AERIS ENVIRONMENTAL LTD
ACN 093977336
ANNUAL
REPORT
2019
Chairman and CEO Report
1
Review of Operations
3
Directors’ Report
5
Auditor’s Independence Declaration
20
Consolidated Statement of Profit or
Loss and Other Comprehensive Income
21
Consolidated Statement of Financial Position
22
Consolidated Statement of Changes in Equity
23
Consolidated Statement of Cash Flows
24
Notes to the Consolidated Financial Statements
25
Directors’ Declaration
59
Independent Auditor’s Report
61
Australian Securities Exchange (ASX)
Additional Information
69
Corporate Directory
72
ANNUAL
REPORT
2019
1 I A NN UAL REP ORT 2019
CHA IRMAN AN D CEO REPORT
Aeris today is successfully delivering on the inflection strategy outlined at
our last AGM. The company is highly focused on its commercial scale up,
driven by a series of global and local strategic partnerships.
It is clear that Aeris’ technical leadership is now being recognised and
supported by companies such as Daikin, Goodman, Carrier, Bunzl and
many others.
The Aeris whole-of-system approach ensures that
systems perform better, are safer, last longer and
cost less to run. The Company’s products solve real
world problems more effectively than conventional
toxic chemicals. Uniquely based on validated green
formulations, Aeris’ enzymes and treatments with
residual protection provide long-term remediation
and prevention of mould, bacteria growth, corrosion
protection and improved hygiene.
During the 2018-19 financial year, Aeris continued
with its thrust to market its product portfolio into
the North American market, through strategic
partnerships with global companies that can help
deliver rapid growth with customers in that market.
Aeris’ work on product development, achieving
regulatory approvals, customer validation and
global branding in association with its high-profile
customers and distributors in the core Hygiene
and Consumables, Anti-Corrosion, and SmartHUB
SmartENERGY and Control Systems business units.
Aeris’ aim is to leverage its know-how to generate
attractive margins on its product sales, in conjunction
with a focus on controlling costs, and at the same
time having a low fixed overhead. Aeris is now
producing a strong pipeline of recurring sales with its
leading customers and its platinum partners together
with specifying consultants.
During the March 2019 quarter, Aeris announced
that it has entered into an attractive distribution
agreement in China, with Aus Made for the sale of
three launch products, being Southern Cross Hard
Surface Disinfectant dry paper wipes, Southern Cross
Skin dry paper wipes and Evocide Extra (a hospital-
grade disinfectant cleaner with unique residual
efficacy). The opportunity in this strategic Australia-
China partnership is achieve a direct replacement
alternative for many plastic-based wipes and
incorporates the capability to disinfect both surfaces
and hands by simply moistening these paper-
based wipes. Evocide Extra provides hospital-grade
disinfectant capability, effective against bacteria,
viruses, mould and mildew, with superior cleaning
and extended residual anti-microbial protection
properties.
The Company is pleased to report that its
production support in the USA has proved to be
successful and is now rapidly scaling, projecting
to have more than enough capacity to support
the planned growth. Key to growth in the USA is
Aeris’ new and highly experienced team who can
provide its key distributors and commercial partners
with comprehensive training, technical services,
efficient regulatory registrations and supply chain
management.
AERIS ENVIRONMENTAL LTD I 2
On 12 December 2018 Aeris successfully closed a
share placement of $4 million to a new cornerstone
strategic investor group, professional investors
and existing shareholders. The Company held an
Extraordinary General Meeting on 29 January 2019,
at which Aeris’ shareholders approved an additional
share issue, and the placement was finalised on
31 January 2019 raising $3.21 million, for a total
of $7,210,000. In January 2019 the Company also
concluded a Share Purchase Plan which raised
$257,000. The three capital raisings were completed
at an issue price of $0.17 per share.
Aeris has had meaningful year on year growth, with
all divisions demonstrating broadly based market
demand and is increasingly generating new interest
from distributors and customers internationally. The
Company believes that the markets are broadly
adopting a requirement for more environmentally
friendly products and your company is in the right
place, at the right time to capitalize on this global
trend. Aeris is proud to be driving a comprehensive
agenda in terms of its environmental, social and
governance (ESG) responsibilities. Each and every
product in the Aeris portfolio targets an improved
environmentally sustainable profile, often replacing
toxic and conventional older technologies. In
parallel the products themselves deliver substantial
environmental benefits via energy efficiency, system
performance and extending the useful life of a
broad range of HVAC and Refrigeration assets. From
a social perspective, the Company has a number of
active programmes and aims to deliver increased
indoor air quality and improved health conditions in
the building environment.
The Board wishes to recognize the outstanding
efforts and achievements of our team who have
succeeded in having Aeris achieve a global footprint
and rapidly growing sales over the last calendar
year. The Company is in parallel strengthening its
investment in all aspects of ESG to help drive the
Aeris to its full potential. Aeris is successfully building
a scalable global business, delivering high impact
and outstanding green credentials. Our business
model and technology base is targeting an ongoing
growth in shareholder value while delivering a clean,
green, protect promise.
