is fanatical about providing legendary customer service and creating an environment that enables an organisation to attract and
retain the best team of people. David has been an investor and mentor to a number of start-ups, many of which have been successfully
exited. These include Zipmoney, CalReply, Latam Autos, RangeMe, Pocketbook, Centric Wealth, MacromatiX and Holly Connects.
David is also Co-Founder of Our Innovation Fund, a $50million early stage venture capital fund that invests in exciting Australian start-
ups as well as a founding partner in the Israeli venture capital enterprise, OurCrowd, the first Global Equity Based Crowd Funding
Platform.
04
MOQ ANNUAL REPORTFor personal use only
DIRECTORS’ REPORT (cont.)
Interests in shares and options:
4,083,335 fully paid ordinary shares
Other current directorships:
Former Directorships in last three years:
None
None
Special responsibilities:
Chair of Remuneration Committee
Michael Pollak (Non-Executive Director and Joint Company Secretary)
Michael holds a Bachelor of Commerce, is a Chartered Accountant and has an MBA in strategy from the Australian Graduate School
of Management. Michael commenced his career at PricewaterhouseCoopers over 20 years ago. Michael has gained valuable experience
in both Sydney and London including in general management, audit, insolvency, corporate advisory and strategy across a wide range of
industries and has been involved in the restructuring, recapitalisation and relisting of a number of ASX listed entities.
Interests in shares and options:
2,130,000 fully paid ordinary shares
Other current directorships:
None
Former Directorships in last three years:
Blue Star Helium Limited (ASX: BNL) (Non-executive director) Janison Education
Group Limited (ASX: JAN) (Non-executive director)
Special responsibilities:
Chair of Audit and Risk Committee
Joey Fridman (Non-Executive Director)
Joey is the co-founder and Chief Executive Officer of Monash Private Capital Pty Limited, a Sydney-based independent financial
services firm investing across various asset classes as principal and through its managed funds. Prior to establishing Monash Private
Capital, Joey was Chief Financial Officer of Investec Bank (Australia) Limited, and prior to his role as CFO, Joey was one of the founding
members of the Bank’s investment banking division. Joey is a Chartered Accountant and has an M.B.A. from the Australian Graduate
School of Management.
Interests in shares and options:
18,328,334 fully paid ordinary shares
Other current directorships:
None
Former Directorships in last three years:
Member of Audit and Risk Committee
Special responsibilities:
None
Alexander White (Non-Executive Director) (Appointed 1 June 2019)
Alex is an experienced investment manager, having undertaken a number of roles across financial markets prior to joining Viburnum
Funds in 2014 to open a Melbourne office and establish an Australian Equities strategy. Prior to joining Viburnum Funds Alex worked
at Cooper Investors and as a Strategy Analyst at Fletcher Building (ASX:FBU).
Interests in shares and options:
21,571,214 fully paid ordinary shares*
Other current directorships:
Former Directorships in last three years:
Special responsibilities:
None
None
None
*Shares owned by Viburnum Funds for which Mr White has an indirect interest as a Portfolio Manager.
Joe D’Addio (Executive Director and Chief Executive Officer)
Joe was a co-founder and Director of Technology Effect, MOQ Limited’s first acquisition. Joe has over 40 years’ experience in the
Information Technology services industry. Over the last 25 years, he has held a number of key management and director positions,
starting, building and leading businesses focused on providing specialist services for leading and emerging technology solutions into
the Australian market.
Interests in shares and options:
17,655,978 fully paid ordinary shares
Other current directorships:
Former Directorships in last three years:
None
None
Special responsibilities:
Chief Executive Officer, Member of Audit and Risk Committee
05
MOQ ANNUAL REPORTFor personal use only DIRECTORS’ REPORT (cont.)
Scott McPherson (Executive Director and Chief Operating Officer)
Scott was a co-founder and Director of Technology Effect, MOQ Limited’s first acquisition. Since forming the company in 2005, Tech
Effect grew from providing Infrastructure related Integration Services, to offering Consulting and Managed Services to assist their
clients to overcome both business and technical ICT related challenges.
Scott previously held the position of Solutions Director drawing upon more than two and a half decades of industry experience where
he has worked for iconic market leaders Com Tech Communications and Dimension Data. During this time, Scott has honed his
engineering, management and people skills to create a customer-centric organisation that develops solutions that solve real business
problems. These traits contributed to building Tech Effect into the successful, highly respected organisation. As the business grew,
Scott’s responsibilities evolved to focus on managing the Integration Services Practice, along with setting the vision and go to market
strategy for the ‘Cloud World’. Scott’s technology career started at Queensland University of Technology where he studied for his
Bachelor of Business degree in Information Management.
In his position as Chief Operating Officer within MOQdigital, Scott works closely with the CEO to ensure that efficient operations
of the business. Scott’s experience has been tapped to help ensure that the business is in a position of predictability, scalability and
profitability, while making sure of the quality of the services delivered.
Interests in shares and options:
17,943,478 fully paid ordinary shares
Other current directorships:
Former Directorships in last three years:
None
None
Special responsibilities:
Executive Director
Danny Loh (Joint Company Secretary) (appointed 2 October 2019)
Danny joined MOQ in 2015 after starting his career in the IT industry with Com Tech Communications. He gained valuable experience
within Com Tech and Dimension Data, culminating in some senior financial roles in Dimension Data subsidiaries such as Express Data,
DDLS and Dimension Data Cloud Solutions. Danny holds a Bachelor of Commerce from University of New South Wales and is a
Certified Practising Accountant. His experience in service providers and product-oriented IT organisations is being utilised to provide
disciplines around reporting, risk management and assessment, and efficient operations at MOQ.
Brad Cohen (Company Secretary) (resigned 2 October 2019)
Brad is the Chief Executive Officer of SkoolBag.
Brad has over 15 years of experience in ASX-listed, large consulting companies and startups across Australia, New Zealand and Israel.
His experience in the finance and technology sectors spans corporate mergers and acquisitions, technology startup investment, capital
raisings, and building acquired businesses. Prior to these roles, Brad worked as a management consultant, where he advised clients
from a broad spectrum of industries on strategic direction, planning and development, process optimisation, product direction and
excellence in project management.
Brad is a qualified Chartered Accountant and holds a Bachelor of Commerce-Accounting and a Bachelor of Laws from Macquarie
University, Sydney.
06
MOQ ANNUAL REPORTFor personal use only DIRECTORS’ REPORT (cont.)
Our Business Model and Objectives
MOQ Limited’s strategy is to develop, build and acquire Cloud centric complementary technology businesses and capitalise on the
accelerating market opportunity presented by Digital Transformation. The Directors of the Company have extensive experience and
a proven track record in building and acquiring businesses, as well as providing strategic direction, in order to generate long term
sustainable returns for shareholders. The Company is actively pursuing suitable growth opportunities by either organic investment or
through synergistic acquisitions in the technology sector.
The Directors would like to report that through FY20, despite significant challenges, there has been substantial progress towards
achieving our strategic goals and building the foundations for the business that we aspire to be. Here is a summary and status of those
previously stated priorities:
1.
Investment in the organic growth of MOQdigital and a build
out of capability in the New South Wales and Queensland
markets;
Key investments in Sales, Go To Market and Management
teams is contributing to our go forward ambitions
2. Continued and increased focus on the growth of high value
recurring revenue streams;
Recurring Services has grown to contribute 50% of Total
Gross Profit for the business (See Chart 1 below)
3.
4.
Prioritise investment in our Digital Transformation Services
and specifically our Digital Services Line of Business;
The Digital Services line of business now represents 50%
of Total Gross Profit for the business (See Chart 2 below)
Investment in function and feature improvement of the
Skoolbag product, to further grow the user base and revenue
streams;
The Skoolbag team has developed and is deploying its
modern architecture.
5. Growth via strategic acquisitions.
The Wardy IT acquisition has been a very positive addition
for MOQ Limited and forms the basis for growth in
Digital Services and Recurring revenue streams
General Items of Note for FY20
The key items of note for MOQ Limited in FY20 have been:
•
From September 1, 2019 Wardy IT Solutions started trading as a wholly owned subsidiary of MOQ Limited. The Wardy IT business
is performing well. The phased integration process was temporarily halted during Q4, due to the demands placed on the business
to cope with the COVID-19 situation, and was restarted in July 2020.
• With the addition of Wardy IT’s market offering, the appointment of Peter Ward as the General Manager of the combined Digital
Services and Solutions business and further investment in the Microsoft Partnership, MOQ now has strong positioning in the
Digital Transformation Services market. This is evident from excellent growth in our opportunity pipeline, and some significant
recent wins.
• Despite the COVID-19 challenges, the MOQ business has now successfully pivoted to be Digital Services and Recurring Services
led. This is clearly evident by examination of the Gross Profit contribution statistics:
o Overall Gross Profit has grown by 16.1% (with 10 months of Wardy IT contribution and despite downturn in Technology
Sales and COVID-19 impact in H2FY20)
o Digital Services Gross Profit has increased by 152% and now represents 50% of the MOQ business (with 10 months of
Wardy IT contribution), up from 23% in FY19.
o Recurring Services now contributes 50% of total Gross Profit of the MOQ business, and has grown 118% in FY20, (with
10 months of Wardy IT contribution).
• The Chart below illustrates the benefit in Gross Profit that the Digital Services Line of Business has contributed to the business
in FY20, compared to FY19. Note that the deterioration in Foundation Services Gross Profit is mainly due to reduced technology
sales through the year and then markedly through the COVID-19 impacted period. (Please note that MOQ Limited benefited from
the Wardy IT acquisition for only 10 months of the financial year)
07
MOQ ANNUAL REPORTFor personal use only DIRECTORS’ REPORT (cont.)
FY19 Vs FY20 Gross Profit by Line of Business
$16,000,000
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$
$16,000,000
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$
Digital Services
$2,899,490
Digital Services
$7,310,405
Foundation Services
$9,633,503
Foundation Services
$7,237,649
FY19
FY20
FY19 Vs FY20 Gross Profit by Service Category
Technology Sales
$3,925,075
Professional Services
$3,408,049
Recurring Services
$7,214,930
Technology Sales
$6,157,456
Professional Services
$3,071,620
Recurring Services
$3,303,917
FY19
FY20
• The restructuring, introduction of new management, and cost reduction programs implemented through Q2 and Q3 has resulted
in a more market tuned and effective MOQdigital side of the business. This is particularly evident in Professional Services utilisation
rates over the last 3 months and forward momentum, Managed Services opportunity pipeline and recent wins.
08
MOQ ANNUAL REPORTFor personal use only DIRECTORS’ REPORT (cont.)
Executive Review of FY20
The Reporting Period FY20 featured a unique event in the shape of the COVID-19 pandemic and as such our year became a story of
two distinct experiences:
1. The initial eight-month period to the end of February 2020 where the focus was on completing and integrating the Wardy IT
Solutions acquisition and reshaping the MOQdigital business to further pivot to-wards the high growth Digital Services market;
and
2. The COVID-19 pandemic period from March to June 2020, essentially the final third of FY20, a period in which our customers
were faced with a range of pressures and uncertainty, resulting in a hesitation to commit to major long-standing projects, majorly
impacting our traditionally stronger finish to a Financial Year and hence our profitability.
MOQ entered the COVID-19 Pandemic period whilst in the middle of a concerted restructuring and cost reduction exercise (this
was outlined in our H1FY20 and COVID-19 market announcements in February and April 2020). Additionally, we were receiving the
benefit of onboarding of the Wardy IT Solutions business, which had continued to perform well post acquisition. These two positive
actions in H2 of FY20, along with the Federal Government’s JobKeeper Program, would prove to be major assets as we navigated the
COVID-19 period downturn.
Bookings and Revenues dropped significantly through March and April, as customers deferred plans to acquire technology or invest
in major projects and initiatives. The initial negative impact on profitability and our cashflow position was significant. The resulting
substantial drop in revenue, mainly in Technology Sales, resulted in MOQ Limited’s Australian based operating entities qualifying for
the JobKeeper program.
It is important to note that the Services side of MOQdigital’s business was not as dramatically impacted as Technology Sales revenues.
Managed Services revenues remained steady and reliable with minimal negative impact, whilst Professional Services, despite being
initially impacted, recovered to pre COVID-19 levels by June 2020.
To understand the impact of the COVID downturn, we highlight that historical forecasting through February 2020 indicated a strong
probability of a reasonable statutory EBITDA (pre-impairment) result - greater than what was eventually achieved with the aid of
JobKeeper. As provided in this report, our Statutory EBITDA (pre-impairment) result was $2.881 Million, and this was achieved with
the valued assistance of JobKeeper. The Underlying EBITDA (pre-impairment) of $1.213 Million is a true indicator of the substantial
short-term damage on the MOQ business financial return mainly through March, April and May of 2020.
We are pleased to report that business performance for the start of FY21 has been positive with many of our customers residing in
low impact vertical markets – such as government, education, utilities, mining and financial services, continuing their investment cycles
which had been stalled by COVID-19.
COVID-19 – Business Outlook
The Board and Executive Team organised promptly and effectively to adapt and adjust to the market environment created by the onset
and continuation of the COVID-19 pandemic. With the assistance of JobKeeper, we have been able to, not only quickly recover from
the initial financial impact to our business, but importantly keep the shape and capability of the business intact whilst continuing to
drive towards our strategic goal of winning our share of the high growth Digital Services market.
We are seeing the following in the market:
• New or additional requirements for technology solutions and services to assist customers with adjusting to the ‘Work From
Home’ environment that is not only necessary but becoming part of the ‘new normal’.
• Digital Transformation initiatives restarting or continuing, as customers determine that much of this investment is also necessary
to maintain competitiveness, ensure cost reduction and/or business improvement, regardless of COVID-19.
• A growing number of customers have taken the decision to reduce headcount in their businesses and this has impacted their
ability to service their own ongoing IT requirements. This will become an emerging market opportunity over the next six to twelve
months.
• The general market for adoption of Cloud services such as Microsoft’s Azure Cloud is accelerating at double digit growth rates
through the pandemic period and into the foreseeable future. This is resulting in increased professional and operational services
opportunities for providers such as MOQ.
Whilst underlying market conditions continue to pose some challenges, mainly medium term visibility and uncertainty due to the
ongoing COVID-19 situation, there is no doubt that technology services of the nature MOQ Limited provides will remain in demand,
as technology continually requires operation, management and improvement, as a minimum. Our business is experiencing a reasonable
recovery in a shorter time frame than initially expected and whilst there is an ongoing risk profile that COVID-19 will further impact
health, economy and hence our market, there is a growing confidence level that we as a business can continue to pivot to reach our
strategic goals.
