HITECH GROUP AUSTRALIA LIMITED — Annual Report 2021

Aug 11, 2021

APPENDIX 4E

PRELIMINARY FINAL REPORT

FINANCIAL YEAR ENDED 30 JUNE 2021

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HiTech Group Australia Limited

A.B.N. 41 062 067 878

Appendix 4E Preliminary Final Report

APPENDIX 4E

Preliminary Final Report

HiTech Group Australia Limited ABN: 41 062 067 878 Financial Year ended 30 June 2021

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Revenues from ordinary activities	26%	Up	$42,051,802
Net profit for the period attributable to members	9%	Up	$3,636,602
Dividends	5 cents per share fully franked 4 cents per share fully franked
Final dividend	5 cents per share fully franked
Previous corresponding period	4 cents per share fully franked

Comment on figures reported :

HiTech’s core business is the placement of ICT contractors and recruitment services to the public and private sectors. ICT consulting services demand has been strong with several IT infrastructure and digital/cyber security transformation projects underway, requiring specialist IT talent.

For the financial year ended 30 June 2021, the consolidated entity’s results are:

• Operating revenue is $42,168,504, an increase of 26% over the previous corresponding period (pcp) (FY20: $33,380,909).

• Gross Profit is $7,059,491, an increase of 16% over pcp (FY20: $6,105,679).

• NPAT is $3,636,602, an increase of 9% over pcp (FY20: $3,336,117).

• EBITDA is $5,214,886, an increase of 20% over pcp (FY20: $4,330,867).

The directors have declared a fully franked dividend of 5 cents per share to be paid on 15 September 2021 to shareholders registered on close of business on 1 September 2021 .

HiTech’s reputation and brand as a specialised ICT contractor and services specialist continues to build at a time when quality technologists are in high demand. The HiTech Group is fully prepared to take advantage of continued demand for talent in the ICT recruitment and services sector. We are continually working towards winning new business and maximising returns on our existing agreements so that profit maximisation is achieved. Our cost controls are fine tuned to ensure operating costs are kept to a minimum.

Appendix 4E Page 2

Appendix 4E Preliminary Final Report

1. CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 30 June 2021

For the year ended 30 June 2021
Note	Consolidated Group 2021 $ 2020 $
Revenue from continuing operations Sales Revenue 5(a) Cost of sales 6 Gross Profit Other revenue 5(b) Marketing expenses Occupancy expenses Insurance and legal expenses Administration expenses Other expenses from ordinary activities Profit/(Loss) before income tax Income tax (expense)/benefit 7 Profit attributable to members of the parent entity Other comprehensive income Total comprehensive income for the year Earnings per Share: Basic and diluted earnings (cents per share) 20	42,051,802 33,357,189 (34,992,311) (27,251,510)
	7,059,491 6,105,679 116,702 23,720 (10,982) (17,242) (171,484) (202,774) (16,055) (11,011) (1,662,359) (1,472,949) (203,687) (188,989)
	5,111,626 4,236,434 (1,475,024) (900,317)
	3,636,602 3,336,117 - -
	3,636,602 3,336,117
	9.32 8.77

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Appendix 4E Preliminary Final Report

2. CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2021

As at 30 June 2021
Notes	Consolidated Group 2021 $ 2020 $
CURRENT ASSETS Cash and cash equivalents 8 Trade and other receivables 9 Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Plant and equipment 10 Deferred tax assets Intangible assets 12 Right of use assets Other non-current assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 13 Provision for taxation 14 Lease liabilities Other current liability Deferred tax liabilities Short-term provisions 15 TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Lease liabilities Long term provisions 15 TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity 16 Reserves Retained profits TOTAL EQUITY	6,612,460 7,608,206 3,443,031 2,805,159 63,639 32,730
	10,119,130 10,446,095
	536,741 222,430 166,454 8,700 - - 234,236 400,580 48,206 47,734
	985,637 679,444
	11,104,767 11,125,539
	3,646,307 3,358,486 270,052 552,393 173,885 157,610 - 50,921 185,867 126,537 378,447 240,030
	4,654,358 4,485,977
	76,588 250,473 54,705 39,574
	131,293 290,047
	4,785,651 4,776,024
	6,319,116 6,349,515
	3,738,213 3,738,213 185,638 185,638 2,395,265 2,425,664
	6,319,116 6,349,515

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Appendix 4E Preliminary Final Report

3. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the Financial Year Ended 30 June 2021

	Share Capital Ordinary Retained Earnings Employee Equity- settled Benefits Reserve Total $ $ $ $
Balance at 1/7/2019 Total dividends paid for the year Total comprehensive profit for the year Balance at 30/6/2020 Balance at 1/7/2020 Total Dividends paid for the year Total comprehensive income for the year Balance at 30/6/2021	3,738,213 2,704,297 185,638 6,628,148 - (3,614,750) - (3,614,750) - 3,336,117 - 3,336,117
	3,738,213 2,425,664 185,638 6,349,515
	3,738,213 2,425,664 185,638 6,349,515 - (3,667,001) - (3,667,001) - 3,636,602 - 3,673,902
	3,738,213 2,395,265 185,638 6,319,118