Maurie Stang
Non-Executive Chairman
Peter Bush
Chief Executive Officer
3 I AN NUAL REP ORT 2019
REVIEW OF OPERATIONS
The financial year ended 30 June 2019 has seen Aeris scale up its commercial
production capabilities and continue with its multi-region sale effort. The
Company has optimised its supply chain, commenced its key product rollout
in the USA, and maintained its work on developing relationships with
international leaders with existing paths to market.
Financial
Aeris achieved a record invoiced sales revenue of
$6,851,000, which was a greater than 250% increase
year-on-year with a strong forward sales order book.
A significant effort was placed on the successful
delivery of large-scale mould remediation projects
in Townsville, Queensland, with the Company as
master contractor. Aeris invoiced a total of $3,127,000,
which was a combination of full margin product
sales and low margin project management in the
year. Customers and insurance companies have
noted outstanding efficacy and performance of
Aeris’ products in this large-scale application. The
Company’s USA division invoiced over $500,000 in
the last quarter of the financial year. It is anticipated
that revenue in the USA will grow to become a
material component of Aeris’ sales mix in the 2019-20
financial year due to expanded sales channels.
The Company’s business in China commenced in
the second half of the 2018-19 year. Aeris’ distributor
in China has undertaken significant investment
in marketing, sales and promotion. Revenue for
the pre-launch initial purchases in the year were
$485,000, and it is anticipated that these will scale
as the Company’s programme rolls out. Revenue
of $2,739,000 was recorded from clients in Asia,
the Middle East, Europe and Australia at attractive
margins.
The annual operating loss, adjusted for one-off and
abnormal items, was $3,041,000, which was down 15%
year-on-year despite investment in the establishment
of North American operations and including research
& development (R&D) expenditure of $612,000.
The 2018-19 sales reflected a mix of ‘white
label’ products supplied to original equipment
manufacturers (OEMs) and project work, blended
with the higher margins from the Aeris branded
products. The Company anticipates that there will
be a positive impact on margins as the core Aeris
range forms a greater part of the revenue mix in
subsequent years.
Budgeted operating expenses for the 2019-20
financial year are targeted at less than $5,000,000
per annum (including forecast R&D of $500,000 less
ATO cash-back). This operating expenditure budget
provides expanded capability and cost savings of
$1,500,000 over the FY2019 year. It is anticipated that
growth in operating expenses will remain modest
whilst sales revenue is projected to grow significantly.
The Company now has in place a series of strategic
relationships that provide highly cost-effective
distribution capability across all Aeris’ major markets,
with recent emphasis on contracts in the USA and in
Europe. This includes an expanded management and
sales team in North America.
Commercial
During the year Aeris signed and commenced
worldwide strategic alliance with Goodman, a
division of Daikin Industries, Ltd. The Company’s
USA-produced air-conditioning maintenance range
was launched in North America across 210 stores
and to over 80,000 contractors. Scale-up of new
manufacturing and supply chain operations in the
USA in support of growth in revenue in multiple key
international markets.
First shipments of new Southern Cross hygiene range
to Aus Made Express International Group Pty Ltd for
the Greater China market.
BUNZL (leading global distributor of cleaning
products, catering supplies, food production
and health hygiene products) Memorandum of
Understanding signed, including a joint marketing and
new product development roadmap. Initial revenue
and a joint marketing activity have been successfully
established.
The first commercial order from Carrier in the
Philippines was received following over two years of
testing and is to supply corrosion coating for factory
application to coils for brand new residential and
commercial air-conditioning units.
Strategic opportunities are being addressed in
measurement, and data visualisation, control and
optimisation.
AERIS ENVIRONMENTAL LTD I 4
Revenue is scaling strongly in multiple divisions and
territories, with key commercial partnerships in place,
and now generating quarter-on-quarter growth.
There is increasing customer recognition of
the financial benefits, effectiveness, safety, and
environmental and health benefits from the Aeris
portfolio of solutions.
Working Capital
The full year cash receipts were $5,008,000, with
an additional amount of over $2,500,000 received
post-June 2019 year-end. At 30 June 2019 there
was $3,468,000 cash-on-hand, with an additional
$1,500,000 in net receivables (trade debtors less
creditors) at the end of the June 2019 financial year.
There has been an additional cash investment in
inventory of $454,000 (total $770,000) reflecting
increasing activity in the USA, Australia and south-
east Asia. The net 2018- 19 normalised net operating
cash outflow of $3,974,000, was achieved after
$440,000 of one-off and abnormal items were added
back.