09
MOQ ANNUAL REPORTFor personal use only DIRECTORS’ REPORT (cont.)
Financial Results - Items of Note for FY20
The key items of note for MOQ Limited in FY20 have been:
• Due to the uncertainty around the impacts of the COVID-19 pandemic, MOQ felt that it was prudent to fully impair the goodwill
related to its past acquisitions of Tetran and Skoolbag. The impact of this impairment was $13.3m to the results.
•
FY20 was the first reporting period that MOQ Limited adopted the new leases accounting standard AASB 16. As this has a
material impact on the statutory numbers, through decrease in occupancy costs and increase in depreciation and finance costs,
Table A has been included below to provide an overview of the impact of the changes, and how any pre-AASB16 full year results
would have compared to prior period.
Table A
Consolidated Full Year
Revenue from operations
Cost of sales
Gross Profit
Other Income (excluding interest)
Expenses
Occupancy
Other expenses
Finance costs
Total expenses (excl. Depreciation & Amortisation)
EBITDA (pre-impairment)
Interest Income
Depreciation & Amortisation
Profit (Loss) before Impairment & Income Tax
add back / (deduct) abnormal items
Underlying Profit before Impairment & Income Tax
Underlying EBITDA (pre-impairment)
30 Jun 2020
Statutory
$’000
30 Jun 2020
AASB16
Adjustment
$’000
30 Jun 2020
Pre-AASB16
$’000
30 Jun 2019
Pre AASB16
$’000
65,186
(50,638)
14,548
1,699
(799)
(12,567)
(124)
(13,490)
2,881
12
(4,106)
(1,337)
1,543
206
1,952
65,186
(50,638)
14,548
1,699
(1,538)
(12,567)
(20)
67,870
(55,337)
12,533
41
(1,166)
(10,073)
(14,125)
(11,239)
2,142
12
(3,381)
(1,247)
1,543
296
1,213
1,334
19
(724)
629
629
1,334
(739)
104
(635)
(739)
725
90
90
(739)
1.
Underlying EBITDA is arrived at by adding back impact of abnormal items (excluding amortisation) to Statutory EBITDA. See Table B below for a subtotal of the
impact of abnormal cost items excluding amortization
• Also, as FY20 had some abnormal items, primarily associated with the Wardy IT acquisition and government subsidies, we have
provided a breakdown of the material items in a separate table below (Table B) to explain the difference between the statutory
earnings and underlying earnings, as well as statutory EBITDA and underlying EBITDA.
010
MOQ ANNUAL REPORTFor personal use only
DIRECTORS’ REPORT (cont.)
Table B
Abnormal Items
Amortisation Expenses - Wardy Intangible Assets
Subtotal (impact on amortisation expense)
M&A Advisory Costs
Wardy Integration Costs
Wardy establishment of provision for doubtful debts
MOQdigital additional doubtful debts for project
Subtotal (impact on operating expense exc amortisation)
Government subsidies (JobKeeper/Cashflow Boost)
Subtotal (impact on other income)
Total Abnormal Items
30 Jun 2020
Statutory
$’000
2,472
2,472
445
50
106
172
773
(1,702)
(1,702)
1,543
Notes for Table B
1. Abnormal amortisation expenses are related to Wardy IT Solutions intangible assets recognised as part of the acquisition, and being amortised over their useful life.
2. M&A advisory costs are related primarily to Wardy IT Solution acquisition.
3. Wardy integration costs relate to costs to establish the project to integrate Wardy IT Solutions into MOQdigital operation, with a view to completion by end of
calendar year 2020.
4. We have established a provision for doubtful debts for the Wardy IT business and will review this provision regularly.
5.
In relation to issues with onboarding a major client in FY19, we felt it prudent to provide for an additional $172k in doubtful debts in relation to the project. This will
ensure that we have fully covered for any potential disputes for the work.
•
In relation to MOQ Limited’s cash position, please note:
o
In April 2020, MOQ and its subsidiaries qualified for government incentives, primarily the Job-Keeper subsidy. This was primarily
due to the significant drop in Technology revenues over the April-June quarter. The positive impact to our cash position from
such assistance was approximately $1.12m.
o We also announced in April 2020 a range of measures related to COVID-19 around cash conservation, including reduction in
executive and director salaries, not replacing vacancies in headcount and reduction in discretionary expenditure.
o Our cash position has improved to $4.976m as at 30 June 2020 from $740k at 31 December 2019 through a combination of
government assistance as well as our measures to conserve cash. As at 24 August 2020, our cash position (unaudited) remains
strong at $6.2m, with a further working capital facility of $2.5m remaining unused.
It is also worthwhile to note that we have provided for $2.6m in current liabilities as the best estimate of the expenditure
required to settle the obligation for the Wardy IT acquisition. According to the terms of the sale agreement (as outlined in the
ASX announcement dated 12 August 2019), a minimum of one third of the earnout is to be paid in cash, and the balance in
either shares (valued at a minimum of 27.5c per share) or cash at the discretion of the purchaser.
o Tables C and D provide additional information
Table C
Balance Sheet
Cash
Current Assets
Current Liabilities
Net Tangible Assets
Current Ratio
FY20
$’000
4,976
13,463
16,476
(1,357)
0.82:1
FY19
$’000
5,231
16,109
13,682
6,277
1.18:1
% Change
-5%
-16%
20%
-122%
-31%
011
MOQ ANNUAL REPORTFor personal use only
DIRECTORS’ REPORT (cont.)
Financial Results - Items of Note for FY20 (Cont)
Table D
Cashflow
Cash from Operating Activities
Cash used in Investing Activities
Cash used in acquisition of Wardy IT
Cash from Financing Activities
Free Cashflow excluding Wardy acquisition
SkoolBag
FY20
$’000
3,556
(1,150)
(1,922)
(739)
1,667
FY19
$’000
3,373
(2,106)
-
-
1,267
% Change
5%
45%
-
-
32%
The SkoolBag business operates and develops a market leading Software-as-a-Service (“SaaS”) communications platform, including
mobile apps, primarily for K-12, Childcare and education customers and also in the sports vertical.
Some highlights for SkoolBag include:
• New application architecture developed and deployed, providing the foundations for the next stage of scalable feature and product
growth
• New admin console for schools developed and currently being rolled out to all customers.
•
Successfully piloted a substantial new feature with the intention to roll out over FY21
Summary
As outlined in this Directors’ Report, from an earnings perspective, for MOQ Limited, FY20 has been disappointing, albeit severely
impacted by an extraordinary period caused by the initial COVID-19 Pandemic reaction.
The Directors and Executive Team strategy to ensure the business not only survived this COVID-19 period , but also continued to
pivot to service the Digital Transformation market opportunity, has at this stage proved successful. The cash position as at August 24,
2020 is strong and our line of credit is fully intact. Most importantly, we have been able to retain our core staff, capability and capacity
and we are now also benefiting from our H1 FY20 restructuring investments. Wardy IT has been a great strategic acquisition and we
are now very well positioned to benefit as the market continues to improve.
The Directors of the Company would like to emphasise that MOQ Limited is continuing to actively seek strategic acquisitions through
an ongoing program run by the MOQ Executive team and its advisors to identify and qualify suitable M&A partners.
Significant Changes in State of Affairs
There are no significant changes in the state of affairs of the group other than discussed above.
Dividends Paid or Recommended
In respect of the current year, no dividends have been declared or paid and none are recommended (2019: $nil).
Significant Events after the Reporting Period
On 21 August 2020, the Company issued a Notice of Meeting for an Extraordinary General Meeting to be held on 22 September 2020
to consider and vote on its Employee Option Plan, and the cancellation and re-issue of Employee Options.
Likely developments and expected results
Disclosure of information regarding likely developments in the operations of the Group in future financial years and the expected
results of those operations is likely to result in unreasonable prejudice to the Group. Accordingly, this information has not been
disclosed in this report.
012
MOQ ANNUAL REPORTFor personal use only DIRECTORS’ REPORT (cont.)
Environmental Issues
There are no applicable environmental regulations that would have an effect on the Company.
Indemnifying Officers or Auditor
During the year, the Company paid a premium to insure officers of the Group. The officers of the Group covered by the insurance
policy include all directors. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that
may be brought against the officers in their capacity as officers of the Group, and any other payments arising from liabilities incurred
by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach
of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or
someone else to cause detriment to the Group.
Details of the amount of the premium paid in respect of the insurance policies is not disclosed as such disclosure is prohibited under
the terms of the contract.
The Group has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or
agreed to indemnify any current or former officer or auditor of the Group against a liability incurred as such by an officer or auditor.
Proceeding on Behalf of Company
No person has applied for leave of court to bring proceedings on behalf of the company or intervene in any proceedings to which the
company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings
Auditor
Stantons International Audit and Consulting Pty Limited are the appointed auditors of the Company. The auditor has not been
indemnified under any circumstance.
Non-audit Services
There have been no non-audit services provided during the year.
The board of directors considers that there have been no independence issues imposed by the Corporations Act 2001.
Auditor’s Independence Declaration
The lead auditor’s independence declaration for the year ended 30 June 2020 can be found on page 54 of the financial report.
Options
At the date of this report, the unissued ordinary shares of MOQ Limited under option are as follows:
Grant Date
01/09/2016
01/07/2018
TOTAL
Balance at the date
of this report
2,436,358
2,109,088
4,545,446
Exercise price
$0.275
$0.255
Expiry
01/09/2020
01/07/2022
Option holders do not have any rights to participate in any issues of shares or other interests of the company or any other entity. For
details of options issued to directors and executives as remuneration, refer to the remuneration report.
No person entitled to exercise the option had or has any right by virtue of the option to participate in any share issue of any other
body corporate.
013
MOQ ANNUAL REPORTFor personal use only REMUNERATION REPORT (AUDITED)
Remuneration Policy
The remuneration policy of MOQ Limited has been designed to align key management personnel (KMP) objectives with shareholder
and business objectives by providing a fixed remuneration component and offering performance incentives based on key performance
areas affecting the consolidated group’s financial results. The Board of MOQ Limited believes the remuneration policy to be appropriate
and effective in its ability to attract and retain high-quality KMP to run and manage the consolidated group, as well as create goal
congruence between directors, executives and shareholders.
The Board’s policy for determining the nature and amount of remuneration for KMP of the consolidated group is to have the
remuneration policy developed by the Board after professional advice is sought where appropriate from independent external
consultants. No external advice was sought to prepare remuneration policies for the current financial year.
• All KMP receive a base salary (which is based on factors such as length of service and experience), superannuation, fringe benefits
and performance incentives.
• Performance incentives are generally only paid once predetermined key performance indicators (KPIs) have been met.
• The Board reviews KMP packages annually by reference to the consolidated group’s performance, executive performance and
comparable information from industry sectors.
•
Incentives paid in the form of options or rights are intended to align the interests of the KMP and the Group with those of the
shareholders. In this regard, KMP are prohibited from limiting risk attached to those instruments by use of derivatives or other
means.
The performance of KMP is measured against criteria agreed biannually with each executive and is based predominantly on the forecast
growth of the consolidated group’s profits and shareholders’ value. All bonuses and incentives must be linked to predetermined
performance criteria. The Board may, however, exercise its discretion in relation to approving incentives, bonuses and options.
KMP receive at a minimum, a superannuation guarantee contribution required by the government, which for the year ending 30 June
2020 was 9.50% (2019: 9.5%) of the individual’s average weekly ordinary time earnings. KMP do not receive any retirement benefits.
All remuneration paid to KMP is valued at the cost to the company and expensed.
The Board’s policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The Board
determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and
accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to
non-executive directors is subject to approval by shareholders. Currently, the maximum aggregate remuneration of non-executive
directors is $500,000.
Performance-based Remuneration:
The KPIs are set annually, in consultation with KMP. The KPIs target areas the Board believes hold greater potential for group
expansion and profit, covering financial and non-financial as well as short and long-term goals. The level set for each KPI is based on
budgeted figures for the Group and respective industry standards.
Performance in relation to the KPIs is assessed annually, with bonuses being awarded depending on the number and deemed difficulty
of the KPIs achieved. Following the assessment, the KPIs are reviewed by the remuneration committee (if requested) in light of the
desired and actual outcomes, and their efficiency is assessed in relation to the Group’s goals and shareholder wealth, before the
KPIs are set for the following year. In determining whether or not a KPI has been achieved, the Board bases the assessment on the
Company’s performance using audited figures.
014
MOQ ANNUAL REPORTFor personal use only REMUNERATION REPORT (AUDITED)
Remuneration Expense Details:
The following table of benefits and payments represents the components of the current year and comparative year remuneration
expenses for each member of KMP of the consolidated group:
Short-term benefits
Post-
employment
benefits
Salary &
fees
Cash
Bonus
Other
payments
Superannua-
tion
Year
Share
based
payments
Non-executive Directors
Personnel
Executive Directors
Mr Joe D’Addio
Mr Scott McPherson
Mr David Shein
Mr Joey Fridman
Mr Michael Pollak**
Mr Alexander White
(appointed 1st June
2019)
Key Management
Mr Matthew Goggin
(Director Sales)
Mr Chad Lurie
(GM Services)
Mr (Danny) Wan Yee
Loh (GM Finance)
Mr Peter Ward (CEO
Wardy IT Solutions)
2020 Total
2019 Total
2020
2019
2020
2019
186,667
200,000
-
-
273,333
6,000
200,000
36,000
-
-
-
-
2020
2019
2020
2019
2020
2019
2020
2019
51,662
54,795
50,000
60,000
51,662
54,795
45,662
4,566
2020
270,667
-
2019*
240,000
35,000
2020
2019
2020
2019
2020
2019
193,333
200,000
199,500
196,000
189,231
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,000
10,000
-
-
-
-
-
-
-
-
17,733
19,000
21,003
20,531
4,338
5,205
-
-
4,338
5,205
4,338
434
21,003
20,531
18,367
19,000
18,953
18,620
17,977
-
Total
204,400
219,000
300,336
256,531
56,000
60,000
50,000
60,000
76,000
70,000
50,000
5,000
291,670
295,531
211,700
219,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,168
221,621
9,238
223,858
-
-
207,208
-
1,511,717
6,000
20,000
128 ,050
3,168 1,668,935
1,210,156
71,000
10,000
108,526
9,238 1,408,920
* New executive agreement of $280,000 per annum from 1 January 2019
** Other payments for Michael Pollak are related to his appointment as joint Company Secretary.
Performance
based
percentage of
remuneration
-
-
2%
15%
-
-
-
-
-
-
-
-
-
12%
-
-
1%
2%
-
-
-
-
015
MOQ ANNUAL REPORTFor personal use only
REMUNERATION REPORT (AUDITED)
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Personnel
Fixed Remuneration
At Risk – Short Term
Incentives
At Risk - Options
Executive Directors
Mr Joe D’Addio
Mr Scott McPherson
Other Key Management Personnel
Mr Matthew Goggin
Mr Chad Lurie
Mr (Danny) Wan Yee Loh
Mr Peter Ward
Service agreements (audited):
100%
98%
100%
100%
99%
100%
-
2%
-
-
-
-
-
-
-
-
1%
-
The directors serve until they resign, are removed, cease to be a director or are prohibited from being a director under the provisions
of the Corporations Act 2001, or are not re-elected to office.
