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HIREMII LIMITED Annual Report 2021
65064_rns_2021-05-06_431ba690-e315-4eda-9d43-813d4d5d9bce.pdf
Annual Report
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Oncontractor Pty Ltd
ABN 93 609 820 402
Annual Report - 30 June 2019
Oncontractor Pty Ltd Directors' report 30 June 2019
The directors present their report, together with the financial statements of Oncontractor Pty Ltd (referred to hereafter as the 'company') at the end of, or during, the year ended 30 June 2019.
Directors
The following persons were directors of Oncontractor Pty Ltd during the whole of the financial year and up to the date of this report, unless otherwise stated:
Conor O'Brien Alastair Haldane (ceased 16 June 2020) Evan Renwick (ceased 3 June 2019) Andrew Kirkwood (appointed 16 June 2020) Joseph Schofield (appointed 16 June 2020) Chris Brophy (appointed 16 June 2020) David Buckingham (appointed 14 July 2020)
Principal activities
During the financial year the principal continuing activities of the company consisted of software based labour hire and recruitment. It connects projects to pre-vetted professional contractors and enables them to be engaged across the platform while maintaining full statutory and insurance compliance
Dividends
The company paid no dividend during or for the year ended 30 June 2019.
Review of operations
The loss for the year ended 30 June 2019 after providing for income tax amounted to \$925,154 (30 June 2018: \$187,964).
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the company during the financial year.
Matters subsequent to the end of the financial year
Other than as described in Note 19 to the Financial Statements, no matter or circumstance has arisen since 30 June 209 that has significantly affected, or may significantly affect the company's operations, the results of those operations, or the company's state of affairs in future financial years.
Likely developments and expected results of operations
Information on likely developments in the operations of the company and the expected results of operations have not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the company.
Environmental regulation
The company is not subject to any significant environmental regulation under Australian Commonwealth or State law.
| Information on directors | |
|---|---|
| Name: | David Buckingham |
| Title: | Non-Executive Chairman |
| Qualifications: | Bachelor of Engineering (Hons), GAICD |
| Experience and expertise: | David has extensive experience in CEO roles and non executive director roles within |
| ASX listed tech companies. Most recently he was the Group CEO and Managing | |
| Director of Navitas. | |
| David was appointed on 14 July 2020. |
Oncontractor Pty Ltd Directors' report
30 June 2019
| Name: Title: Qualifications: Experience and expertise: |
Andrew Kirkwood Managing Director & CEO MBA Andrew has over 10 years' experience in executive positions with various high growth, technology-based start ups as well as corporate experience as an Executive for a national health insurer looking after IT and HR. Andrew was appointed on 16 June 2020. |
|---|---|
| Name: Title: Qualifications: Experience and expertise: |
Conor O'Brien Non-Executive Director LLB Conor is the founder and Managing Director of international oil and gas labour hire company Rigforce. Conor has extensive experience in commercial and industrial relations and HR. |
| Name: Title: Qualifications: Experience and expertise: |
Christopher Brophy Executive Director MBA, MAICD Chris is an accomplished leader with 15+ years of experience. He is a specialist in strategy, portfolio growth, financial and operational restructuring. He was appointed on 16 June 2020. |
| Name: Title: Experience and expertise: Name: |
Joe Schofield COO & Executive Director Joe is an experienced operational Executive with over 20 years' experience in numerous industries including construction, mining, waste & recycling, rental and construction. He was appointed on 16 June 2020. Joe Schofield |
| Name: Title: Qualifications: Experience and expertise: |
Alastair Haldane (resigned on 16 June 2020) Former Non-Executive Director MSc (Honours) With extensive recruitment and labour hire experience, Alastair is one of the founders of Oncontractor. He was previously a reservoir engineer with BHP and is currently Director of Rigforce. |
| Name: Title: Qualifications: Experience and expertise: |
Evan Renwick (resigned on 3 June 2019) Former Non-Executive Director BSc An experienced project manager, director and engineer. Successful management of projects over \$1B, from initiation through to completion, with an added ability to turn around underperforming projects. Evan resigned on 16 June 2020. |
Company secretary
Evan Renwick held the role of company secretary until 27 July 2020.