Aeris continues to invest substantial resources into its
manufacturing and supply chain capability to support
the expected further material growth in its product
sales through its distribution network. This requires
an increase in the inventory of long lead time
components and raw materials in order to minimise
delays in sales
Share Placement, Share Purchase Plan and
Loan Repayment
During the year Aeris completed two share
placements amounting to $7,200,000 and Share
Purchase Plan (SPP) of $257,000 for a total of
$7,457,000. The placement and SPP were completed
at $0.17 per share. The fundraising was made to a
new cornerstone strategic investor group and existing
shareholders of the Company. Directors’ loans of
$1,500,000 were converted into shares at the same
price as the placement and SPP ($0.17 per share).
The balance of $818,000 in Directors’ loans, being
principal and interest, were repaid in the March 2019
quarter from the proceeds of the placement, making
Aeris debt free.
Investor Relations and Shareholder
Communications
Aeris continues with its investor relations efforts
and shareholders’ communications. The Company’s
programme to reach retail and institutional investors
continues to evolve and regular roadshows with
brokers and investors are planned for the coming
year. The Company increasingly attends and presents
at both local and international trade shows to
continue to drive the Company’s profile and presence
with trade wholesalers, key facility management
companies and customers.
5 I AN NUAL REP ORT 2019
DIRECTORS’ REP ORT
30 JUNE 2019
The Directors of Aeris Environmental Ltd submit herewith the Annual Financial
Report for the financial year ended 30 June 2019. In order to comply with the
provisions of the Corporations Act 2001, the Directors Report is as follows:
Directors
The names and details of the Directors and Company Secretary of the Company during or since the end of the
financial year are:
Maurie Stang
Non-Executive Chairman
Steven Kritzler
Non-Executive Director
Bernard Stang
Non-Executive Director
Mr Kritzler (M.Sc from the
UNSW in the field of Polymer
Chemistry) holds a number
of international patents. He
is the Technical Director of
Novapharm Research. Mr
Kritzler has over 40 years of
experience in commercial R&D
in the areas of pharmaceutical,
medical, cosmetic and specialty
industrial products. Under his
technical direction, Novapharm
Research has become a
world-leader in infection
control science.
Director since 2002.
Directorship of other listed
companies held in the last
three years: None
Mr M Stang is a director of the
Regional Health Care Group of
companies and of Novapharm
Research. He has over 30 years
of experience building and
managing successful companies
in the Australian healthcare
market, and extensive networks
within the life-sciences and
pharmaceutical sectors, both
in Australia and internationally.
Since co-founding the Regional
Health Care Group, Mr M
Stang has been instrumental
in building it into one of the
region’s leading healthcare
product suppliers, with a
key joint venture in the
Australasian dental market, and
successful operating businesses
across a range of medical,
pharmaceutical and consumer
healthcare sectors.
Director since 2002
– appointed Chairman in 2002.
Directorship of other listed
companies held in the last
three years:
Non-Executive Chairman of
Nanosonics Limited (ASX:NAN)
since November 2000.
Non-Executive Deputy
Chairman of Vectus Biosystems
Limited (ASX:VBS) since
December 2005.
Mr B Stang (B.Arch) is a
Co-Founder and Director of the
Regional Health Care Group
of companies. He serves as
the Chief Executive Officer of
Stangcorp Pty Ltd, Stoneville
Ltd and Brunswick Property Pty
Ltd, which are key property
entities in the Stang Group.
Mr B Stang manages a broad
portfolio of investments in the
private and listed sectors, and
has enjoyed over 40 years
of operational leadership
in successful healthcare
businesses. He serves as
a Director of Novapharm
Research. Mr B Stang is
a Director of Weizmann
Australia, which represents the
Weizmann Institute of Science
in Australia, and the Institute
has recently established the
Garvan-Weizmann Centre of
Cellular Genomics in Sydney,
in joint venture with the
Garvan Institute. He served as
a Non-Executive Director of
Nanosonics Limited (ASX:NAN)
until 2007.
Director since 2002.
Directorship of other listed
companies held in the last
three years:
Non-Executive Director of
Vectus Biosystems Limited from
December 2005 until October
2016.
AERIS ENVIRONMENTAL LTD I 6
Telephone: +61 3 9415 4000
Web: www.computershare.com
Robert Waring
Company Secretary
Mr Robert J Waring (B.Ec,
CA, FCIS, FFin, FAICD) was
appointed to the position of
Company Secretary of the
Company in 2002. He has
over 40 years of experience
in financial and corporate
roles, including over 25 years
in company secretarial roles
for ASX-listed companies and
over 19 years as a Director
of ASX-listed companies. Mr
Waring has over 30 years of
experience in industry and,
prior to that, spent nine years
with an international firm of
chartered accountants. He is a
director of Oakhill Hamilton Pty
Ltd, which provides company
secretarial and corporate
advisory services to a range of
listed and unlisted companies.