The directors entered into service agreements on the following terms:
• Mr Shein, Mr Fridman, Mr Pollak and Mr White - Base salary (including director’s fees) of $60,000 per annum (including
superannuation or similar contributions). They may receive additional payments as approved by the board.
o As part of MOQ’s response to the COVID-19 pandemic, as announced to the ASX on 21 April 2020, all non-executive director
remuneration were waived from 1 May 2020 for 6 months.
• Mr D’Addio - Base salary (including director’s fees) of $200,000 per annum (plus superannuation or similar contributions).
• Mr McPherson – Base salary (including director’s fees) of $300,000 per annum (plus superannuation or similar contributions).
o Annual incentive payment of up to $81,217 each based on pre-determined key metrics.
o The Company may also, in its absolute discretion, provide a bonus, the value of which, the conditions attached to and the
frequency of such a bonus, remain matters over which the Company exercises sole discretion.
o
If the Company terminates the agreement with reason (such as gross misconduct, conviction of a major criminal offence
or misuse of price sensitive information), the Company will provide the Director with no notice and will be summarily
dismissed. If the Company terminates the agreement without reason (notwithstanding any other provision of the agreement),
the Company will provide the Director with 3 months’ written notice or make a payment of 3 months’ salary in lieu of the
notice period.
o The Director may terminate the agreement at his or her sole discretion and at any time, and in doing so is entitled to payment
of a fee equivalent to 3 months of their base fees.
o After the termination of their employment with the Company and MOQdigital, the Director will be subject to a contractual
restraint which may apply for 6 months after the termination and cover up to all of Australia.
o As part of MOQ’s response to the COVID-19 pandemic, as announced to the ASX on 21 April 2020, Mr McPherson’s salary
was temporarily reduced by 20% effective from 1 May 2020, for 6 months. Mr D’Addio’s salary was temporarily reduced by
40% effective from 1 May 2020, for 6 months.
Key Management Personnel entered into service agreements on the following terms:
• Mr Goggin - Base salary of $280,000 per annum (plus superannuation or similar contributions).
• Mr Loh - Base salary of $210,000 per annum (plus superannuation or similar contributions).
o The Company may also, in its absolute discretion, provide a bonus, the value of which, the conditions attached to and the
frequency of such a bonus, remain matters over which the Company exercises sole discretion.
o
If the Company terminates the agreement with reason (such as gross misconduct, conviction of a major criminal offence or
misuse of price sensitive information), the Company will provide the KMP with no notice and will be summarily dismissed. If
the Company terminates the agreement without reason (notwithstanding any other provision of the agreement), the Company
will provide the KMP with up to 3 months’ written notice or make a payment of up to 3 months’ salary in lieu of the notice
period.
o As part of MOQ’s response to the COVID-19 pandemic, as announced to the ASX on 21 April 2020, all KMP salaries were
temporarily reduced by 20% effective from 1 May 2020, for 6 months.
016
MOQ ANNUAL REPORTFor personal use only REMUNERATION REPORT (AUDITED) (cont)
Service agreements (audited) (cont):
o The KMP may terminate the agreement at his or her sole discretion and at any time, and in doing so is entitled to payment of
a fee equivalent to 3 months of their base fees.
o After the termination of their employment with the Company and MOQdigital, the KMP will be subject to a contractual
restraint which may apply for 6 months after the termination and cover up to all of Australia.
• Mr Ward – Base salary of $240,000 per annum (plus superannuation or similar contributions).
o The Company may also, in its absolute discretion, provide a bonus, the value of which, the conditions attached to and the
frequency of such a bonus, remain matters over which the Company exercises sole discretion.
o
If the Company terminates the agreement with reason (such as gross misconduct, conviction of a major criminal offence
or misuse of price sensitive information), the Company will provide the KMP with no notice or compensation and will be
summarily dismissed. If the Company terminates the agreement without reason (notwithstanding any other provision of the
agreement), the Company will provide the KMP with up to 2 months’ written notice or make a payment of up to 2 months’
salary in lieu of the notice period.
o The KMP may terminate the agreement at his or her sole discretion and at any time, and in doing so is entitled to payment of
a fee equivalent to 2 months of their base fees.
o After the termination of their employment with the Company, the KMP will be subject to a contractual restraint which may
apply for 36 months after the termination and cover up to all of Australia.
o As part of MOQ’s response to the COVID-19 pandemic, as announced to the ASX on 21 April 2020, all KMP salaries were
temporarily reduced by 20% effective from 1 May 2020, for 6 months.
• Mr Lurie – Base salary of $200,000 per annum (plus superannuation or similar contributions).
o The Company may also, in its absolute discretion, provide a bonus, the value of which, the conditions attached to and the
frequency of such a bonus, remain matters over which the Company exercises sole discretion.
o
If the Company terminates the agreement with reason (such as gross misconduct, conviction of a major criminal offence or
misuse of price sensitive information), the Company will provide the Director with no notice and will be summarily dismissed.
If the Company terminates the agreement without reason (notwithstanding any other provision of the agreement) within
12 months of commencement, the Company will provide the Director with 6 months’ written notice, and thereafter with 2
months’ written notice.
o As part of MOQ’s response to the COVID-19 pandemic, as announced to the ASX on 21 April 2020, all KMP salaries were
temporarily reduced by 20% effective from 1 May 2020, for 6 months.
Shareholding and option holding of directors and other key management personnel (audited)
Options held by Directors and Key Management Personnel
The number of options in the Company during the 2020 reporting period held by each of the Group’s Directors and Key Management
Personnel, including their related parties, is set out below:
Personnel
Mr Joe D’Addio
Mr Scott McPherson
Mr David Shein
Mr Joey Fridman
Mr Michael Pollak
Mr Alexander White
Mr Matthew Goggin
Mr Chad Lurie
Mr Danny Loh
Mr Peter Ward
Year ended 30 June 2020
Balance at the
start of the year
Options acquired
Received as part of
remuneration
Options exercised
/ disposed
Held at the end
of the year
-
-
-
-
-
-
-
-
363,636
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
363,636
-
017
MOQ ANNUAL REPORTFor personal use only REMUNERATION REPORT (AUDITED) (cont)
Options held by Directors and Key Management Personnel (continued)
Year ended 30 June 2019
Balance at the
start of the year
Options acquired
Received as part of
remuneration
Options exercised
/ disposed
Held at the end
of the year
Personnel
Mr Joe D’Addio
Mr Scott McPherson
Mr David Shein
Mr Joey Fridman
Mr Michael Pollak
Mr Alexander White
Mr Matthew Goggin
Mr Chad Lurie
Mr Danny Loh
Mr Peter Ward
-
-
-
-
-
-
-
-
181,818
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
181,818
-
-
-
-
-
-
-
-
-
-
-
Additional Information
The factors that are considered to affect total shareholders return (TSR) are summarised below:
Share Price at financial year end
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
2020
0.165
(8.30)
(8.30)
2019
0.195
1.42
1.35
2018
0.24
0.70
0.68
2017
0.24
0.06
0.06
-
-
-
-
-
-
-
-
363,636
-
2016
0.29
(0.05)
(0.05)
Name
Grant Date
Held at 1
July 2019
Granted as
remuneration
Net
change
other
Held at
30 June
2020
Vested
during
the year
and as at
30 June
2020
Total
unvested
at 30
June
2020
Value
per
option
at grant
date
Total value
of options
at grant
date
Exercise
price per
option
Vesting
Date Expiry Date
Wan Yee
(Danny)
Loh
05-Sep-2016
90,909
05-Sep-2016
90,909
01-Jul-2018
90,909
01-Jul-2018
90,909
-
-
-
-
-
-
90,909
90,909
- 01-Sep-2018 01-Sep-2020
$0.1045
$9,500.00
$0.275
90,909
90,909
- 01-Sep-2019 01-Sep-2020
$0.1045
$9,500.00
$0.275
90,909
90,909
-
-
90,909
01-Jul-2020
01-Jul-2022
$0.0697
$6,336.36
$0.255
90,909
01-Jul-2021
01-Jul-2022
$0.0697
$6,336.36
$0.255
*No other Key Management Personnel were granted remuneration options during the year.
018
MOQ ANNUAL REPORTFor personal use only REMUNERATION REPORT (AUDITED) (cont)
Shares held by Directors and Key Management Personnel
The number of ordinary shares in the Company during the 2020 reporting period held by each of the Group’s Key Management
Personnel, including their related parties, is set out below:
Personnel
Balance at the
start of the
year
Mr Joe D’Addio
17,655,978
Mr Scott McPherson
17,943,478
Mr David Shein
Mr Joey Fridman
Mr Michael Pollak
4,083,335
18,328,334
2,130,000
Mr Alexander White *
21,571,214
Mr Matthew Goggin
Mr Chad Lurie
Mr Danny Loh
Mr Peter Ward
8,827,989
4,110,457
-
-
Personnel
Balance at the
start of the
year
Mr Joe D’Addio
17,655,978
Mr Scott McPherson
17,943,478
Mr David Shein
Mr Joey Fridman
Mr Michael Pollak
Mr Alexander White*
Mr Matthew Goggin
Mr Chad Lurie
Mr Danny Loh
4,083,335
18,328,334
2,130,000
-
8,827,989
4,110,457
-
Year ended 30 June 2020
Received
as part of
remuneration Other changes
Acquired
Disposal
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
63,000
14,125,072
-
-
-
-
-
-
-
1,085,457
-
-
Year ended 30 June 2019
Received
as part of
remuneration Other changes
Acquired
Disposal
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21,571,214
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Held at the end
of reporting
period
17,655,978
17,943,478
4,083,335
18,328,334
2,130,000
21,571,214
8,827,989
3,025,000
-
14,188,072
Held at the end
of reporting
period
17,655,978
17,943,478
4,083,335
18,328,334
2,130,000
21,571,214
8,827,989
4,110,457
-
* Mr Alexander White was appointed 1 June 2019. 21,571,214 shares were held at appointment per initial directors notice on 1 June
2019. Shares owned by Viburnum Funds for which Mr White has an indirect interest as a Portfolio Manager.
019
MOQ ANNUAL REPORTFor personal use only REMUNERATION REPORT (AUDITED) (cont)
Other Equity-related KMP Transactions
There were no equity-related KMP transactions during the year.
Loans to KMP
No loans have been made to KMP during, or since, the year ended 30 June 2020 (2019: $Nil).
Other transactions with KMP or their related parties
During the year PWJAW Holdings PTY Ltd, a company of which Peter Ward is a director, was engaged to supply HR services. Fees of
$21,875 we paid to PWJAW Holdings Ltd. No amounts were outstanding as at 30 June 2020.
During the year, Monash Private Capital was engaged at an arm’s length basis to consult on various acquisition opportunities. Consulting
fees were paid to Monash of $355,043, including a success fee relating to the acquisition of Wardy IT Solutions. No amounts related
to these services were outstanding as at 30 June 2020.
This directors’ report, incorporating the remuneration report, is signed in accordance with a resolution of the Board of Directors.
Non-Executive Chairman
27 August 2020
020
MOQ ANNUAL REPORTFor personal use only
STATEMENT OF CORPORATE GOVERNANCE
STATEMENT OF CORPORATE GOVERNANCE
The Board is committed to achieving and demonstrating the highest standards of corporate governance. As such, MOQ Limited and
its Group have adopted the third edition of the Corporate Governance Principles and Recommendations which was released by the
ASX Corporate Governance Council on 27 March 2014 and became effective for financial years beginning on or after 1 July 2014.