4. CONSOLIDATED STATEMENT OF CASH FLOWS

For the Financial Year Ended 30 June 2021

4. CONSOLIDATED STATEMENT OF CASH FLOWS For the Financial Year Ended 30 June 2021
Note	Consolidated Group 2021 $ 2020 $
CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Income tax (expenses)/ refund Net cash provided by operating activities 18 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets at fair value through profit and loss Payment for property, plant and equipment Net cash (used in) / provided by investing activities CASH FLOWS FROM FINANCING ACTIVITIES Repayment of Borrowings Dividend paid Net cash (used in) / provided by financing activities Net increase / (decrease) in cash and cash equivalents held Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year 8	42,713,728 36,351,779 (38,481,592) (30,362,728) 2,857 22,767 (1,354,375) (859,594)
	2,880,375 5,152,224
	(20,585) (18,439) (205,053) 3,870
	(225,638) (14,569)
	16,275 157,610 (3,667,001) (3,614,750)
	(3,650,726) (3,457.140)
	(995,746) 1,680,516 7,608,206 5,927,690
	6,612,460 7,608,206

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Appendix 4E Preliminary Final Report

5. REVENUE

5. REVENUE
	Consolidated Group 2021 $ 2020 $
Revenue from continuing operations (a) Services - Contracting and permanent placement revenue (i) 42,051,802 33,357,189 (b) Other revenue - Interest received – other entities 3,329 23,720 - Other 113,373 - Total revenue 42,168,504 33,380,909 (i) Contracting revenue includes permanent placement fees, commission earned on contracting and contract services provided.	42,051,802 33,357,189 3,329 23,720 113,373 -
	42,168,504 33,380,909

6. EXPENSES

6. EXPENSES
	Consolidated Group 2021 $ 2020 $
Cost of providing services Rental expenses on operating leases - Minimum lease payments Depreciation and amortisation of non-current assets - Plant and equipment - Motor vehicles - Software Net transfers to provisions – employee benefits 7. INCOME TAX (a) Income tax expense Current tax Deferred tax (b) Numerical reconciliation of income tax to prima facie tax payable Profit from continuing operations before income tax expense at 26.00% Add tax effect of: Imputation credits Other assessable income Non-deductible depreciation and amortisation and other non-allowable items Less tax effect of: Non-assessable income & imputation credit Deductible expenses Over provision in prior year DTA previously not recognised Income tax expense	34,992,311 27,251,510 171,483 202,774 36,251 53,122 43,240 45,733 20,855 19,298 153,548 58,886
		1,289,358 818,988 185,666 81,329
		1,475,024 900,317
		1,329,023 1,134,166 - - (74,030) (226,924) (6,856) - 9,750 - 50,683 1,775 - - 166,454 (8,700)
		1,475,024 900,317

Appendix 4E Page 6

Appendix 4E Preliminary Final Report

8. CASH AND CASH EQUIVALENTS

SH AND CASH EQUIVALENTS
Cash at bank and in hand Bank term deposits	5,062,301 6,090,904 1,550,159 1,547,302
	6,612,460 7,608,206

The effective interest rate on bank deposits at call is 1.00%

9. TRADE AND OTHER RECEIVABLES

9. TRADE AND OTHER RECEIVABLES
	Consolidated Group 2021 $ 2020 $
Trade receivables	3,443,031 2,805,159

(a) Impaired trade receivables

As at 30 June 2021, none of the trade receivables of the Group were impaired (2020: $0)

(b) Past due but not impaired

As at 30 June 2021, trade receivable of $264,784 (2020: $86,803) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows:

30-60 days 61-90 days 90+ days	134,088 65,977 130,696 23,424 - (2,598)
	264,784 86,803

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Appendix 4E Preliminary Final Report

10. PLANT & EQUIPMENT

	Plant & Equipment Leasehold Improvements Motor vehicles TOTAL $ $ $ $
	482,286 79,303 278,772 840,361 (448,892) (68,321) (100,717) (617,930)
	33,394 10,981 178,055 222,430
	33,394 10,981 178,055 222,430 165,962 - 227,841 393,803 (26,911) (9,340) (43,241) (79,492)
	172,445 1,641 178,055 536,741
	648,248 79,303 278,772 506,613 (475,803) (77,662) (100,717) (697,423)

Plant and equipment has been tested for impairment at 30 June 2021 resulting in no impairment loss.