Mr Waring is also presently the
Company Secretary of ASX-
listed companies Cobalt Blue
Holdings Limited (ASX:COB),
Vectus Biosystems Limited
(ASX:VBS) and Xref Limited
(ASX:XF1).
Share Registry
Computershare Investor Services
Pty Ltd
Yarra Falls, 452 Johnston Street
Abbotsford VIC 3067
GPO Box 2975,
Melbourne VIC 3001
Peter Bush
Chief Executive Officer,
Alternate Director for M
and B Stang, and Chief
Financial Officer
Mr Bush (B.Com, CA) is the
Chief Financial Officer of the
Regional Health Care Group
of companies (one of the
region’s leading diversified
healthcare product suppliers,
with successful businesses
across a range of medical,
pharmaceutical, consumer
healthcare, and research
and development sectors)
and of GryphonCapital (an
independent merchant bank
that facilitates the financing
and development of emerging
healthcare-related entities).
He began his career working
for five years at BDO, a global
accounting and consulting firm,
and has since spent a number
of years working in industry. Mr
Bush holds a number of private
directorships and
board positions.
Alternate Director since 2011.
Directorship of other listed
companies held in the last
three years:
Non-Executive Director of
Vectus Biosystems Limited
(ASX:VBS) since July 2015.
Alex Sava
Non-Executive Director
Dr Sava (M.Sc in Chemical
Engineering, PhD in Physical
Chemistry) spent seven years
earlier in his career with the
Institute of Semiconductors in
Ukraine and four years as a
Vice President of New York-
based MicroMax Computer
Intelligence Inc. He holds
over 100 international patents
and has authored over 50
scientific articles. Dr Sava was
a Founder and Board member
of Nanosonics Pty Ltd from 14
November 2000 until prior to
its listing on ASX on 15 May
2007 as Nanosonics Limited
(ASX:NAN). He also made a
substantial contribution to the
later success of Nanosonics
Limited and has undertaken
business development activity
across many international
markets. Dr Sava has scientific,
regulatory and commercial
experience.
Director since 3 October 2016.
Directorship of other listed
companies held in the last
three years:
None
7 I A NN UAL REP ORT 2019
Directors' Meeting
The following table sets out the number of Directors’ meetings and Committee meetings held during the financial
year and the number of meetings attended by each Director (while they were a Director).
Board of
Directors
Meetings
*Audit
Committee
Meetings
Corporate
Governance
Committee Meetings
Remuneration and
Nomination
Committee Meetings
Number of meetings held
Number of meetings attended
Maurie Stang
Steven Kritzler
Bernard Stang
Alex Sava
9
9
7
8
6
3
1
3
N/A
3
N/A
1
N/A
1
N/A
-
-
-
-
-
*The Audit Committee became a joint Audit and Risk Committee on 1 April 2019
In addition to the above meetings the Board and senior executives conduct formal management meetings.
Committee Membership
As at the date of this Report, the Company had an Audit and Risk Committee, a Corporate Governance
Committee and a Remuneration and Nomination Committee of the Board of Directors. Members acting on the
Committees of the Board during the financial year were:
Audit and Risk Committee
Bernard Stang (Chairman)
Maurie Stang
Corporate Governance
Committee
Maurie Stang (Chairman)
Bernard Stang
Remuneration and
Nomination Committee
Maurie Stang (Chairman)
Bernard Stang
Steven Kritzler
Principal Activities
The principal activities of the consolidated entity during the course of the financial year were:
• research, development, commercialisation of proprietary technologies and global distribution of the AerisGuard
range of products;
• provision of HVAC/R Hygiene and Remediation Technology; and
• provision of Energy Efficiency solutions.
There is no significant change in the nature of activities performed by the Company during the financial year.
Review of Operations
The results of the operations of
the consolidated entity during the
financial year were as follows:
For a comprehensive review
of the Company’s operational
performance please refer to the
Chairman’s and Chief Executive
Officer’s Report.
Income
Expenses
2019
$
2018
$
6,980,773
2,770,897
(10,609,272)
(6,361,935)
Loss after income tax
(3,628,499)
(3,591,038)
AERIS ENVIRONMENTAL LTD I 8
Insurance premiums
During the financial year, the Company paid a
premium in respect of a contract to insure its
Directors and executives against a liability to the
extent permitted by the Corporations Act 2001.
The contract of insurance prohibits disclosure
of the nature of liability and the amount of the
premium.
During the financial year, the Company has not paid
a premium in respect of a contract to insure the
Auditor of the Company.
Proceedings on behalf of the Company
No person has applied for leave of Court 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.
The Company was not a party to any such
proceedings during the financial year.
Directors’ interests
Equity holdings
Maurie Stang
Bernard Stang
Steven Kritzler
Alex Sava
Peter Bush
Ordinary
shares
Rights over
ordinary shares
22,630,218
19,459,124
11,252,785
-
-
-
665,085
100,000
750,000
1,323,537
Options or rights granted to Directors
and Officers of the Company
During or since the end of the 2019 financial year,
the Company has not granted any options or rights
for no consideration over unissued ordinary shares
in Aeris Environmental Ltd to the Directors and
Officers.