The Group’s current Corporate Governance Statement for this reporting period is available on MOQ Limited’s website at
www.moq.com.au/corporate-governance/
021
MOQ ANNUAL REPORTFor personal use only CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
Notes
2020
$
2019
$
Revenue
Cost of Sales
Gross Profit
Other Income
Expenses
Share based payments
Depreciation expenses
Amortisation expenses
Employee costs
Legal costs
ASX and registry related expenses
Marketing expense
Occupancy expenses
Professional fees
Telecommunication carrier expenses
Other expenses
Total expenses
(Loss) / Profit before impairment
Impairment Expense
(Loss) / Profit after impairment
(Loss ) / Profit before income tax expense
Income tax (expense) / credit
(Loss) / Profit after income tax
Other comprehensive profit for the year
Exchange differences on translating foreign subsidiaries
Total comprehensive (loss) / Profit for the year
(Loss) / profit is attributable to
MOQ Limited
Total comprehensive (loss) / profit is attributable to
MOQ Limited
Earnings per share attributable to equity
holders of the parent entity
Basic (loss) / earnings per share (cents per share)
Diluted (loss) / earnings per share (cents per share)
6
7
6
7
7
7
7
7
8
65,185,592
67,870,016
(50,637,538)
(55,337,023)
14,548,054
12,532,993
1,711,541
59,646
6,381
(1,196,773)
(2,910,233)
(8,279,438)
(356,006)
(65,758)
(644,355)
(798,505)
(701,215)
(310,233)
(2,340,726)
(17, 596,861)
(197,566)
(400,378)
(324,234)
(6,357,526)
(101,575)
(50,861)
(559,305)
(1,165,982)
(932,732)
(277,559)
(1,596,308)
(11,964,026)
(1,337,266)
(13,281,938)
(14,619,204)
628,613
-
628,613
(14,619,204)
128,685
(14,490,519)
628,613
1,659,410
2,288,023
(9,215)
(14,499,734)
(54,055)
2,233,968
(14,490,519)
(14,490,519)
2,288,023
2,288,023
(14,490,519)
(14,490,519)
2,288,023
2,288,023
27
27
(8.30)
(8.30)
1.42
1.35
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
022
MOQ ANNUAL REPORTFor personal use only CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
Notes
2020
$
2019
$
Current Assets
Cash and cash equivalents
Trade and other receivables
Contract Assets
Tax Receivable
Other assets
Non Current Assets
Other Assets
Right of use asset
Deferred tax assets
Property plant and equipment
Intangibles
Total assets
Current Liabilities
Trade and other payables
Contract liabilities
Provisions
Lease liability
Current tax payable
Non - Current Liabilities
Lease liability
Deferred tax liability
Provisions
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
9
10
11
8
12
12
26
8
13
14
15
16
17
26
8
26
8
17
18
19
20
4,976,105
7,455,073
135,486
5,659
891,060
13,463,383
937,087
2,274,763
2,897,193
619,562
11,879,765
18,608,370
5,230,606
9,824,238
223,380
81,860
749,317
16,109,401
1,069,524
-
2,055,485
883,354
15,016,255
19,024,618
32,071,753
35,134,019
8,902,545
4,170,625
2,760,795
620,692
21,592
16,476,249
1,737,893
2,943,363
391,645
5,072,901
8,963,037
2,891,056
1,771,733
-
56,019
13,681,845
-
-
159,224
159,224
21,549,150
13,841,069
10,522,603
21,292,950
53,490,057
269,681
(43,237,135)
10,522,603
49,615,752
285,277
(28,608,079)
21,292,950
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
023
MOQ ANNUAL REPORTFor personal use only CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Issued Capital
$
Reserves
$
Accumulated Losses
$
Total Equity
$
Balance as at 1 July 2019
49,615,752
285,277
(28,608,079)
21,292,950
Adjustment for adoption of
AASB16 (note1)
Restated balance as at
1 July 2019
Net profit for the year
Other comprehensive loss
Total comprehensive
income for the year
Transactions with owners
in their capacity as owners
(138,538)
(138,538)
49,615,752
285,277
(28,746,617)
-
(14,490,519)
21,154,412
(14,490,519)
(9,215)
-
(9,215)
(9,215)
(14,490,519)
(14,499,734)
-
-
-
-
Issue of share capital
3,874,305
Option Premium Reserve
-
(6,381)
-
-
-
-
-
-
3,874,305
(6,381)
Balance as at 30 June 2020
53,490,057
269,681
(43,237,136)
10,522,602
Issued Capital
$
Reserves
$
Accumulated Losses
$
Total Equity
$
Balance as at 1 July 2018
49,615,752
141,766
(30,896,102)
18,861,416
Net profit for the year
Other comprehensive loss
Total comprehensive
income for the year
Transactions with owners
in their capacity as owners
Issue of share capital
Option Premium Reserve
Balance as at 30 June 2019
-
-
-
-
-
-
-
2,288,023
(54,055)
-
2,288,023
(54,055)
(54,055)
2,288,023
2,233,968
-
-
197,566
-
-
-
-
-
197,566
49,615,752
285,277
(28,608,079)
21,292,950
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
024
MOQ ANNUAL REPORTFor personal use only CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
Notes
2020
$
2019
$
Cash flow from operating activities
Receipts from customers
Receipts from other income
Payments to suppliers and employees
Interest received
Interest paid
Income taxes received / paid
Net cash provided by operating activities
Cash flow from investing activities
Payment for property plant and equipment
Payments for intellectual property
Payment for deposits
Acquisition of subsidiaries
Payments for other assets
Net cash (used in) investing activities
Cash flow from financing activities
Lease payments for right of use assets
Net cash provided by financing activities
29
13
14
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
9
75,197,872
74,836,667
1,124,138
40,611
(72,447,237)
(71,586,095)
12,403
(19,940)
(311,057)
3,556,179
(109,705 )
(1,002,976)
(37,752)
(1,921,550)
19,035
-
63,063
3,373,281
(353,049)
(858,134)
(126,707)
-
-
(768,523)
(3,071,983)
(2,106,413)
(738,697)
(738,697)
(254,501)
5,230,606
4,976,105
-
-
1,266,868
3,963,738
5,230,606
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
025
MOQ ANNUAL REPORTFor personal use only NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements cover MOQ Limited (“Company or “parent entity”) and its controlled entity as a consolidated
entity (also referred to as “the Group”). MOQ Limited is a company limited by shares, incorporated and domiciled in Australia. The
Group is a for-profit entity and is primarily involved in the information technology industry being the field of software and services.
The separate financial statements of the parent entity, MOQ Limited, have not been presented within this financial report as permitted
by the Corporations Act 2001.
The consolidated financial statements were authorised for issue by the Board of Directors on 27 August 2020.
The following is a summary of the material accounting policies adopted by the consolidated entity in the preparation and presentation
of the financial report. The accounting policies have been consistently applied, unless otherwise stated.
(a) Basis of preparation of the financial report
Going concern basis of preparation
The financial statements have been prepared on the basis of going concern which contemplates continuity of normal business
activities and the realisation of assets and settlement of liabilities in the ordinary course of business. Management continually
maintains sufficient cash and realisable assets to cover all anticipated entity operating costs and liabilities in the normal course
of business, for a period of 12 months or more. This will ensure the entity’s ability to continue as a going concern.
Statement of Compliance
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act, as appropriate for for-
profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board (‘IASB’).
Accounting Standards include Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that
the financial statements and notes of the Company comply with International Financial Reporting Standards (‘IFRS’). It is
recommended that this financial report be read in conjunction with the public announcements made by MOQ Limited during
the year in accordance with the continuous disclosure requirements arising under the Corporations Act 2001.
The financial report has been prepared on the historical cost basis.
When required by accounting standards, comparative figures have been adjusted to conform to changes in presentation for the
current year. When the Company applies an accounting policy retrospectively, makes a retrospective restatement or reclassifies
items in its financial statements, a statement of financial position as at the beginning of the earliest comparative period will be
disclosed.
(b) Business combinations
Business combinations occur where an acquirer obtains control over one or more businesses.
A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or
businesses under common control. The business combination will be accounted for from the date that control is attained,
whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised
(subject to certain limited exemptions).
When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent
consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is
not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset
or liability is remeasured in each reporting period to fair value, recognising any change to fair value in profit or loss, unless the
change in value can be identified as existing at acquisition date.
All transaction costs incurred in relation to business combinations, other than those associated with the issue of a financial
instrument, are recognised as expenses in profit or loss when incurred.
The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.
(c) Goodwill
Goodwill is carried at cost less any accumulated impairment losses. Goodwill is calculated as the excess of the sum of:
-
-
-
the consideration transferred;
any non-controlling interest (determined under either the full goodwill or proportionate interest method); and
the acquisition date fair value of any previously held equity interest over the acquisition date fair value of net identifiable
assets acquired.
The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of
any previously held equity interest shall form the cost of the investment in the separate financial statements.
026
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont)
(c) Goodwill (cont)
Fair value re-measurements in any pre-existing equity holdings are recognised in profit or loss in the period in which they
arise. Where changes in the value of such equity holdings had previously been recognised in other comprehensive income, such
amounts are recycled to profit or loss.
Goodwill on acquisition of subsidiaries is included in intangible assets.
Goodwill is tested for impairment annually and is allocated to the Group’s cash-generating units or groups of cash-generating
units, representing the lowest level at which goodwill is monitored being not larger than an operating segment. Determining
whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has
been allocated. The value in use calculation requires the directors to estimate the future cash flows expected to arise from the
cash-generating unit and a suitable discount rate order to calculate present value. Where the actual future cash flows are less
than expected, a material impairment loss may arise. Further details can be found in note 14.
(d) Critical accounting estimates
The preparation of the financial statements in conformity with IFRS requires the use of accounting estimates. It also requires
management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving higher
degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are
disclosed in Note 2.
(e) Principles of consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (MOQ Limited) and all
of the subsidiaries. Subsidiaries are entities that the parent controls. The parent controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over
the entity. A list of the subsidiaries is provided in in Note 31.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date
on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases.
Intercompany transactions, balances and unrealised gains or losses on transactions between Group entities are fully eliminated
on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure
uniformity of the accounting policies adopted by the Group.
(f) Fair Value of Assets and Liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on
the requirements of the applicable Accounting Standard. Fair value is the price the Group would receive to sell an asset or
would have to pay to transfer a liability in an orderly (i.e. unforced) transaction between independent, knowledgeable and willing
market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair
value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair
values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques.
These valuation techniques maximise, to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. the market
with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous
market available to the entity at the end of the reporting period (i.e. the market that maximises the receipts from the sale of the
asset or minimises the payments made to transfer the liability, after taking into account transaction costs and transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant’s ability to use the asset in its
highest and best use or to sell it to another market participant that would use the asset in its highest and best use.
These valuation techniques maximise, to the extent possible, the use of observable market data. If all significant inputs required
to measure fair value are observable, the asset or liability is included in Level 2. If one or more significant inputs are not based
on observable market data, the asset or liability is included in Level 3.
The Group would change the categorisation within the fair value hierarchy only in the following circumstances:
-
-
if a market that was previously considered active (Level 1) became inactive (Level 2 or Level 3) or vice versa;
if significant inputs that were previously unobservable (Level 3) became observable (Level 2) or vice versa.
When a change in the categorisation occurs, the Group recognises transfers between levels of the fair value hierarchy (i.e.
transfers into and out of each level of the fair value hierarchy) on the date the event or change in circumstances occurred.
027
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont)
(g)
Income tax
The income tax expense/(income) for the year comprises current income tax expense/(income) and deferred tax expense/
(income).
Current income tax expense or revenue for the year is the tax payable on the current period’s taxable income based on the
notional income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to
unused tax losses.
Deferred income tax is provided using the liability method on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using tax rates
that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred
income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases
of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary
differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities offset when there is a legally enforceable right to offset current tax assets and liabilities and
when the deferred tax balances relate to the same taxation authority. Current tax asset and tax liabilities are offset where the
entity has a legally enforceable right to offset and intends to settle on a net basis, or to realise the asset and settle the liability
simultaneously.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.
(h) Tax Consolidation Legislation
The Company and its Australian wholly owned subsidiaries have formed an income tax consolidated group under the tax
consolidation legislation for the whole of the financial year. Each entity in the Group recognises its own current and deferred tax
liabilities, except for any deferred tax liabilities resulting from unused tax losses and tax credits, which are immediately assumed
by the parent entity. The Group notified the Australian tax Office it had formed an income tax consolidated group to apply from
1 June 2015. The tax consolidated group has entered a tax sharing agreement whereby each company in the Group contributes
to the income tax payable in proportion to their contribution to the net profit before tax of the tax consolidated group.
(i) Plant and equipment
Each class of plant and equipment is carried at cost less any applicable accumulated depreciation and any accumulated impairment
losses. Plant and equipment is measured on the cost basis. The carrying amount of plant and equipment is reviewed annually by
directors to ensure it is not in excess of the recoverable amount from those assets.
The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets
employment and subsequent disposal. The expected net cash flows have been discounted to present values in determining
recoverable amounts.
The depreciated amount of all fixed assets including capitalised leased assets is depreciated on a straight line basis over their
useful lives commencing from the time the asset is held ready for use.
The expected useful life of plant and equipment ranges from 3 to 15 years.
The assets’ residual values and useful life are reviewed at the balances date. The asset’s carrying amount is written down
immediately to its recoverable amount if the asset’s carrying amount is greater that its estimated recoverable amount.
Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful
lives of the improvements.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included net in profit
or loss.
Depreciation
The depreciable amount of all fixed assets including buildings and capitalised lease assets, but excluding freehold land, is
depreciated on a straight-line basis over the asset’s useful life to the consolidated group commencing from the time the asset
is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or
the estimated useful lives of the improvements.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Depreciation Rate
Leasehold improvements
Term of lease
Plant and Equipment
33.33- 66.67%
028
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont)
(i) Plant and equipment (cont)
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than
its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are
recognised in profit or loss in the period in which they arise. When revalued assets are sold, amounts included in the revaluation
surplus relating to that asset are transferred to accumulated losses.
(j) Financial instruments
The Group initially recognises financial assets on the trade date at which the Group becomes a party to a contractual provision
of the instrument.
Financial assets are initially measured at cost. If the financial asset is not subsequently measured at fair value through profit
or less, the initial measurement includes transaction costs that are directly attributed to the asset’s acquisition. The Group
subsequently measures financial assets at either amortised costs or fair value.
A financial asset is subsequently measured at amortised cost using the effective interest method and net of any impairment
loss, if:
- The asset is held with an objective to collect cash flows; and
- The contractual terms give rise to cash flows that are solely payments of principal and interest.
Financial assets other than those classified as financial assets measured at amortised costs are subsequently measured at fair
value with all changes in fair value recognised in profit or loss.
All financial liabilities are recognised initially on the trade date at which the Group becomes a party to the contractual provisions
of the instrument. Non derivative financial liabilities are recognised at amortised cost, comprising original debt less principal
payment and amortisation.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire. Financial assets
and financial liabilities are offset when the Group has a legal right to offset the amounts and intends either to settle on a net
basis or to realise the assets and settle the liability simultaneously.
(k)
Impairment of financial assets
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there
is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that
one or more events have occurred after the initial recognition of the asset and that the loss event has a negative effect on the
estimated future cash flows of that assets which can be estimated reliably.
The Group considers evidence of impairment for receivables at both a specific and collective level. All individually significant
receivables found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but
not yet identified.
(l)
Impairment of non-financial assets
Intangible assets are tested annually for impairment or more frequently if changes in circumstances indicate that they might be
impaired.
At each reporting date the Group assesses whether there is any indication that individual assets are impaired. Where impairment
indicators exist, recoverable amount is determined and impairment losses are recognised in profit or loss where the asset’s
carrying value exceeds its recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs to sell and
value in use.
For the purpose of assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current marked assessment of the time value of money and the risks specific to the asset.
(m) Intangible assets
Customer contracts acquired as part of a business combination are recognised separately from goodwill. The customer
contracts are carried at fair value at the date of acquisition less accumulated amortisation and impairment losses. Fair value is
assessed based on the income streams generated from customer contracts after allowing for cost specific to the generation of
those income streams. In the assessment of the carrying value of the intangible assets costs not related to the generation of the
contract related income streams were excluded. These intangibles are separate from the business to which they relate and have
been assessed on this basis. Amortisation is calculated based on the timing of projected cash flows of the contracts over their
estimated useful lives, which at present are 3 years to 8 years.