Ms Ildiko Wowesny (BBus) was appointed company secretary on 27 July 2020. She is a CPA qualified and highly experienced company secretary and CFO with over 15 years' experience, predominantly with ASX listed companies across numerous industries.
Meetings of directors
The company's Board of Directors ('the Board') did not hold any formal board meetings during the year ended 30 June 2019.
Oncontractor Pty Ltd Directors' report 30 June 2019
Shares under option
Unissued ordinary shares of Oncontractor Pty Ltd under option at the date of this report are as follows:
| Grant date | Issue Date | Expiry date | Exercise price |
Number under option |
|---|---|---|---|---|
| June 2020 | July 2020 | 3 years from date of listing | 150% of the listing price at IPO | 5,000,000 |
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the company or of any other body corporate.
Indemnity and insurance of officers
The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors' report.
Auditor
RSM Australia Partners continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
Andrew Kirkwood Managing Director
26 November 2020 Perth
RSM Australia Partners
Level 32, Exchange Tower 2 The Esplanade Perth WA 6000 GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9111
www.rsm.com.au
AUDITOR'S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Oncontractor Pty Ltd for the year ended 30 June 2019, 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.
David Wall Partner RSM Australia Partners
Perth, WA Dated: 26 November 2020
THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036
Oncontractor Pty Ltd Contents 30 June 2019
| Statement of profit or loss and other comprehensive income | 6 |
|---|---|
| Statement of financial position | |
| Statement of changes in equity | 9 |
| Statement of cash flows | ٩ |
| Notes to the financial statements | 10 |
| Directors' declaration | 22 |
| Independent auditor's report to the members of Oncontractor Pty Ltd | 23 |
General information
The financial statements cover Oncontractor Pty Ltd as a company at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Oncontractor Pty Ltd's functional and presentation
Oncontractor Pty Ltd is a proprietary limited company.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 25 November 2020. The directors have the power to amend and reissue the financial statements.
Oncontractor Pty Ltd
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2019
| Note | 2019 \$ |
2018 \$ |
|
|---|---|---|---|
| Revenue | |||
| Sales Revenue Other income |
3 4 |
858,714 5,639 |
73,246 3,404 |
| Expenses Operating expenses Employee benefit expenses Research and Development expense Other expenses Loss before income tax expense |
(773, 377) (412,092) (352, 611) (251,427) (925, 154) |
(54, 899) (110,008) (53, 198) (46, 509) (187, 964) |
|
| Income tax expense | 5 | ||
| Loss after income tax expense for the year | (925, 154) | (187, 964) | |
| Other comprehensive income for the year, net of tax | |||
| Total comprehensive loss for the year | (925,154) | (187, 964) |
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
Oncontractor Pty Ltd
Statement of financial position
As at 30 June 2019
| Note | 2019 \$ |
2018 \$ |
|
|---|---|---|---|
| Assets | |||
| Current assets Cash and cash equivalents Trade and other receivables Other current assets Total current assets |
6 $\overline{7}$ 8 |
256,400 193,178 9,980 459,558 |
17,713 22,752 39,347 79,812 |
| Non-current assets Oher receivables Total non-current assets |
9 | 13,017 13,017 |
10,756 10,756 |
| Total assets | 472,575 | 90,567 | |
| Liabilities | |||
| Current liabilities Trade and other payables Employee benefits Total current liabilities |
10 11 |
473,366 31,701 505,067 |
57,506 3,676 61,182 |
| Total liabilities | 505,067 | 61,182 | |
| Net assets/(liabilities) | (32, 492) | 29,386 | |
| Equity Issued capital Other equity Accumulated losses Current year losses |
12 12 |
976,712 194,000 (278,050) (925, 154) |
307,436 (90,086) (187, 964) |
| Total equity | (32, 492) | 29,386 |
The above statement of financial position should be read in conjunction with the accompanying notes
Oncontractor Pty Ltd
Statement of changes in equity
For the year ended 30 June 2019
| Issued capital |
Other equity \$ |
Accumulated losses \$ |
Total equity | |
|---|---|---|---|---|
| Balance at 1 July 2017 | 65,716 | 55,000 | (90,086) | 30,630 |
| Loss after income tax expense for the year Other comprehensive income for the year, net of tax |
(187,964) | (187,964) | ||
| Total comprehensive loss for the year | (187, 964) | (187, 964) | ||
| Issue of ordinary shares | 241,720 | (55,000) | 186,720 | |
| Balance at 30 June 2018 | 307,436 | (278,050) | 29,386 |
| Issued capital |
Other equity \$ |
Accumulated losses \$ |
Total equity | |
|---|---|---|---|---|