Dividends
The Directors do not recommend the payment of
a dividend in respect of the year ended 30 June 2019
(2018: Nil). No dividends have been paid or declared
since the start of the financial year.
Significant changes in state of affairs
There have been no significant changes in the state
of affairs of the Group.
Significant events after the balance date
In the opinion of the Directors, no matters or
circumstances have arisen since the end of the
financial year that have significantly affected, or
may significantly affect, the operations of the
consolidated entity, the results of those operations
or the state of affairs of the consolidated entity in
future financial years.
Likely developments and expected results
Disclosure of information other than that
disclosed elsewhere in this Report regarding likely
developments in the operations of the consolidated
entity in future financial years and the expected
results of those operations is likely to result in
unreasonable prejudice to the consolidated entity.
Accordingly, this information has not been disclosed
in this Report.
Environmental regulations
The economic entity is not subject to any significant
environmental Commonwealth or State regulation in
respect of its operating activities.
Indemnification of Officers and Auditors
Indemnification
The Company has a Deed of Access and Indemnity
with each of its Directors, by which the Company
indemnifies each Director in relation to any liability
incurred as a result of being a Director of the
Company except where there is lack of good
faith.
During or since the financial year, the Company has
not indemnified or agreed to indemnify the Auditor of
the Company or any related entity against a liability
incurred by the Auditor.
9 I A NN UAL REP ORT 2019
Options or rights issued during the year:
Performance rights
to Peter Bush
2019
2018
-
1,323,537
Officers of the Company who are former audit
partners of UHY Haines Norton
There are no Officers of the Company who are
former audit partners of UHY Haines Norton.
Particulars of options or rights granted over
unissued shares
Auditors
UHY Haines Norton continues in office in accordance
with section 327 of the Corporations Act 2001.
Auditor’s Independence Declaration
The Auditor’s Declaration of Independence for the
year ended 30 June 2019 is attached to this Directors’
Report on page 20.
Corporate Governance
Aeris Environmental Ltd’s Corporate Governance
Statement and ASX Appendix 4G are released to
ASX on the same day the Annual Report is released.
The Company’s Corporate Governance Statement,
and its Corporate Governance Compliance Manual,
can be all found on the Company’s website at:
https://www.aeris.com.au/investor
Number of options or rights
on issue over unissued
ordinary shares
Shares issued in the period
as the result of the exercise
of options or rights
Options or rights expired
during the period
2019
2018
2,959,037
3,534,037
-
50,000
575,000
200,000
Options or rights granted
during the period
-
1,939,037
Full details of options or rights on issue are shown in Note 18.
Non-audit services
During the financial year UHY Haines Norton, the
Company’s Auditor, performed certain other services
in addition to their statutory duties.
The Board has considered the non-audit services
provided during the financial year by the Auditor
and, in accordance with written advice provided by
resolution of the Audit Committee, is satisfied that
the provision of those non-audit services during
the financial year by the Auditor is compatible with,
and did not compromise, the auditor independence
requirements of the Corporations Act 2001 for the
following reasons:
• All non-audit services were subject to the
corporate governance procedures adopted by
the Company, and have been reviewed by the
Audit Committee to ensure they do not impact the
integrity and objectivity of the Auditor.
• None of the services undermine the general
principles relating to auditor independence as set
out in APES 110 Code of Ethics for Professional
Accountants issued by the Accounting Professional
and Ethical Standards Board, including reviewing
or auditing the auditor’s own work, acting in a
management or decision-making capacity for the
company, acting as advocate for the company or
jointly sharing economic risks and rewards.
REM UN ERATION REPORT (AU DITED)
AERIS ENVIRONMENTAL LTD I 1 0
Key Management Personnel (KMP)
The KMP of the Company comprise the Directors,
Chief Executive Officer and Company Secretary only,
as follows:
Non-Executive Directors
Maurie Stang
Bernard Stang
Steven Kritzler
Alex Sava
Executive
Peter Bush
(Chief Executive Officer and Alternate Director)
Company Secretary
Robert Waring
Remuneration policies
Details of Aeris’ remuneration policies and practices, together with details of Directors’ and Executives’
remuneration, are as follows:
a)
Overview of remuneration structure
The objective of the Company’s executive reward framework is to ensure that reward for performance
is competitive and appropriate for the results delivered. Processes have been established to ensure
that the levels of compensation and remuneration are sufficient and reasonable, and explicitly linked
to the achievement of personal and corporate objectives. The short and long-term incentive plans are
specifically aligned to shareholder interests.