Software acquired as part of a business combination is recognised separately from goodwill. The software is carried at fair value
at the date of acquisition less accumulated amortisation and impairment losses. Amortisation is calculated based on the timing
of projected cash flows of the contracts over their estimated useful lives, which at present are 3 years.
029
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont)
(m) Intangible assets (cont)
Software created internally is carried at fair value less accumulated amortisation and impairment losses. Amortisation is
calculated based on the timing of projected cash flows over their estimated useful lives, which at present are 5 years.
(n) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options
are recognised as a deduction from equity, net of any tax.
If the entity reacquires its own equity instruments, those instruments are deducted from equity and the associated shares are
cancelled. No gain or loss is recognised in the profit or loss and the consideration paid including any directly attributable costs
net of any taxes is recognised directly in equity.
(o) Foreign currency transactions and balances
The functional currency of each entity in the consolidated entity is measured using the currency of the primary economic
environment in which that consolidated entity operates. The consolidated financial statements are presented in Australian
dollars which is the consolidated entity’s functional and presentation currency.
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated using the spot rate at the end of the financial year. Non monetary
items measured at historical cost continue to be carried at the date of the transaction. Non monetary items measured at fair
value are reported at the exchange rate at the date when the fair values were determined. Material exchange differences arising
on the translation of monetary items are recognised in profit or loss except where deferred in equity as a qualifying cash flow
or net investment hedge. Material exchange differences arising on the translation of non monetary items are recognised in
equity to the extent that the gain or loss is directly recognised in equity otherwise the exchange is recognised in profit or loss.
(p) Employee benefits
Wages and salaries and annual leave
Liabilities for wages and salaries, and annual leave, including non monetary benefits, expected to be settled within 12 months of
the reporting date are recognised in other payables, in respect of employees’ services up to the reporting date and are measured
at the amounts expected to be paid when the liabilities are settled, on an undiscounted basis.
Long service leave
The liability for long service leave and annual leave which is not expected to be settled within 12 months of the reporting date
are recognised in the provision for employee benefits and measured as the present value of expected future payments to be
made for services provided by employees up to the reporting date.
Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.
Expected future payments are discounted using market yields at the reporting date on national government bonds with terms
to maturity and currency that match as closely as possible the estimated future cash outflows.
Termination benefits
Termination benefits are payable when employments are terminated before the normal retirement date, or when the employee
accepts voluntary redundancy in exchange for these benefits.
The Group recognises termination benefits when it is demonstrably committed to either terminating the employment of
current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a
result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after reporting date are
discounted to present value.
(q) Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present
obligation at the Statement of Financial Position date. The discount rate used to determine the present value reflects current
market assessments of the time value of money and the risks specific to the liability.
(r) Cash and cash equivalents
Cash and cash equivalents include cash on hand and at banks, deposits held on call with banks, other short term highly liquid
investments with an original maturity date of three months or less held and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities in Statement of Financial Position.
030
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont)
(s) Revenue
Revenue is measured at the fair value of the consideration received or receivable.
The group has identified the following main categories by segment:
•
•
•
Technology – sale of ICT hardware, software and licensing
Professional Services – Infrastructure, Cloud, Data & Analytics, Consulting Professional Services and SkoolBag application
set up, web hosting and online marketing services.
Recurring Services – Managed Services, SkoolBag Mobile App services.
(i)
Rendering of Recurring Services – Recurring Services – Managed Services
Managed Services & Mobile App revenues primarily derives from provision of IT infrastructure, cloud, data and analytics
service desk and outsourced IT services. Where consideration is received in advance of performance, it is initially recorded
as deferred revenue. Revenue is recognised as the performance obligations are satisfied which is considered to be evenly
over the contracted term.
(ii)
Rendering of Services – Professional Services
Revenue from professional services for Infrastructure, Cloud, Data & Analytics and Consulting are recognised over time
either by reference to the stage of completion of the contracts, or by the labour hours incurred to date if provided
for contractually. Stage of completion is measured by reference to labour hours incurred to date as a percentage of
total estimated labour hours for each contract. Where the outcome cannot be reasonably measured, revenue is only
recognised to the extent of the recoverable costs incurred to date of the performance obligation.
(iii)
Rendering of Services – SkoolBag application set up
Application set up revenues consist of fees charged for the setting up of the mobile application for customers. Where the
Group has an enforceable right to payment for performance completed and no alternative use for the asset, it recognises
revenue at the point of completion of the set up when the performance obligations have been satisfied, as per AASB 15.
(iv)
Rendering of Services – SkoolBag web hosting
Hosting revenue primarily derives from website hosting services. Where consideration is received in advance of
performance, it is initially recorded as deferred revenue. Revenue is recognised as the performance obligations are
satisfied which is considered to be evenly over the contracted term.
(v)
Rendering of Services – SkoolBag Online marketing
Online marketing revenue consists of rebates received from advertisers for successful customer sign-ups to advertiser
services. Revenue is recognised at the point where advertisers confirm the rebates have been earned.
(vi)
Technology Sales and Transaction prices
The Group’s customer contracts may include multiple performance obligations. In these cases the Group allocates the
transaction price to each performance obligation based on the relative standalone selling prices of each distinct service.
Standalone selling prices are determined based on prices charged to customers for individual products and services taking
into consideration the size and length of contracts, service rate cards and the Group’s overall go to market strategy.
(vii)
Principal versus agent considerations
The Group acts as an agent for vendors of Cloud Services and recommends such services to customers where appropriate.
Where consumption of such services meet certain criteria set by the vendor, the Group may be entitled to rebates. Such
rebates are recognised in arrears upon confirmation by the vendors of the rebates earned.
(viii) Customer acquisition costs
Incremental costs of obtaining a contract with a customer are capitalised when expected to be recovered under the
contract.
Where costs are incurred in transitioning a Managed Services contract, such costs are capitalised and amortised over
the expected period of benefit. AASB 15 allows entities to immediately expense costs which would have been amortised
within a year or less and for such situations the Group recognises the incremental costs of obtaining contracts as an
expense when incurred.
All revenue is stated net of the amount of goods and services tax (GST).
031
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont)
(t) New and revised accounting requirements applicable to the FY20 period
AASB 16: Leases
AASB 16 ‘Leases’ (modified retrospective approach)
The Group has adopted AASB 16 from 1 July 2019. The standard replaced AASB 117 ‘Leases’ and for lessees eliminated the
classifications of operating leases and finance leases. Except for short term leases and leases of low value assets, right of use
assets and corresponding lease liabilities are recognised in the statement of financial position, Straight line operating lease
expense recognition is replaced with a depreciation charge for the right of use assets (included in operating costs) and an
interest expense on the recognised lease liabilities (included in finance costs). In the earlier periods of the lease, the expenses
associated with the lease under AASB 16 will be higher when compared to the lease expenses under AASB 117. However,
EBITDA (Earnings Before Interest Tax Depreciation and Amortisation) results improve as the operating expense is now replaced
by interest expense and depreciation in profit and loss. For classification within the statement of cashflows, the interest portion
is disclosed in operating activities and the principal portion of the lease payments are separately disclosed in financing activities.
Lease liabilities have been brought to account as the present value of the remaining lease payments, discounted using the
Group’s incremental borrowing rates as at 1 July 2019. The discount rates applied range between 4.1% and 12%.
Impact of adoption
AASB 16 is adopted using the modified retrospective approach and as such comparatives have not been restated. The impact of
adoption on opening accumulated losses as at 1 July 2019 was as follows:
Operating lease commitments as at 1 July 2019 (AASB 117)
Accumulated depreciation as at 1 July 2019 (AASB 16)
Lease Liability – Current (AASB 16)
Lease Liability – Non Current (ASSB 16)
Provision for makegood
Tax effect of deferred tax asset and liability
Increase in operating accumulated losses as at 1 July 2019
Right of use assets
July 2019
$’000
3,306
(575)
(743)
(2,016)
(120)
10
(138)
A right of use asset is recognised at the commencement date of the lease. The right of use asset is measured at cost, which comprises
the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net
of any lease incentives received, any initial direct costs incurred, an estimate of costs expected to be incurred for dismantling and
removing the underlying asset, and restoring the site or asset.
Right of use assets are depreciated on a straight line basis over the unexpired period of the lease or the estimated useful life of
the asset, whichever is shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term, the
depreciation is over the estimated useful life. Right of use assets are subject to impairment or adjusted remeasurement of lease
liabilities.
Lease liabilities
A lease liability is recognised at the commencement date of the lease. The lease liability is initially recognised at the present value of
the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if the rate cannot
be readily determined, the Group’s incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentive
receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual guarantees, exercise
price of a purchase option where the exercise of the option is reasonably certain to occur, and any anticipated termination penalties.
The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a
change in the following: future lease payments arising from a change in an index or rate used; residual; guarantee; lease term; certainty
of a purchase option and termination penalties. When a lease lability is remeasured, an adjustment is made to the corresponding right
of use asset, or the profit or loss if the carrying amount of the right of use asset is fully written down.
032
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont)
(t) New and revised accounting requirements applicable to the FY20 period (cont)
Short term leases and leases of low value
The Group applies the low-value assets recognition exemption to leases of office equipment that are considered of low value ($10,000
or less). Lease payments on short term leases and leases of low value assets are recognised as expense on a straight-line basis over
the lease term).
The Group currently has a number of short-term leases which are being expensed directly to the profit and loss, on a straight line
basis over the lease term.
(u) Finance costs
Finance costs are expenses in the period in which they are incurred and reported in the profit and loss.
(v) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit or loss attributable to ordinary shareholders of the Group by the
weighted average number of ordinary shares outstanding during the year, adjusted for bonus elements in ordinary shares issued
during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Potential ordinary shares are anti-dilutive when their conversion to ordinary shares would increase earnings per share or
decrease loss per share from continuing operations.
(w) Trade and other receivables
The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and
records the loss allowance at the amount equal to the expected lifetime credit losses. In using this practical expedient, the
Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit
losses using a provision matrix.
The Group assess impairment of trade receivables on a collective basis as they possess credit risk characteristics based on the
days past due. The Group writes off fully any amounts that are more than 90 days past due.
The amount of the impairment loss is recognised in profit or loss within other expenses. When a trade receivable for which an
impairment allowance had been recognised becomes uncollectable in a subsequent period, it is written off against the allowance
account. Subsequent recoveries of amounts previously written off are credited against other expenses in profit or loss.
(x) Contract Assets
Contract assets is stated as the aggregate of costs incurred to date plus recognised profits less recognised losses and progress
billings. Cost includes all costs directly related to specific contracts, and an allocation of overhead costs attributable to contract
activity in general.
Project revenue has been recognised on the basis of the terms of the contract adjusted for any variations or claims allowable
under the contract. Any credit balance in contract assets is reclassified as income in advance. Where losses are anticipated they
are provided for in full.
When the outcome of the project cannot be estimated reliably, revenue is only recognised to the extent that the costs incurred
are recoverable.
(y) Trade and other payables
Trade and other payables represent the principal amounts outstanding at balance date, plus, where applicable, any accrued
interest. These amounts are unsecured and are usually settled within 30 days of recognition.
(z) Operating segments
The Company has identified its operating segments based on internal reports that are reviewed and used by the Board of
Directors (chief operating decision makers) to make financial and operational decisions and to allocate resources. We attribute
sales to an operating segment based on the type of product or service provided to the customer.
We have identified three reportable segments, as follows:
-
-
Technology Sales – provision of vendor hardware, software and associated licenses and maintenance contracts;
Professional Services – provision of a range of specialist services including consulting, project management, infrastructure,
cloud and data analytics services to assist clients with strategy, architecture, design, development and implementation of
ICT solutions; and
033
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont)
(z) Operating segments (cont)
-
Recurring Services – a combination of managed services including operations, support and ICT management, as well as a
range of in-house developed commercialised IP and Cloud (SAAS) based solutions.
The consolidated entity primarily services clients in one geographical segment being Australia, with support from Australia, Sri
Lanka and New Zealand. However, there are no material revenues generated outside of Australia, and as a result no additional
geographical segment information has been provided.
(aa) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not
recoverable from the Australian Taxation Office (ATO).
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable
from, or payable to, the ATO is included with other receivables or payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to, the ATO are presented as operating cash flows included in receipts from customers
or payments to suppliers.
(bb) New Accounting Standards for Application in Future Periods
The Group will assess the Accounting Standards and Interpretations issued by the AASB that are not yet mandatorily applicable
to the Group, together with an assessment of the potential impact of such pronouncements on the Group when adopted in
future periods. For the FY20 year there are no new accounting standards to assess.
At the date of authorisation of the financial statements, the Standards and Interpretations listed below were in issue but not yet
effective. The impact of some of these standards has not been assessed yet.
Standard / Implementation
AASB 2018-6 Amendments to Australian Accounting Standards -
Definition of a Business
AASB 2018-7 Amendments to Australian Accounting Standards –
Definition of Material
AASB 2019-1 Amendments to Australian Accounting Standards –
References to the Conceptual Framework
AASB 2020-1 Amendments to Australian Accounting Standards –
Classification of Liabilities as Current or Non-Current
AASB 2020-3 Amendments to Australian Accounting Standards –
Annual Improvements 2018-2020 and Other Amendments
AASB 2020-4 Amendments to Australian Accounting Standards –
Covid-19-Related Rent Concessions
Effective for annual
reporting period
beginning on or after
Expected to be initially
applied in the financial
year ending
1 January 2020
30 June 2021
1 January 2020
30 June 2021
1 January 2020
30 June 2021
1 January 2020
30 June 2021
1 January 2020
30 June 2021
1 January 2020
30 June 2021
(cc ) Government Grants
Government grants are recognised when there is reasonable certainty that the grant will be received and all grant conditions
are met. Grants relating to expense items are recognised as income over the periods necessary to match the grant to the costs
they are compensating.
Government grants include amounts received or receivables under the Federal Governments’ Jobkeeper Payment Scheme and
Cash Flow Boost Scheme, which provide temporary subsidies to eligible businesses significantly affected by COVID 19.The
company has booked these payments in Other Income.
The Directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best
available current information. Estimates assumed a reasonable expectation of future events and are based on current trends and
economic data, obtained both externally and within the Company.
034
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only NOTE 2: CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Key Estimates
Impairment of Non-Current Assets
The Company assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to an
impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations
performed in assessing recoverable amounts incorporate a number of key estimates.