| Balance at 1 July 2018 | 307,436 | (278,050) | 29,386 | |
| Loss after income tax expense for the year Other comprehensive income for the year, net of tax |
(925.154) | (925, 154) | ||
| Total comprehensive loss for the year | (925.154) | (925,154) | ||
| Issue of ordinary shares Advance for issue of shares |
669,276 | 194,000 | 669,276 194,000 |
|
| Balance at 30 June 2019 | 976,712 | 194,000 | (1,203,204) | (32, 492) |
The above statement of changes in equity should be read in conjunction with the accompanying notes
Oncontractor Pty Ltd
Statement of cash flows
For the year ended 30 June 2019
| Note | 2019 S |
2018 \$ |
|
|---|---|---|---|
| Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Other revenue |
796,218 (1,426,446) 5,639 |
21,856 (218, 076) 3,404 |
|
| Net cash used operating activities | 13 | (624,589) | (192,816) |
| Cash flows from financing activities Proceeds from issue of shares (net of share issue costs) Advance for issue of shares |
669,276 194,000 |
186,720 | |
| Net cash from financing activities | 863,276 | 186,720 | |
| Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year |
238,687 17,713 |
(6,096) 23,809 |
|
| Cash and cash equivalents at the end of the financial year | 6 | 256,400 | 17,713 |
The above statement of cash flows should be read in conjunction with the accompanying notes
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The company has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The following Accounting Standards and Interpretations are most relevant to the company:
AASB 9 Financial Instruments
The company has adopted AASB 9 from 1 July 2018. The standard introduced new classification and measurement models for financial assets. A financial asset shall be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows which arise on specified dates and that are solely principal and interest. A debt investment shall be measured at fair value through other comprehensive income if it is held within a business model whose objective is to both hold assets in order to collect contractual cash flows which arise on specified dates that are solely principal and interest as well as selling the asset on the basis of its fair value. All other financial assets are classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading or contingent consideration recognised in a business combination) in other comprehensive income ('OCI'). Despite these requirements, a financial asset may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an accounting mismatch. For financial liabilities designated at fair value through profit or loss, the standard requires the portion of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the accounting treatment with the risk management activities of the entity. New impairment requirements use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment is measured using a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. For receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available.
AASB 15 Revenue from Contracts with Customers
The company has adopted AASB 15 from 1 July 2018. The standard provides a single comprehensive model for revenue recognition. The core principle of the standard is that an entity shall recognise revenue to depict the transfer of promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard introduced a new contract-based revenue recognition model with a measurement approach that is based on an allocation of the transaction price. This is described further in the accounting policies below. Credit risk is presented separately as an expense rather than adjusted against revenue. Contracts with customers are presented in an entity's statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment. Customer acquisition costs and costs to fulfil a contract can, subject to certain criteria, be capitalised as an asset and amortised over the contract period.
Impact of adoption
AASB 9 and AASB 15 were adopted using the modified retrospective approach and as such comparatives have not been restated. There was no impact of adoption.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards -Reduced Disclosure Requirements and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities.
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value through other comprehensive income, investment properties, certain classes of property, plant and equipment and derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2.
Going concern
The financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business.
As disclosed in the financial statements, the company incurred a net loss of \$925,154 and had net cash outflows from operating activities of \$624,589 for the year ended 30 June 2019. As at that date, the consolidated entity had net current liabilities of \$45,509 and net liabilities of \$32,492.