Aeris’ Remuneration and Nomination Committee advises the Board on remuneration policies and
practices generally, and makes specific recommendations on remuneration packages and other terms
of employment for staff, including Directors, the Company Secretary and senior managers of the
Company. The Committee has access to the advice of independent remuneration consultants to ensure
the remuneration and incentive schemes are consistent with its philosophy as well as current market
practices.
b)
Non-Executive Directors
During the 2019 financial year, 647,060 shares were issued to Alex Sava, Non-Executive Director, in lieu
of Directors’ Fees for his services for the period from 3 October 2016 to 30 June 2019, being 33 months,
at the rate of $40,000 per annum, using the 20-day VWAP, being $0.17 per share. Payments to Non-
Executive Directors are reviewed annually.
c)
Executives
The objective of Aeris’ executive reward system is to ensure that remuneration for performance is
competitive and appropriate for the results delivered. Executive pay structures include a base salary
and superannuation. In addition, executives and senior managers can participate in the Employee Share
Option Plan.
1 1 I AN NUAL REP ORT 2019
Remuneration Report (Continued)
d)
Short-term incentives (STI)
During the financial year ended 30 June 2019 no amounts were paid as STIs. The STI arrangement is
reviewed annually by the Board.
e)
Long-term incentives (LTI)
The LTI provide an annual opportunity for selected executives to receive awards in cash and equity.
The equity portion, being performance rights, vest over three years and is intended to align a significant
portion of an executive’s overall remuneration to shareholder value over a longer term. Equity grants
are subject to performance conditions (revenue and / or earnings per share) and are tested against the
performance hurdles set at the end of three financial years. If performance hurdles are not met at the
vesting date, the rights and options lapse. In addition, performance rights and options will only vest if
the executive KMP member remains in continuous employment with Aeris in their current or equivalent
position from the date of grant to the respective vesting date of each grant.
During the financial year ended 30 June 2019 no amounts were paid as LTIs.
f)
Share option based compensation
In February 2005, Aeris established an Employee Share Option Plan (ESOP). The ESOP was approved
by shareholders at the Annual General Meeting held on 25 November 2004 and was re-approved by
shareholders at the Annual General Meeting held on 27 November 2014. The terms of the ESOP provide
for the following conditions:
i. Vesting
33.33% vest on the first anniversary of grant of options
33.33% vest on the second anniversary of grant of options
33.34% vest on the third anniversary of grant of options
ii. The contractual life of the options issued ranges from three to five years.
iii. The exercise price determined in accordance with the Rules of the ESOP is based on the weighted
average price of the Company’s shares for the 20 trading days prior to the offer.
iv. Each option is convertible to one ordinary share.
v. All options expire on the earlier of their expiry date or 90 days after voluntary termination of the
participant’s employment.
vi. There are no voting or dividend rights attached to the options. There are no voting rights attached
to the unissued ordinary shares. Voting rights will be attached to the ordinary shares, which will be
issued when the options have been exercised.
vii. The options issued are on an equity-settled basis. There are no cash settlement alternatives.
AERIS ENVIRONMENTAL LTD I 12
Equity holdings transactions
The movement during the reporting period in the number of ordinary shares in Aeris Environmental Ltd held
directly, indirectly or beneficially by each specified Director and Executive, including their personally-related
entities, are as follows:
2019
Shares
Specified Directors
Number held
on 30 June
2018
Acquired
during
year
Sold
during
year
Issued on
exercise of
options
Number held
on
30 June 2019
Maurie Stang
20,398,290
2,231,928
Bernard Stang
17,227,196
2,231,928
Steven Kritzler
8,331,609
2,921,176
Alex Sava
68,025
597,060
Specified Executives
Peter Bush
750,000
-
Robert Waring
240,857
751,469
47,015,977
8,733,562
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,630,218
19,459,124
11,252,785
665,085
750,000
992,326
55,749,539
Options and rights
Specified Directors
Number held
on 30 June
2018
Granted
during
year
Lapsed
during
year
Exercised
during
year
Number held
on
30 June 2019
Maurie Stang
Bernard Stang
Steven Kritzler
-
-
-
Alex Sava
100,000
Specified Executives
Peter Bush
1,323,537
Robert Waring
50,000
1,473,537
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
1,323,537
50,000
1,473,537
13 I AN NUAL REP ORT 2019
Remuneration Report (Continued)
2018
Shares
Specified Directors
Number held
on 30 June
2017
Acquired
during
year
Sold
during
year
Issued on
exercise of
options
Number held
on
30 June 2018
Maurie Stang
20,621,822
-
(223,532)
Bernard Stang
17,003,664
223,532
Steven Kritzler
8,331,609
Alex Sava
68,025
Specified Executives
Peter Bush
Robert Waring
750,000
173,000
-
-
-
67,857
-
-
-
-
-
46,948,120
291,389
(223,532)
-
-
-
-
-
-
-
20,398,290
17,227,196
8,331,609
68,025
750,000
240,857
47,015,977
Options and rights
Specified Directors
Number held
on 30 June
2017
Granted
during
year
Lapsed
during
year
Exercised
during
year
Number held
on
30 June 2018
Maurie Stang
Bernard Stang
Steven Kritzler
-
-
-
Alex Sava
100,000
-
-
-
-
Specified Executives
Peter Bush
-
1,323,537
Robert Waring
50,000
-
150,000
1,323,537
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
1,323,537
50,000
1,473,537
Transactions with Directors and Director related entities
A number of specified Directors, or their personally-related entities, hold positions in other entities that result in
them having control or significant influence over the financial or operating policies of those entities. A number
of these entities transacted with the Company in the reporting period. The terms and conditions of those
transactions were no more favourable than those available, or which might reasonably be expected to be
available, on similar transactions to unrelated entities on an arms-length basis. Details of these transactions are
as follows.