Expected Credit Losses
The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of provision is
assessed by taking into account the recent sales experience, historical collection rates and specific knowledge of the individual
debtors’ financial position.
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which goodwill
has been allocated. The value in use calculation requires the directors to estimate the future cash flows expected to arise from the
cash-generating unit and a suitable discount rate in order to calculate present value. Where the actual future cash flows are less than
expected, a material impairment loss may arise.
Taxation
The Group’s accounting policy for taxation requires management’s judgment in assessing whether deferred tax assets and deferred
tax liabilities are recognized in the Statement of Financial Position. Deferred tax assets, including those arising from un-recouped tax
losses and temporary differences are recognized only where it is considered more likely than not that they will be recovered, which
is dependent upon the generation of sufficient future taxable profits.
Assumptions about the generation of future profits depend upon management’s estimates of future profitability and cash flows. These
depend upon estimates of future income, operating costs, capital expenditure, dividends and other capital management transactions.
Judgments and assumptions are also required in relation to the application of income tax legislation. These judgments and assumptions
are subject to risk and uncertainty. Therefore there is a possibility that changes in circumstances will alter expectations, which
may impact the amount of deferred tax assets and deferred tax liabilities recognized in the Statement of Financial Position and the
amount of tax losses and temporary differences not yet recognized. In such circumstances, some or all of the carrying amounts of
recognized deferred tax assets and liabilities may require adjustment, resulting in a correction to the Statement of Profit or Loss and
Comprehensive Income.
Share-based payments
The fair value of options issued under the MOQ Limited Employee Incentive Plan is measured by reference to the fair value of options
granted. The fair value estimate is based on the Black Scholes option-pricing model. The contractual life of the options is used as an
input into the model. Further information regarding assumptions is included in Note 30.
Provision for Wardy IT Solutions earn-out
Determining the provision for earn-out requires management’s judgement, supplemented by experience of similar transactions and
advice from experts. The best estimate provision has been arrived at by applying these principles and with the available information
at hand.
NOTE 3: FINANCIAL RISK MANAGEMENT
Recoverability of Contract Assets
The Company assesses contract assets on a monthly basis to determine whether the amounts accrued are recoverable to the Group
when billed to customers. At the reporting date, the directors believe that the carrying value of contract assets is recoverable in full.
Valuation of Provisions
The Company has assessed the value of provisions at the reporting date in line with the accounting policy at Note 1(q).
Risk management is the role and responsibility of the board. The Group’s current activities expose it to minimal risk. However, as
activities increase there may be exposure to credit, liquidity, foreign currency and interest rate risks.
Determination of Intangible Property Acquired
The company has assessed the value of intangible property acquired from the acquisition of Skoolbag, Tetran and Wardy IT Solutions
using management’s judgement in determining the fair values of the property acquired.
035
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only NOTE 3: FINANCIAL RISK MANAGEMENT (cont)
(a) Credit Risk
The Group has no significant concentrations of credit risk. As there are no other major concentration of debtors, no sensitivity
analysis has been prepared by the Group. The ageing of the Group’s trade and other receivables net of expected credit losses
at the reporting date is:
Current
30 - 60 days
60 - 90 days
More than 90 days
2020
$
6,106,602
667,815
269,222
411,434
7,455,073
2019
$
6,301,563
1,700,488
539,351
1,282,836
9,824,238
The directors believe that the above stated balances are fully recoverable.
(b) Liquidity
Prudent liquidity risk management implies maintaining sufficient cash to meet commitments as and when they fall due. The Group
manages liquidity risk by preparing forecasts and monitoring actual cash flows and requirements for future capital raisings. The
Group has a committed credit line available, which is appropriate given the nature of its operations. Surplus funds are invested
in a cash management account with Westpac Banking Corporation, St George and HSBC which is available as required.
The material liquidity risk for the Group is the ability to raise equity or access debt finance as required in the future.
(c)
Interest rate risk
The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of
changes in market rates and the effective weighted average interest rates on classes of financial assets and financial liabilities, is:
Floating
Interest Rate
$
1 year or less
Fixed Interest
Rate
$
Non Interest
Bearing
$
Over 1 to 5
years
Non Interest
Bearing
$
Total
$
30 June 2020
Financial assets
Cash and deposits
Current receivables
Right of use asset
Other assets
Weighted average interest rate
Financial liabilities
Trade and other payables
Lease liability
Borrowings
Tax Payable
Weighted average interest rate
Net financial assets
1,290,188
-
-
-
1,290,188
0%
-
-
-
-
-
Nil
1,290,188
-
-
-
-
-
-
-
-
-
-
-
3,685,917
7,455,073
2,274,763
35,816
13,451,569
-
-
-
583,866
583,866
4,976,105
7,455,073
2,274,763
619,682
15,325,623
(8,902,545)
(620,692)
-
(21,592)
(9,544,829)
-
(1,737,893)
-
(1,737,893)
(8,902,545)
(2,358,585)
-
(21,592)
(11,282,722)
3, 906,740
(1,154,027)
4,042,901
The directors do not consider the results of the Group to be subject to significant sensitivity arising from interest rate risks.
036
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only NOTE 3: FINANCIAL RISK MANAGEMENT (cont)
Floating
Interest Rate
$
1 year or less
Fixed Interest
Rate
$
Non Interest
Bearing
$
Over 1 to 5
years
Non Interest
Bearing
$
Total
$
30 June 2019
Financial assets
Cash and deposits
Current receivables
Right of use asset
Other assets
Weighted average interest rate
Financial liabilities
Trade and other payables
Lease liability
Borrowings
Tax Payable
Weighted average interest rate
Net financial assets
(d) Foreign currency risk
265,539
-
-
-
265,539
0%
-
-
-
-
-
Nil
265,539
-
-
-
-
-
-
-
-
-
-
-
4,965,067
9,824,238
-
112,017
14,901,322
(8,963,037)
-
-
(56,019)
(9,019,056)
-
-
-
545,991
545,991
5,230,606
9,824,238
-
658,008
15,712,852
-
-
-
-
(8,963,037)
-
-
(56,019)
(9,019,056)
5,882,266
545,991
6,693,796
The Group has subsidiaries in Sri Lanka and New Zealand, which serves primarily as service and support centres. As all
intercompany loans are repayable in AUD$, the group is not materially exposed to foreign currency risk and as such, no
sensitivity analysis has been made by the Group.
(e) Fair value hierarchy
The Group has not disclosed the fair values for financial instruments such as short-term trade receivables and payables because
their carrying amounts are a reasonable approximation of their fair values.
NOTE 4: SEGMENT INFORMATION
The segment information provided to the Board of directors, for the reportable segments* is as follows:
30 June 2020
Recurring
Services
$
Professional
Services
$
Technology
Sales
$
Unallocated
$
Total
$
Revenue from external customers
Other income
20,094,559
-
21,442,198
-
23,648,835
-
-
1,711,541
65,185,592
1,711,541
Total Reportable Segment results
7,214,930
3,408,049
3,925,075
(29,167,258)
(14,619,204)
Total segment assets
Total segment liabilities
30 June 2019
-
-
-
-
-
-
32,071,753
32,071,753
21,549,150
21,549,150
Revenue from external customers
Other income
13,545,139
-
17,792,941
-
36,531,936
-
-
59,646
67,870,016
59,646
Total Reportable Segment results
3,303,917
3,071,620
6,157,456
(11,904,380)
628,613
Total segment assets
Total segment liabilities
-
-
-
-
-
-
35,134,019
35,134,019
13,841,069
13,841,069
*please refer to Note 1(s) for a description of each of the Reportable Segments.
037
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only NOTE 5: PARENT ENTITY DETAILS
Summarised presentation of the parent entity, MOQ Limited:
(a) Summarised statement of financial position
Assets
Current assets
Non current assets
Total assets
Liabilities
Current liabilities
Non current liabilities
Total liabilities
Net assets
Equity
Share Capital
Reserves
Accumulated losses
Total equity
(b) Summarised statement of comprehensive income
Profit / (Loss) for the year after tax
Total comprehensive income / (loss) for the year
(c) Guarantees entered into by the parent
The parent has not entered into any guarantees other than disclosed in this report.
(d) Contingent liabilities of the parent
The parent is not aware of any contingent liabilities other than disclosed in this report.
(e) Commitments of the parent
The parent does not have any commitments other than disclosed in this report.
NOTE 6: REVENUE AND OTHER INCOME
(a) Revenue from operations
(b) Other income
Interest received
Other income
Government Grants1
2020
$
2019
$
201,741
10,703,252
10,904,993
(2,824,537)
(1,381,295)
(4,205,832)
6,699,160
320,373
19,905,394
20,225,767
(95,028)
(1,375,813)
(1,470,841)
18,754,926
53,490,057
49,615,752
472,230
478,611
(47,263,127)
(31,339,437)
6,699,160
18,754,926
(15,923,690)
(15,923,690)
757,847
757,847
2020
$
2019
$
65,185,592
67,870,016
12,403
(2,362)
1,701,500
1,711,541
19,035
40,611
-
59,646
Total revenue and other income
66,897,133
67,929,662
1Government grants include Jobkeeper subsidy and Cashflow Boost.
038
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only NOTE 7: OPERATING PROFIT
Profit before income tax includes the following expenses:
(a) Cost of sales
Technology
Recurring services
Professional services
(b) Depreciation – office equipment, software and right of use asset
Amortisation – intangible assets
(c) Employee benefits, other labour and related expenses
Wages and salaries
Superannuation
Other employee benefits expenses
(d) Legal costs
(e) Professional fees
Consultants fees1
Compliance fees
Other Fees
2020
$
2019
$
19,723,760
12,879,629
18,034,149
50,637,538
1,196,773
2,910,233
4,107,006
6,363,534
591,532
1,324,372
8,279,438
30,374,480
10,241,222
14,721,321
55,337,023
400,378
324,234
724,612
4,682,355
352,569
1,322,602
6,357,526
356,006
101,575
468,821
223,526
8,868
701,215
757,699
162,967
12,066
932,732
1 FY 19 Includes $349,462 tax advisory costs for recovery of historical deferred tax asset of $1,647,442 by way of a Private Ruling from the Australian Tax Office
NOTE 8: INCOME TAX
(a) The components of tax benefit / (expense) comprise:
Current tax
Deferred tax
(b) Numerical Reconciliation of Income Tax Expense to Prima Facie Tax Payable
(Loss) / Profit before income tax expense
Income tax calculated at 30% (2019: 30%)
Tax rate differential
Other expenditure not allowed for income tax purposes
Foreign exchange differences
Over Provision in respect of prior years
Other income for income tax purposes
Temporary income tax differences
Tax effect of tax losses able to be utilised due to private tax ruling
Income tax (expense) / benefit
The applicable weighted average effective tax rates are as follows:
2020
$
2019
$
(165,447)
294,132
264,292
1,395,118
128,685
1,659,410
(14,619,204)
4,385,761
(30,465)
(4,151,580)
-
(18,722)
(16)
(389,334)
333,041
(128,685)
0.88%
628,613
(188,584)
7,727
8,435
-
142,022
42,368
111,961
1,535,481
1,659,410
263.98%
039
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only NOTE 8: INCOME TAX (continued)
(c) Tax effects relating to other comprehensive income
There is no tax effect relating to components of other comprehensive income.
(d) Unrecognised Tax losses
Potential tax benefit at 30% (2019: 30%)
(e) Current tax payable / recoverable
Current tax payable is $21,592, relating to income tax for MOQdigital NZ Limited
Current tax receivable for the group is $5,659 for MOQ Limited.
(f) Recognised deferred tax assets and liabilities
Deferred income tax balances at 30 June 2020 relate to the following:
(i) Deferred tax liabilities
Right of use asset
Contract assets
Acquired customer contracts
Deferred Tax Liabilities
(ii) Deferred tax assets
Provisions
M&A costs
Contract liabilities
Other Assets
Employee obligations
Other
Lease liabilities
Tax losses*
Deferred Tax Assets
2020
$
2019
$
-
-
(604,826)
(64,927)
(2,273,610)
(2,943,363)
610,356
245,304
675,245
-
757,150
-
609,138
-
2,897,193
-
-
-
-
519,191
41,953
360,662
208,153
537,761
54,724
-
333,041
2,055,485
* A private ruling was lodged on 5 February 2019 (after finalisation of the 2018 financial statements but before lodgement of the
2018 Income Tax Return) applying for modification of the continuity of ownership test for tax losses related to the entity prior to
reconstruction that were initially treated as lost in accordance with the continuity of business rules under the Australian Taxation
legislation. On 11 April 2019, the Australian Taxation Office ruled in favour of MOQ and tax returns were amended to ensure use
of the losses. The amendments resulted in additional tax losses of $5,118,269 being recognised.
(g) Tax consolidation
For the purposes of income taxation MOQ Limited and its 100% Australian owned subsidiaries form a tax consolidated group.
The head entity of the consolidated group is MOQ Limited.
The head entity is responsible for the liabilities of the group. Intra group transactions are ignored for tax purposes and there is a
single return lodged on behalf of the group.
040
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only NOTE 9: CASH AND CASH EQUIVALENTS
Cash at bank
NOTE 10: TRADE AND OTHER RECEIVABLES
Trade receivables
Expected credit losses
Other receivables*
2020
$
2019
$
4,976,105
5,230,606
4,976,105
5,230,606
2020
$
2019
$
7,496,498
10,172,536
(596,525)
(386,386)
555,100
38,088
7,455,073
9,824,238
* Other receivables at 30th June 2020 includes a $525,000 Job Keeper receivable outstanding from the Australian Tax Office for 30 June 2020 wages only.
Management believes that any debts that have not provided for and are past due by more than 30 days are still collectible in full based
on historic payment behaviour. The amounts that are past due but not impaired are $751,946 at 30 June 2020.
Please refer to Note 3(a) for a further breakdown of the ageing of receivable amounts.