11. DEFERRED TAX LIABILITIES

Total deferred tax liabilities

Consolidated	Group
2021	2020
$	$
185,666	126,537
185,666	126,537

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Appendix 4E Preliminary Final Report

12. INTANGIBLE ASSETS

At 1 July 2019 Computer software at cost Accumulated Amortisation and impairment Net book value Year ended 30 June 2020 Opening net book balance Additions Amortisation and impairment Net book value As at 30 June 2020 Computer software at cost Accumulated Amortisation and impairment Net book value Year ended 30 June 2021 Opening net book balance Additions Amortisation and impairment Net book value As at 30 June 2021 Computer software at cost Accumulated Amortisation and impairment Net book value	Consolidated Group Intangibles at cost 1,108,370 (1,107,511)
	859
	859 18,438 (19,297)
	-
	1,126.809 (1,126,809)
	-
	- 20,855 (20,855)
	-
	1,147.664 (1,147,664)
	-

13. TRADE AND OTHER PAYABLES

Unsecured liabilities Trade payables Sundry payables and accrued expenses 4. PROVISION FOR TAXATION Current Income Tax 5. PROVISIONS Employee benefits Reconciliation of movement in the liability is recognized in the balance sheet as follows:- Prior year closing balance Increase / (Decrease) in provision Current year closing balance Provisions - Total current - Total non-current		Consolidated Group 2021 2020 $ $
		315,835 467,752 3,330,472 2,252,734
		3,646,307 2,720,486
		270,433 552,393
		433,152 279,604
		279,604 220,718 153,548 58,886
		433,152 279,604
		378,447 240,030 54,705 39,574
		433,152 279,604

14. PROVISION FOR TAXATION

15. PROVISIONS

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Appendix 4E Preliminary Final Report

16. ISSUED EQUITY

. ISSUED EQUITY
	Consolidated Group 2021 2020 $ $
39,000,000ordinary shares (2020: 38,050,000) Ordinary shares carry one vote per share and carry the right to dividends. Share Options: There are 4M options expiring in November 2022.	3,738,213 3,738,213

17. SEGMENT INFORMATION

The Consolidated Group operates primarily in one geographical and in one business segment, namely the ICT recruitment industry in Australia and reports to the Board on the performance of the Group as a whole.

18. NOTES TO STATEMENT OF CASH FLOWS

18. NOTES TO STATEMENT OF CASH FLOWS
		Consolidated Group 2021 $ 2020 $
Profit after income tax Depreciation and amortisation of non-current assets Decrease / (Increase) in assets Trade and other receivables Other Assets Deferred tax assets Increase/ (Decrease) in liabilities Provisions for taxation Trade and other payables Provisions Deferred tax liabilities Net cash flows provided by/(used in) operating activities 19. NTA BACKING Net tangible asset backing per ordinary security (per share)		3,636,602 3,336,117 106,589 118,153 30,781 (380,062) - - (157,754) (8,700) (282,341) 860,854 (665,936) 1,424,623 153,548 58,886 59,130 (257,647)
		2,880,619 5,152,224
		$0.16 $0.16

20. COMMENTARY ON RESULTS FOR THE PERIOD

HiTech’s core business is the recruitment of ICT professionals and the supply of contracting services. This sector of the market has been strong in the past year.

For the financial year ended 30 June 2021, the consolidated entity’s results are:

• Operating revenue is $42,168,504, an increase of 26% over the previous corresponding period (pcp) (FY20: $33,380,909).

• Gross Profit is $7,059,491, an increase of 16% over pcp (FY20: $6,105,679).

• NPAT is $3,636,602, an increase of 9% over pcp (FY20: $3,336,117).

• EBITDA is $5,214,886, an increase of 20% over pcp (FY20: $4,330,867).

The directors have declared a fully franked dividend of 5 cents per share to be paid on 15 September 2021 to shareholders registered on close of business on 1 September 2021 .

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Appendix 4E Preliminary Final Report

HiTech remains fully prepared to take advantage of any improvement in the ICT recruitment and services sector. We are working towards winning new business, increasing profit and ensuring that operating costs are kept to a minimum.

We are also actively seeking EPS accretive acquisitions.

EPS

Basic and diluted earnings per share for the current financial year was 9.32 cents per share as compared with 8.77 cents per share in the previous corresponding period.

Dividends

The directors have declared a fully franked dividend of 5 cents per share to be paid on 15 September 2021 to shareholders registered on close of business on 1 September 2021 .

Significant features of operating performance

HiTech currently supplies permanent and contract staff from its large, personalised database of over 375,000 specialised ICT professionals which has been developed over the years through various strategies of recruitment.

The HiTech client base is well established, with strong representation by Federal Government departments and agencies, recognised private enterprise and state government departments.

ICT contracting, comprising the provision of ICT professionals for temporary and other non-permanent staffing needs of clients for specific projects is the primary source of HiTech’s recurring steady cash flow. ICT contracting is viewed as a relatively higher volume business with recurring contractual arrangement for the supply of the service. We continue to grow this part of the revenue stream alongside permanent recruitment.

Factors which are likely to affect results in the future

While there is still an increasing short supply of quality candidates, any potential drop in ICT resources demand will result in lower margins, less contracts and downward pressure on permanent placement numbers.

We have retained our preferred supplier status with our valued clients and are working towards further developing these relationships. We are constantly evolving and improving our systems and productivity to provide a better service to our clients and candidates.

We expect to secure further contracts in the near future and develop our business in both the government and private sector.

21. AUDIT OF ACCOUNTS

This report is based on accounts that are in the process of being audited and are not likely to be subject to dispute or qualification.

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Elias Hazouri CEO 12 August 2021

Appendix 4E Page 11