AERIS ENVIRONMENTAL LTD I 14
Regional Healthcare Group Pty Ltd
The Company and its controlled entities incur expenses for services provided by
Regional Healthcare Group Pty Ltd.
Office and administration expenses
Rent
Distribution expenses
Corporate services
Mr M Stang and Mr B Stang are Directors and shareholders of Regional Healthcare Group Pty Ltd.
2019
$
2018
$
154,841
168,378
54,753
53,645
51,767
56,650
88,520
83,500
Novapharm Research (Australia) Pty Ltd
The Company and its controlled entities incur expenses for services provided by
Novapharm Research (Australia) Pty Ltd.
Mr M Stang, S Kritzler and B Stang are Directors and shareholders of Novapharm Research (Australia) Pty Ltd.
Research and development
Patent and other expenses
313,919
109,021
64,696
68,476
Ramlist Pty Ltd
The Company and its controlled entities incur expenses for rent and utility outgoings to
Ramlist Pty Ltd.
45,396
50,556
Mr M Stang and Mr B Stang are Directors and shareholders of Ramlist Pty Ltd.
Ensol Systems Pty Ltd
The Company and its controlled entities incur expenses for marketing and other
operational services to Ensol Systems Pty Ltd.
7,570
5,633
Mr M Stang is a shareholder of Ensol Systems Pty Ltd.
Teknik Lighting Solutions Pty Ltd
The Company and its controlled entities incur expenses for marketing and other
operational services to Teknik Lighting Solutions Pty Ltd.
8,231
3,761
Mr M Stang is a shareholder of Teknik Lighting Solutions Pty Ltd.
15 I AN NUAL REP ORT 2019
Remuneration Report (Continued)
Bright Accountants
The Company and its controlled entities incur expenses for accounting services to
Bright Accountants.
61,840
56,884
Mr P Bush is a related party to Bright Accountants.
2019
$
2018
$
Loans from Directors (Messrs M Stang, B Stang and S Kritzler)
Interest on loans
Loan borrowings
Loan repayments in cash
Loan repayments by issue of shares
Mr M Stang, S Kritzler and B Stang are Non-Executive Directors and shareholders of the Company.
52,209
15,748
1,050,000 1,200,000
750,000
1,500,000
-
-
These are unsecured loans with interest charged at ATO benchmark rates.
Outstanding balances payable from purchases of services
Regional Healthcare Group Pty Ltd
Novapharm Research (Australia) Pty Ltd
Ramlist Pty Ltd
Bright Accountants
Ensol Systems Pty Ltd
Teknik Lighting Solutions Pty Ltd
Outstanding balances at year-end are unsecured, interest free and settlement occurs in cash.
Outstanding loan balances
Directors’ loans
Interest is charged on these loans at ATO benchmark rates
24,259
171,352
14,892
179,439
882
26,067
6,545
10,305
82,387
84,136
3,520
-
- 1,200,000
AERIS ENVIRONMENTAL LTD I 1 6
Details of Directors’ and Executive officers’ remuneration for the year ended 30 June 2019
Short term benefits
Salary &
Director's
Fees
STI
Cash
bonus
Non-
monetary
benefits
Other
long-term
benefits
Post
employment
benefits
(Super-
annuation)
Equity based
benefits
Shares
Options
& rights
(Note (ii))
Total
Perfor-
mance
Related
Non-Executive Directors
Maurie Stang
Bernard Stang
Steven Kritzler
Alex Sava
$
-
-
-
40,411
$
-
-
-
-
$
-
-
-
-
$
-
-
-
-
$
-
-
-
-
$
-
-
-
-
$
-
-
-
$
-
-
-
9,410
49,821
%
0.0%
0.0%
0.0%
0.0%
Total Non-Executive
Directors
40,411
-
-
-
-
-
9,410
49,821
Executive Directors
Total Directors
-
40,411
Executives (Note (i))
Peter Bush
Robert Waring
238,816
100,493
-
-
-
-
-
-
-
-
-
-
22,647
-
-
-
-
-
-
-
-
-
0.0%
9,410
49,821
- 73,708
335,171
-
4,713 105,206
0.0%
0.0%
Total
379,720
-
-
22,647
-
- 87,831 490,198
Notes to the tables of details of Directors’ and Executive Officers’ remuneration
i.