NOTE 11: CONTRACT ASSETS
Contract assets
NOTE 12: OTHER ASSETS
(a) OTHER ASSETS - CURRENT
Deposits
Prepayments
Other
(a) OTHER ASSETS – NON-CURRENT
Deposits
Other
2020
$
135,486
135,486
2019
$
223,380
223,380
2020
$
2019
$
39,401
681,347
170,312
891,060
583,159
353,928
937,087
30,157
548,848
170,312
749,317
545,407
524,117
1,069,524
041
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only NOTE 13: PROPERTY, PLANT AND EQUIPMENT
At 30 June 2020
Cost
Accumulated depreciation
At 30 June 2019
Cost
Accumulated depreciation
Leasehold
Improvements
$
Office
Equipment &
Software
$
862,984
(602,450)
260,534
865,145
(420,327)
444,818
1,213,100
(854,072)
359,028
1,367,503
(928,967)
438,536
Reconciliation of carrying amounts at the beginning and end of the year:
Total
$
2,076,084
(1,456,522)
619,562
2,232,648
(1,349,294)
883,354
Total
$
883,354
203,902
(14,539)
Leasehold
Improvements
$
Plant and
Equipment
$
444,818
-
-
438,536
203,902
(14,539)
(182,337)
(263,870)
(446,207)
(1,947)
260,534
(5,001)
359,028
(6,947)
619,563
At 1 July 2019
Additions1
Disposals
Depreciation
Foreign currency translation differences
At 30 June 2020
1$94,197 plant and equipment asset were acquired on 1st September 2019 as part of the acquisition of Wardy IT Solutions.
At 1 July 2018
Additions
Disposals
Depreciation
Foreign currency translation differences
At 30 June 2019
482,399
116,752
-
410,000
282,625
(11,584)
892,399
399,377
(11,584)
(154,333)
(246,045)
(400,378)
-
444,818
3,540
438,536
3,540
883,354
042
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only NOTE 14: INTANGIBLE ASSETS
Goodwill on acquisition of TETRAN Group
Goodwill on acquisition of Skoolbag
Goodwill on acquisition of Wardy IT Solutions
Intangible Property Acquired Skoolbag
Intangible Property – Skoolbag software development -cost
Intangible Property – Skoolbag software development – accumulated depreciation
Intangible Property - Wardy IT Solutions acquired customers
Intangible Property - Wardy IT Solutions acquired customers – accumulated depreciation
Intangible Property - Wardy IT Solutions acquired website
Intangible Property - Wardy IT Solutions acquired website – accumulated depreciation
Intangible Property - Wardy IT Solutions acquired intangible
Intangible Property - Wardy IT Solutions acquired intangible – accumulated depreciation
Reconciliation of carrying amounts at the beginning and end of the year:
2020
$
2019
$
-
-
9,339,308
3,942,630
1,500,798
-
339,153
488,196
1,839,951
13,770,134
2,444,851
1,441,875
(484,465)
(195,754)
1,960,386
1,246,121
9,946,906
(2,368,311)
5,000
(4,167)
600,000
(100,000)
8,079,428
-
-
-
-
-
-
-
11,879,765
15,016,255
Skoolbag software
development
$
Wardy IT Solutions
Intangible
$
At 1 July 2019
Additions1
Disposals
Amortisation
At 30 June 2020
1$10,551,906 intangible assets were acquired on 1st September 2019 as part of the acquisition of Wardy IT Solutions.
At 1 July 2018
Additions
Disposals
Amortisation
At 30 June 2019
1,246,121
1,002,976
-
(288,711)
1,960,386
563,178
858,134
-
(175,191)
1,246,121
-
10,551,906
-
(2,472,478)
8,079,428
-
-
-
-
-
043
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only NOTE 14: INTANGIBLE ASSETS (continued)
Impairment Testing:
Due to the uncertainty around the impact of the COVID-19 pandemic, a decision was taken to fully impair the TETRAN and Skoolbag
goodwill of $13,281,938. Goodwill arising from a business combination is allocated to CGUs (cash generating units) or groups that
are expected to benefit from the synergies of the combination. Accordingly, Wardy IT Solutions’ CGU has been combined with certain
MOQdigital income. For the purposes of impairment testing, goodwill and acquired customer relationships (which is being amortised
over 3.5 years) has been allocated to MOQ’s CGUs as follows. The goodwill amount for Wardy IT Solutions is $1,500,798 which is
being split evenly across Professional Services and Managed Services:
Skoolbag*
Wardy IT Solutions – Professional Services
Wardy IT Solutions – Managed Services
2020
$
2019
$
2,299,539
1,734,317
4,039,714
4,039,714
10,378,967
1,734,317
*The Skoolbag 2019 CGU amount is entirely related to the software development and the acquired customer relationships.
The recoverable amounts were based on fair values estimated using discounted cash flows.
The key assumptions used in the estimation of the recoverable amount are set out below. The values assigned to the key assumptions
represents management’s assessment of future trends in the ICT industry and have been based on data from both external and internal
sources.
Skoolbag
Discount rate
Terminal Value Growth Rate
Wardy IT Solutions
Discount rate
Terminal Value Growth Rate
2020
11%
2.5%
2020
11%
2.5%
The discount rate was a post-tax measure estimated based on a conservative mix of historical weighted average cost of capital and
debt.
The cashflow projections included specific estimates for 3 years for Wardy IT Solutions and 3 years for Skoolbag. The basis of
estimation of the three-year cash flows uses the following key operating assumptions:
- Three year budgeted EBITDA is based on management’s forecasts of revenue from its operating segments. Revenue forecasts take
into account historical revenue and consider external factors such as market sector.
- Costs are calculated taking into account historical margins, known increases, the impact of COVID-19 and estimated inflation rates
over the period.
The estimated recoverable amount of the CGUs exceeded their carrying amounts by $9.8 million for Wardy IT Solutions – Professional
Services, $19.1m for Wardy IT Solutions – Managed Services and $7.1m for Skoolbag . Management recognises that actual results
(EBITDA) may vary to what has been estimated. Management has identified that a possible change in either of two key assumptions
could cause the carrying amount to exceed the recoverable amount. The following table shows the amount by which these two
assumptions would need to change individually for the estimated recoverable amount to be equal to the carrying amount.
Wardy IT Solutions -
Managed Services
2020
Wardy IT Solutions -
Professional Services
2020
Discount Rate
Average Budgeted EBITDA growth rate
39%
30%
25%
13%
Skoolbag
2020
40%
(14%)
044
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only NOTE 15: TRADE AND OTHER PAYABLES
Trade creditors
Other payables and accrued expenses*
2020
$
2019
$
3,680,400
7,020,552
5,222,145
1,942,485
8,902,545
8,963,037
* Included in other payables is an amount of $2,612,306 provided for in respect of the Wardy earn-out. Please refer to Note 31 for more details.
There are no trade and other payables that are considered past due.
NOTE 16: CONTRACT LIABILITIES
CURRENT
Contract liabilities – subscription, consulting and licenses
NOTE 17: PROVISIONS
CURRENT
Employee entitlements
- Provision for Annual Leave
- Provision for Long Service Leave
NON-CURRENT
Employee entitlements
- Provision for Long Service Leave
- Provision for Makegood
2020
$
2019
$
4,170,625
4,170,625
2,891,056
2,891,056
2019
$
2018
$
1,643,389
1,013,140
1,117,406
758,593
2,760,795
1,771,733
221,645
170,000
391,645
159,224
-
159,224
Employee provisions includes the total amount accrued for annual leave entitlements and the amounts accrued for long service leave
entitlements that have vested due to employees having completed the required period of service. Based on past experience, the
company does not expect the full amount of annual leave or long service leave balances classified as current liabilities to be settled
within the next 12 months. However, these amounts must be classified as current liabilities since the company does not have an
unconditional right to defer the settlement of these amounts in the event employees wish to use their leave entitlement.
045
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only NOTE 18: SHARE CAPITAL
(a) Details of share issues
2020
2019
No. Of Shares
Share Value $
No. Of Shares
Share Value $
Balance at the beginning of the year
161,320,702
49,615,752
161,320,702
49,615,752
Acquisition of Wardy IT Solutions
16,142,939
3,874,305
-
-
Balance at the end of the year
177,463,641
53,490,057
161,320,702
49,615,752
For the 2020 financial year:
Holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at
shareholder meetings, otherwise each member present at a meeting or by proxy has one vote on a show of hands. In the event of the
winding up of the Company, ordinary shareholders rank after creditors and share in any proceeds on winding up in proportion to the
number of shares held.
(b) Options
Unlisted
Unlisted
Total
Balance at
30/06/2020
Balance at
30/06/2019
2,436,358
2,109,088
4,545,446
3,690,901
4,036,358
7,727,259
Exercise price
Expiry
$0.275
$0.255
01/09/2020
01/07/2022
A summary of the movements of all company options issues is as follows:
No. of
Options
Weighted Average
Exercise Price
7,727,259
-
3,181,813
-
-
4,545,446
2,436,358
$0.265
-
$0.263
-
-
$0.266
$0.275
No. of
Options
Weighted Average
Exercise Price
3,690,901
4,036,358
-
-
-
7,727,259
1,804,951
$0.275
$0.255
-
-
-
$0.265
$0.275
Options outstanding at 30 June 2019
Granted
Forfeited
Exercised
Expired
Options outstanding at 30 June 2020
Options exercisable as at 30 June 2020
The weighted average life of the outstanding share options at 30 June 2020 is 1.13 years.
Options outstanding at 30 June 2018
Granted
Forfeited
Exercised
Expired
Options outstanding at 30 June 2019
Options exercisable as at 30 June 2019
046
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only NOTE 18: SHARE CAPITAL (continued)
(d) Capital management
Management controls the capital of the Group in order to generate long-term shareholder value and ensure that the Group can
fund its operations and continue as a going concern.
The Group’s capital includes ordinary share capital supported by financial assets.
The Group is not subject to any externally imposed capital requirements.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure in
response to changes in these risks and in the market. These responses include the management of debt levels, distributions to
shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Group since the prior year.
NOTE 19: RESERVES
Reserves at the beginning of financial year
Option Premium Reserve1
Foreign Exchange Translation Reserve
Reserves at end of financial year
1 Refer to note 18(b) for details of options outstanding at 30 June 2020
NOTE 20: ACCUMULATED LOSSES
Accumulated losses at beginning of financial year
Net (loss) /profit for the year after income tax
Change in accounting policy AASB16
Accumulated losses at end of financial year
NOTE 21: FRANKING CREDITS
2020
$
285,277
(6,381)
(9,215)
269,681
2019
$
141,766
197,566
(54,055)
285,277
2020
$
2019
$
(28,608,078)
(30,896,102)
(14,490,519)
2,288,024
(138,538)
-
(43,237,135)
(28,608,078)
2020
$
2019
$
Franking credits available for subsequent financial years based on a tax rate of 30%
1,130,447
964,270
047
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only NOTE 22: KEY MANAGEMENT PERSONNEL DISCLOSURE
Compensation received by key management personnel of the consolidated entity:
Short term employee benefits
Cash bonus and other payments
Other long-term employee benefits
Post employment benefits
Short-term employee benefits
2020
$
2019
$
1,511,717
1,210,155
26,000
3,168
81,000
9,238
128,048
108,528
1,668,933
1,408,921
These amounts include fees and benefits paid to the non-executive Chair and non-executive directors as well as all salary, paid leave
benefits, fringe benefits and cash bonuses awarded to executive directors and other KMP.
Other payments
These amounts represent cash bonus and commissions payments awarded to KMP.
Other long-term benefits
These amounts represent long service leave benefits accruing during the year, long-term disability benefits, deferred bonus and share
based payments.
Post-employment benefits
These amounts are the current-year’s estimated cost of providing for the Group’s superannuation contributions made during the year.
Further information in relation to KMP remuneration can be found in the directors’ report.
NOTE 23: RELATED PARTY TRANSACTIONS
(a) The Group’s main related parties are as follows:
(i) Key management personnel:
Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or
indirectly, including any director (whether executive or otherwise) of that entity, are considered key management personnel.
For details of disclosures relating to key management personnel, refer to Note 22.
(ii) Other related parties:
Other related parties include entities over which key management personnel have joint control.
(b) Transactions with related parties:
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available
to other parties unless otherwise stated.
During the year PWJAW Holdings PTY Ltd, a company of which Peter Ward is a director, was engaged to supply HR services.
Fees of $21,875 we paid to PWJAW Holdings Ltd. No amounts were outstanding as at 30 June 2020.
During the year, Monash Private Capital was engaged at an arm’s length basis to consult on various acquisition opportunities.
Consulting fees were paid to Monash of $355,043, including a success fee relating to the acquisition of Wardy IT Solutions. No
amounts related to these services were outstanding as at 30 June 2020.
(c) Loans to/from related parties:
There are no amounts outstanding or payable to related parties as at 30 June 2020 (2019: $Nil).
048
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only
NOTE 24: AUDITOR’S REMUNERATION
Amounts paid / payable to Stantons International for audit and review work
undertaken under the Corporation Act 2001
Amounts paid / payable to Ernst and Young for audit and review work
undertaken in Sri Lanka
2020
$
2019
$
104,371
94,500
5,066
8,946
109,437
103,446
NOTE 25: CONTINGENT LIABILITIES AND CONTINGENT ASSETS
The company has accrued an estimated amount in relation to the earn-out of Wardy. As the earn-out period only finishes on 31 August
2020, there is a potential that the final amount payable will be different to the estimate. For more information, please see note 29.
NOTE 26: CAPITAL AND LEASING COMMITMENTS
(a) Operating lease commitments
Payable - minimum lease payments
- not later than 1 year
- later than 1 year and not later than 5 years
(b) Right of use assets and lease liabilities
Right of use asset
Cost
Accumulated depreciation
Reconciliation of carrying amounts at the beginning and end of the year:
As at 1 July 2019
Adjustment of changes in accounting policy
Additions1
Depreciation
As at 30 June 2020
1$287,648 right of use asset were acquired on 1st September 2019 as part of the acquisition of Wardy IT Solutions.