The Directors are of the view that there are reasonable grounds to believe that the company will continue as a going concern, after consideration of the following factors:
- The company has commenced activities towards an initial public offering (IPO) scheduled to occur prior to 30 June $\bullet$ 2021.
- Subsequent to the year end, the company successfully raised \$697,000 via a share issue and raised \$2,285,000 via $\bullet$ convertible loans for a term of 24 months from draw down date. The convertible loan agreement includes terms that on a liquidity event or a private placement event or a change of control event, the convertible loan will be converted into a variable number of shares at the lower of \$0.12 and a 40% discount to the share price offered under an equity capital raising pursuant to an IPO or under the private placement investment or under the change of control event. In event other than a liquidity event or a private placement event or a change of control event, the borrower has the option to issue a predetermined number of shares or repay cash plus interest at 8% within 14 days of the termination date.
- The company has ability to curtail administrative, discretionary expenditure and overhead cash outflows as and when required.
Accordingly, the Directors believe that the company will be able to continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial statements.
Revenue recognition
The company recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the company is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the company: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle are recognised as a refund liability.
Rendering of services
Revenue from a contract to provide services is recognised over time as the services are rendered based on either a fixed price or an hourly rate.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
- When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or
- When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the $\bullet$ timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
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.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the company's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the company's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the statement of cash flows presentation purposes, cash and cash equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities on the statement of financial position.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days.
The company has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Contract assets
Contract assets are recognised when the company has satisfied the performance obligations in the contract and either has not recognised a receivable to reflect its unconditional right to consideration or the consideration is not due. Contract assets are treated as financial assets for impairment purposes.
Customer acquisition costs
Customer acquisition costs are capitalised as an asset where such costs are incremental to obtaining a contract with a customer and are expected to be recovered. Customer acquisition costs are amortised on a straight-line basis over the term of the contract.
Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained or which are not otherwise recoverable from a customer are expensed as incurred to profit or loss. Incremental costs of obtaining a contract where the contract term is less than one year is immediately expensed to profit or loss.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless, an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the company has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the company intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition.
Impairment of financial assets
The company recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the company's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the company will obtain ownership at the end of the lease term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.
Trade and other payables
These amounts represent liabilities for goods and services provided to the company prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
Contract liabilities
Contract liabilities are recognised when a customer pays consideration, or when the company recognises a receivable to reflect its unconditional right to consideration (whichever is earlier), before the company has transferred the goods or services to the customer. The liability is the company's obligation to transfer goods or services to a customer from which it has received consideration.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred.
Provisions
Provisions are recognised when the company has a present (legal or constructive) obligation as a result of a past event, it is probable the company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to 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 corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other nonfinancial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the company.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.
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 tax authority is included in other receivables or other 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 tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
Rounding of amounts
The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.
Income tax
The company is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The company recognises liabilities for anticipated tax audit issues based on the company's current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.
Employee benefits provision
As discussed in note 1, the liability for employee benefits expected to be settled more than 12 months from the reporting date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account.
Note 3, Revenue
| 2019 | 2018 S |
|
|---|---|---|
| Revenue from contracts with customers Labour hire and recruitment services |
858,714 | 73.246 |
| 858,714 | 73.246 |
Note 4. Other income
| 2019 \$ |
2018 \$ |
|
|---|---|---|
| Other | 5,639 | 3,404 |
| Other income | 5,639 | 3,404 |
| Note 5. Income tax expense | ||
| Major components of income tax expense are: | ||
| 2019 \$ |
2018 \$ |
|
| Income tax expense reported in the statement of profit or loss and other |
comprehensive income
A reconciliation of income tax expense applicable to accounting loss before income tax at the statutory income tax rate to income tax expense at the Group's effective income tax rate is as follows:
| 2019 \$ |
2018 \$ |
|
|---|---|---|
| Net profit/(loss) before income tax expense | (925, 154) | (187, 964) |
| Prima facie tax calculated at 27.5% Non-deductible expenses Tax losses carried forward Income tax expense |
(254, 417) 120,366 134,051 |
(51,690) 10,290 41,400 |
| Unrecognised tax losses Revenue losses |
673,660 673,660 |
186,203 186,203 |
Availability of Tax Losses
The availability of the tax losses for future periods is uncertain and will be dependent on the company satisfying strict requirements with respect to continuity of ownership and the same business test imposed by income tax legislation.
The recoupment of available tax losses as at 30 June 2019 is contingent upon the following:
- the company deriving future assessable income of a nature and of an amount sufficient to enable the benefit $(a)$ from the losses to be realised:
- the conditions for deductibility imposed by income tax legislation continuing to be complied with; and $(b)$
- there being no changes in income tax legislation which would adversely affect the company from realising the $(c)$ benefit from the losses.
Given the company is currently in a loss making position, a deferred tax asset has not been recognised with regard to unused tax losses, as it has not been determined that the company will generate sufficient taxable profit against which the unused tax losses can be utilised.
Note 6. Current assets - cash and cash equivalents
| 2019 S |
2018 \$ |
|
|---|---|---|
| Cash at bank | 256,400 | 17,713 |
| 256,400 | 17,713 |
Note 7. Current assets - trade and other receivables
| \$ | |
|---|---|
| 193,178 193,178 |
22,752 22,752 |
Note 8. Current assets - other assets
| 2019 ъ |
2018 \$ |
|
|---|---|---|
| Accrued revenue Prepayments |
4,072 5.908 |
28,638 10,709 |
| 9.980 | 39.347 |
Note 9. Non-current assets - other receivables
| 2019 \$. |
2018 \$ |
|
|---|---|---|
| Loan to related parties | 13,017 | 10,756 |
Loan to related parties
The loans to related parties are to be repaid by 30 June 2021. The effect of discounting is considered not to be material and is not past due nor impaired. The loans are interest free.
Note 10. Current liabilities - trade and other payables
| 2019 \$ |
2018 \$ |
|
|---|---|---|
| Trade payables Accrued expenses GST payable |
396,487 73,879 3,000 |
26,482 32,348 (1, 324) |
| 473,366 | 57,506 |
Note 11. Current liabilities - employee benefits
| 2019 ъ |
2018 æ |
|
|---|---|---|
| Provision for annual leave | 31.701 | 3,676 |
| 31,701 | 3,676 |
Note 12. Equity - issued capital
| 2019 Shares |
2018 Shares |
2019 | 2018 | |
|---|---|---|---|---|
| Ordinary shares - fully paid | 46,988,475 | 545,936 | 976,712 | 307,436 |
Movements in ordinary share capital
| Details | Date | Shares | Issue price | \$ |
|---|---|---|---|---|
| Balance | 1 July 2017 | 230 | 65,716 | |
| Share split 1:1000 | 3 September 2017 | 229,770 | ||
| Issue of shares | 5 November 2017 | 165,909 | 1.46 | 241,720 |
| Balance | 30 June 2018 | 395,909 | 307,436 | |
| Issue of shares | 31 August 2018 | 21,874 | 4.77 | 104,276 |
| Issue of shares | 15 October 2018 | 127.731 | 2.94 | 375,000 |
| Share split 1:75 | 26 April 2019 | 40,367,961 | ||
| Issue of shares for nil consideration | 31 May 2019 | 3.700.000 | ||
| Issue of shares | 31 May 2019 | 2.375,000 | 0.08 | 190,000 |
| Balance | 30 June 2019 | 46,988,475 | 976,712 |
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.
Issue of shares for nil consideration was to brokers as cost for services in relation to capital raising.