Lease liabilities
Current
Non Current
2020
$
2019
$
667,529
706,978
1,800,576
2,310,380
2,468,105
3,017,358
3,581,875
(1,307,112)
2,274,763
-
2,728,335
287,648
(741,220)
2,274,763
(620,652)
(1,737,893)
(2,385,585)
-
-
-
-
-
-
-
-
-
049
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only
NOTE 27: (LOSS) / EARNINGS PER SHARE
(a) Basic earnings per share (cents per share)
From continuing operations
(b) Diluted (loss) / earnings per share (cents per share)
From continuing operations
2020
$
2019
$
(8.30)
1.42
(8.30)
1.35
(c) Reconciliation of (loss) / earnings in calculating earnings per share
Basic and diluted profit per share
Profit from continuing operations attributable to ordinary equity holders
(14,490,519)
2,288,024
(d) Total shares
Weighted average number of ordinary shares outstanding during the year used in the
calculation of basic earnings per share
174,640,832
161,320,702
Weighted average number of ordinary shares outstanding during the year used in the
calculation of diluted earnings per share
174,640,832 169,047,961
NOTE 28: CASH FLOW INFORMATION
Reconciliation of net cash provided by operating activities to net profit after tax
2020
$
2019
$
(14,490,519)
2,288,023
(128,685)
(1,659,410)
(14,619,204)
628,613
4,107,006
(6,381)
13,281,938
724,612
197,566
-
2,885,108
273,764
(46,723)
(3,170,838)
334,848
516,660
3,556,178
278,620
232,210
742,636
581,665
(129,952)
117,311
3,373,281
(Loss) /profit for the period after tax
Add back: Income tax (benefit) / expense
Profit for the period before tax
Non cashflows and non-operating cashflows in profit:
Depreciation / Amortisation
Share option expense
Impairment of investments
Change in assets and liabilities:
Decrease / (Increase) in trade debtors
Decrease / (Increase) in contract assets
Decrease / (Increase) in other current assets
Increase / (Decrease) in payables
Increase / (Decrease) in contract liabilities
Increase / (Decrease) in provision for employee entitlements
Cash flow from operations
050
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only NOTE 29: ACQUISITION OF WARDY IT SOLUTIONS
On 12 August 2019, the Company announced that it had signed a binding heads of agreement to acquire 100% of the issued capital of
Wardy IT Solutions Pty Ltd.
On 4 September 2019, the Company announced that it had acquired 100% of the shares of Wardy IT Solutions Pty Ltd following the
settlement of the transaction.
Details of the business combination is as follows:
Fair value of consideration for businesses acquired
Amount settled in cash and shares
Cash and cash equivalents
Work in progress
Prepayments
Right of use assets
DTA
Property, plant and equipment
Acquired Customer Contracts
Software
Websites
Total Assets
Trade and other payables
Deferred income
Lease liability
Deferred Tax Liability
Total Liabilities
Identifiable net assets
Goodwill on acquisition
Consideration settled in cash
Cash and cash equivalents acquired
Net cash paid in relation to acquisition
$
8,408,261
100
185,870
95,143
278,811
527,505
94,197
9,946,906
600,000
5,000
11,733,532
(584,823)
(944,721)
(228,811)
(3,067,715)
(4,826,070)
6,907,462
1,500,799
1,921,650
100
1,921,550
Acquisition costs are not included as part of consideration transferred and have been recognised as an expense in the consolidated
statement of profit or loss and other comprehensive income, as part of other expenses.
In relation to the acquisition of Wardy IT Solutions, based on the achievement of certain performance criteria for the 12 months ending
31 August 2020, there could be up to $6m payable in a mix of cash and shares. Based on current information available and external
advice, MOQ management’s best estimate is that consideration of $2.6m will be payable, and has been provided for accordingly. As the
performance period has not ended yet, there is the potential that the final amount payable may differ from this estimate.
Financial period
Summarised Financial Performance
Revenue
Profit before tax
Profit after tax
Other comprehensive income after tax
Total comprehensive income
Profit/(loss) attributable to non-controlling interests
Wardy IT Solutions
$
1 September 2019 – 30 June 2020
11,139,324
1,344,663
1,182,527
-
1,182,527
-
051
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only NOTE 30: SHARE BASED PAYMENTS
There were no share-based payments during the year, however in the prior year, the assessed fair value of the 4,036,358 options
granted during was $281,249 as calculated at the date of grant using the Black-Scholes model for the valuation of call options, the
inputs of which included:
No of options
Grant date
Exercise by
Expected average life of the options
Exercise price per share
Share price at grant date
Expected volatility
Risk-free interest rate
Value of options at grant date
4,036,358
1 July 2018
1 July 2022
4 years
25.5 cents
24 cents
46.78%
2.28%
$281,249
During the FY20 financial year, 3,181,813 share options were forfeited without vesting and accordingly, an expense of $134,290 was
reversed.
Further details regarding share based payments to key management personnel can be found in the audited Remuneration
Report set out in the Director’s Report.
NOTE 31: CONTROLLED ENTITIES
Name of entity
Country of Incorporation
Class of Shares
iimage Technical Services Pty Ltd
TETRAN Pty Ltd
MOQdigital NZ Limited
MOQdigital Asia Pacific (PVT) Limited
MOQdigital Pty Ltd
Coral Communities Pty Ltd
Wardy IT Solutions Pty Ltd
Australia
Australia
New Zealand
Sri Lanka
Australia
Australia
Australia
* Coral Communities Pty Ltd was incorporated on 2 April 2019
** Wardy IT Solutions was acquired on September 2019
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Equity holding
2020
100%
100%
100%
100%
100%
100%
100%
2019
100%
100%
100%
100%
100%
100%
-
NOTE 32: EVENTS SUBSEQUENT TO REPORTING DATE
On 21 August 2020, the Company issued a Notice of Meeting for an Extraordinary General Meeting to be held on 22 September 2020
to consider and vote on its Employee Option Plan, and the cancellation and re-issue of Employee Options.
END OF AUDITED STATEMENTS
052
MOQ ANNUAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL REPORTFor personal use only DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of MOQ Limited (the “Company”), the directors of the company declare that:
1.
In the opinion of the directors of the Company, the financial statements and notes, as set out on pages 18 to 48 are in
accordance with the Corporations Act 2001 and
i.
ii.
comply with Australian Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements,
constitutes compliance with International Financial Reporting Standards (IFRS); and
give a true and fair view of the financial position as at 30 June 2020 and of the performance for the year ended on that date
of the consolidated group;
in the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when
they become due and payable;
the audited remuneration disclosures set out on pages 11 to 16 of the directors’ report comply with accounting standard AASB
124 Related Party Disclosures and the Corporation Regulations 2001; and
the directors have been given the declarations required by s 295A of the Corporations Act 2001 from the Chief Executive Officer.
2.
3.
4.
On behalf of the Directors
David Shein
Non Executive Chairman
27 August 2020
053
MOQ ANNUAL REPORTFor personal use only
PO Box 1908
West Perth WA 6872
Australia
Level 2, 1 Walker Avenue
West Perth WA 6005
Australia
Tel: +61 8 9481 3188
Fax: +61 8 9321 1204
ABN: 84 144 581 519
www.stantons.com.au
Stantons International Audit and Consulting Pty Ltd
trading as
Chartered Accountants and Consultants
27 August 2020
Board of Directors
MOQ Limited
Suite 1, Ground Floor
3-5 West Street,
North Sydney NSW 2060
Dear Directors
RE:
MOQ LIMITED
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of MOQ Limited.
As Audit Director for the audit of the financial statements of MOQ Limited for the year ended 30 June
2020, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
Yours sincerely
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(Trading as Stantons International)
(An Authorised Audit Company)
Samir Tirodkar
Director
Liability limited by a scheme approved
under Professional Standards Legislation
054
MOQ ANNUAL REPORTFor personal use only
Stantons International Audit and Consulting Pty Ltd
trading as
Chartered Accountants and Consultants
PO Box 1908
West Perth WA 6872
Australia
Level 2, 1 Walker Avenue
West Perth WA 6005
Australia
Tel: +61 8 9481 3188
Fax: +61 8 9321 1204
ABN: 84 144 581 519
www.stantons.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
MOQ LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of MOQ Limited the Company and its subsidiaries (“the Group”), which
comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit
or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial
performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our
report. We are independent of the Company in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110: Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Liability limited by a scheme approved
under Professional Standards Legislation
055
MOQ ANNUAL REPORTFor personal use only
Key Audit Matters
We have determined the matters described below to be Key Audit Matter to be communicated in our report.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matters
How the matter was addressed in the audit
Carrying Value of Intangibles
totalled
As at 30 June 2020,
$11,879,765 (refer to Note 14 of the financial
report).
Intangibles
Inter alia, our audit procedures
following:
included
the
The carrying value of Intangibles assets is a key
audit matter due to:
i.
The significance of the intangibles representing
37% of total assets;
to assess management’s
The necessity
application of
the
requirements of
the
accounting standard Intangible Assets (“AASB
138”), in light of any indicators of impairment
that may be present; and
Initial discussions with management prior to the
commencement of the final audit on the impact
of Covid 19 on
individual CGU’s (Cash
generating Units);
ii. Requested the Group complete an impairment
review in line with AASB 138 and Impairment of
Assets (AASB 136), reviewed their assumptions
for reasonableness and satisfied ourselves that
of impairments required;
The assessment of significant judgements
made by management in relation to the
preparation of future budgets and their impact
on the impairment models prepared.
iii. Consideration of the requirements of accounting
standard AASB 136 and reviewed the financial
statements to ensure appropriate disclosures
are made.
•
•
•
056
MOQ ANNUAL REPORTFor personal use only
Key Audit Matters
How the matter was addressed in the audit
Business Combination – Acquisition of Wardy
IT Solutions Pty Ltd.
During the year, the Company acquired 100%
issued capital Wardy IT Solutions Pty Ltd.
Inter alia, our audit procedures
following:
included
the
The acquisition has been disclosed in Note 29 to
the financial report and was considered a key audit
matter due to:
•
•
The significance of the transaction ($6.9
million net asset acquisition); and
The judgement required in the application
of AASB 3 Business Combinations (“AASB
3”).
AASB 3 required the Group to determine, if the
transaction is an asset acquisition or a business
combination and the fair value of considerations
transferred and the identifiable assets and liabilities
acquired as part of the acquisition.
i. Examining the contract for the acquisition of
Wardy IT Solutions Pty Ltd;
ii. Reviewing and assessing the determination
made by the Company whether the transaction
is an asset acquisition or a business
combination;
iii. Assessing the fair value of consideration paid
for the acquisition including the assumptions
required
out
to
consideration;
calculate
earn
the
iv. Examining the net assets of Wardy IT Solutions
Pty Ltd as at the date of acquisition; and
v. Considering the adequacy of the financial
report disclosures contained in Note 29 in
relation to AASB 3.
Other Information
The directors are responsible for the other information. The other information comprises the information included in
the Group’s annual report for the year ended 30 June 2020, but does not include the financial report and our auditor’s
report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any form
of assurance opinion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true and
fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
057
MOQ ANNUAL REPORTFor personal use only
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the
Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial report.
The procedures selected depend on the auditor's judgement, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation of the financial report that gives a true and fair view in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity's internal control.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report.
We conclude on the appropriateness of the Directors' use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor's report to the related disclosures in the financial report or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue
as a going concern.
We evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
We obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in Internal control that we identify during our audit.
The Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Directors, we determine those matters that were of most significance in
the audit of the financial report of the current period and are therefore key audit matters. We describe these matters
in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
058
MOQ ANNUAL REPORTFor personal use only
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 14 to 20 of the directors’ report for the year ended 30
June 2020.
In our opinion, the Remuneration Report of MOQ Limited for the year ended 30 June 2020 complies with section
300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(Trading as Stantons International)
(An Authorised Audit Company)
Samir Tirodkar
Director
West Perth, Western Australia
27 August 2020
059
MOQ ANNUAL REPORTFor personal use only
MOQ LIMITED AND ITS CONTROLLED ENTITIES
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
ABN: 94 050 240 330
The following information is current as at 27 August 2020
ORDINARY SHARES
177,463,641 fully paid ordinary shares held by 695 individual shareholders. All ordinary shares carry one vote per share.
UNQUOTED OPTIONS
The Company has on issue:
•
•
2,436,358 options exercisable at 27.5 cents expiring on 1 September 2020 amongst MOQ employees.
2,109,088 options exercisable at 25.5 cents expiring on 1st July 2022 amongst MOQ employees.
Options do not carry any votes
DISTRIBUTION OF HOLDERS FULLY PAID ORDINARY SHARES
Category
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Number of holders
Number held
% of issued shares
108
233
49
51
254
695
166,255,669
10,630,805
397,617
151,036
28,514
93.68
5.99
0.22
0.09
0.02
177,463,641
100.00
The number of holders who held less than a marketable parcel of shares was nil.
SUBSTANTIAL SHAREHOLDERS
The names of substantial shareholders who have notified the Company in accordance with Section 671B of the Corporations Act are:
Holder
A/C designation
VIBURNUM FUNDS PTY LTD
MONASH PRIVATE CAPITAL PTY LTD
No. of
ordinary
shares
21,571,214
18,228,334
MR SCOTT MCPHERSON
17,655,978
MS KATHY LOUISE EDWARDS
PWJAW PTY LTD
THE WARD DEARNESS FAMILY
CHALLENGER LIMITED (AND ITS ENTITIES)
17,655,978
14,125,072
9,388,456
% of issued
shares
12.16
10.27
9.95
9.95
7.96
5.29
060
MOQ ANNUAL REPORTFor personal use only MOQ LIMITED AND ITS CONTROLLED ENTITIES
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
ABN: 94 050 240 330
TOP 20 HOLDERS OF EQUITY SECURITIES
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
MONASH PRIVATE CAPITAL PTY LTD
MR SCOTT MCPHERSON
MS KATHY LOUISE EDWARDS
PWJAW PTY LTD
MATTHEW CHARLES GOGGIN & ROMILY JANE GOGGIN
CITICORP NOMINEES PTY LIMITED
ANACACIA PTY LIMITED
MOAT INVESTMENTS PTY LTD
MR DON AMAL NANAYAKKARA
KOMATIE PTY LTD
DAVCOL NOMINEES PTY LTD
NATIONAL NOMINEES LIMITED
UNITED EQUITY PARTNERS PTY LTD
HOLLOWAY COVE PTY LTD
ICON PACIFIC SERVICES PTY LTD
MAST FINANCIAL PTY LTD
JARREN INVESTMENTS PTY LTD
INFLECTION INVESTMENTS PTY LTD
MR KAI MYSLIWIECZ
Total
Grand total
27 Aug 2020
24,087,546
18,228,334
17,655,978
17,655,978
14,125,072
8,827,989
7,003,254
4,174,883
4,000,000
3,981,908
3,025,000
2,500,001
2,387,433
2,130,000
2,050,000
2,017,867
1,750,000
1,583,334
1,227,603
1,135,625
%IC
13.57
10.27
9.95
9.95
7.96
4.97
3.95
2.35
2.25
2.24
1.70
1.41
1.35
1.20
1.16
1.14
0.99
0.89
0.69
0.64
139,547,805
177,463,641
78.63
100.00
061
MOQ ANNUAL REPORTFor personal use only
For personal use only