During the current financial year, \$194,000 were received from shareholders as advance for issue of 2,424,997 shares at 8 cents per share. The shares were issued on 4 October 2019 and 6 November 2019. Note 13. Reconciliation of profit after income tax to net cash from operating activities
| 2019 | 2018 \$ |
|
|---|---|---|
| Loss after income tax expense for the year | (925, 154) | (187, 964) |
| Change in operating assets and liabilities: Movement in receivables Movement in payables Movement in other current assets Movement in provisions |
(170,426) 374,329 27.106 69,556 |
(22, 752) 27,990 (43, 724) 33.634 |
Note 42. Fair value measurement (continued)
| Net cash used in operating activities | (624, 589) | (192, 816) |
|---|---|---|
Note 14. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the company is set out below:
| 2019 | 2018 ¢ |
|
|---|---|---|
| Aggregate compensation | 277,353 | 7,376 |
Note 15. Contingent liabilities
The company has given bank guarantees as at 30 June 2020 of \$22,096 (2018: nil) to various landlords.
Note 16. Commitments
| 2019 | 2018 S |
|
|---|---|---|
| Lease commitments - operating Committed at the reporting date but not recognised as liabilities, payable: |
||
| Within one year | 66,000 | |
| One to five years | 33,000 | |
| More than five years | ||
| 99,000 |
Operating lease commitments includes contracted amounts for various retail outlets, warehouses, offices and plant and equipment under non-cancellable operating leases expiring within one to ten years with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated.
Note 17. Related party transactions
Key management personnel Disclosures relating to key management personnel are set out in note 12.
Note 52. Deed of cross guarantee (continued)
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
| 2019 | 2018 | |
|---|---|---|
| Non-current receivables: Loan to directors |
13,017 | 10,756 |
Terms and conditions
The loans are interest free and repayable by 30 June 2021.
Note 18. Segment information
The company operates predominantly in one business and geographical segment being software based labour hire and recruitment services throughout Australia.
Note 19. Events after the reporting period
Other than as described below, no matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect the company's operations, the results of those operations, or the company's state of affairs in future financial years:
Mr Alastair Halden resigned as director on 16 June 2020.
Mr Andrew Kirkwood was appointed director on 16 June 2020.
Mr Chris Brophy was appointed director 16 June 2020.
Mr Joe Schofield was appointed director 16 June 2020.
Mr David Buckingham was appointed 14 July 2020.
Mr Evan Renwick resigned as company Secretary and Ms Ildiko Wowesny was appointed as Company Secretary on 27 July 2020.
For the year ending 30 June 2020 the company raised \$697,000 by the issue of 8,712,500 fully paid ordinary shares at 8c/share, as well as \$2,285,000 via a convertible loan.
In June 2020 the company granted 5,000,000 broker options for issue of convertible loan. The options will be exercisable at 150% of the future IPO price on or before 3 years after the company has been admitted to the official list of the ASX.
Oncontractor Pty Ltd Directors' declaration 30 June 2019
In the directors' opinion:
- the attached financial statements and notes comply with the Corporations Act 2001, the Australian Accounting $\bullet$ Standards - Reduced Disclosure Requirements, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
- the attached financial statements and notes give a true and fair view of the company's financial position as at 30 June $\bullet$ 2019 and of its performance for the financial year ended on that date;
- there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due $\bullet$ and payable; and
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
Andrew Kirkwood Managing Director
26 November 2020 Perth
RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade Perth WA 6000 GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9111
www.rsm.com.au
INDEPENDENT AUDITOR'S REPORT To the members of Oncontractor Pty Ltd
Opinion
We have audited the financial report of Oncontractor Pty Ltd (Company), which comprises the statement of financial position as at 30 June 2019, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the 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 Company is in accordance with the Corporations Act 2001, including:
- (i) Giving a true and fair view of the Company's financial position as at 30 June 2019 and of its financial performance for the year then ended; and
- (ii) Complying with Australian Accounting Standards Reduced Disclosure Requirements 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 confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
Other information
The directors are responsible for the other information. The other information comprises the information included in the Company's annual report for the year ended 30 June 2019, but does not include the financial report and the auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards – Reduced Disclosure Requirements 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 Company 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 Company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors\_responsibilities/ar4.pdf. This description forms part of our auditor's report.
David Wall Partner RSM Australia Partners
Perth, Western Australia 26 November 2020