“Executive Officers” are officers who are or were involved in, concerned in, or who take part in, the
management of the affairs of Aeris and/or related bodies corporate.”
ii. The fair value of the options is calculated at the date of grant using a Black-Scholes model and allocated
to each reporting period evenly over the period from grant date to vesting date. The value disclosed is the
portion of the fair value of the options allocated to this reporting period. In valuing the options, market
conditions have been taken into account in both the current and prior periods. Comparative information
was not restated as market conditions were already included in the valuation.
.
17 I A NN UAL REP ORT 2019
Remuneration Report (Continued)
Details of Directors’ and Executive officers’ remuneration for the year ended 30 June 2018
Short term benefits
Salary &
Director's
Fees
STI
Cash
bonus
Non-
monetary
benefits
$
-
-
-
69,589
$
-
-
-
-
$
-
-
-
-
Other
long-term
benefits
Post
employment
benefits
(Super-
annuation)
Equity based
benefits
Shares
Options
& rights
(Note (ii))
Total
Perfor-
mance
Related
$
-
-
-
-
$
-
-
-
-
$
-
-
-
-
$
-
-
-
$
-
-
-
9,410
78,999
%
0.0%
0.0%
0.0%
0.0%
69,589
-
-
-
-
-
9,410
78,999
Non-Executive Directors
Maurie Stang
Bernard Stang
Steven Kritzler
Alex Sava
Total Non-
Executive Directors
Executive Directors
Total Directors
-
69,589
Executives (Note (i))
Peter Bush
Robert Waring
240,175
71,781
-
-
-
-
-
-
-
-
-
-
22,817
-
-
-
-
-
-
-
-
-
0.0%
9,410
78,999
- 12,729 275,721
-
4,713
76,494
0.0%
0.0%
Total
381,545
-
-
22,817
-
- 26,852 431,214
The following factors and assumptions were used in determining the fair value of options on grant date.
Grant Date
Expiry Date
Fair value at
grant date
Exercise
price
Price of shares
on grant date
Estimated
volatility
Risk free
interest rate
23-Dec-16
23-Dec-16
14-Oct-21
23-Oct-21
$0.2823
$0.2828
$0.42
$0.42
$0.37
$0.37
108.3%
108.3%
2.34%
2.34%
The following factors and assumptions were used in determining the fair value of performance shares on issue date.
Grant Date
30-May-18
30-May-18
30-May-18
Vesting date
Price of shares on grant date
11-Apr-19
11-Apr-20
11-Apr-21
$0.1650
$0.1650
$0.1650
Exercise price
Not applicable
Not applicable
Not applicable
AERIS ENVIRONMENTAL LTD I 18
Employment contracts
Chief Executive Officer (CEO):
The following sets out the key terms of the employment for the CEO, Peter Bush
Contract term
Continuous employment until notice is given by either party
Fixed
remuneration
Notice period
Resignation or
termination
$261,463
This is reviewed annually.
To terminate his employment, Mr Bush is required to provide Aeris with 3 months written
notice. Aeris must provide 3 months written notice.
On resignation, unless the Board determines otherwise:
• All unvested short term or long term benefits are forfeited.
• All vested but unexercised benefits are forfeited after 90 days following cessation of
employment.
Statutory
entitlements
Annual leave applies in all cases of separation. Long Service applies unless Mr Bush’s
service is under 10 years and he is dismissed for misconduct.
Termination for
serious misconduct
Aeris may immediately terminate employment at any time in the case of serious misconduct
and Mr Bush will only be entitled to payment of fixed remuneration until the termination
date. Such termination will result in all unvested benefits being forfeited. Treatment of any
vested but unexercised benefits will be at the discretion of the Board.
Post-Termination
Restraint of Trade
For a period of 6 months or, if that period is unenforceable, 3 months after the termination
of employment, Mr Bush must not, in the area of Australia or, if that area is unenforceable,
New South Wales:
i.
solicit, canvass, approach or accept any approach from any person who was at any
time during his last 12 months with the Company a client of the Company in that part
or parts of the business carried on by the Company in which he was employed with a
view to obtaining the custom of that person in a business that is the same or similar to
the business conducted by the Company; or
ii.
interfere with the relationship between the Company and its customers, employees or
suppliers; or
iii. induce or assist in the inducement of any employee of the Company to leave their
employment.
There are no other contracts to which a Director is a party or under which a Director is entitled to a benefit other than as disclosed
above and in note 26 to the financial statements.
Link between remuneration and performance and statutory performance indicators
The table below shows measures of the Group’s financial performance over the last five years as required by the
Corporations Act 2001. However, these are not necessarily consistent with the measures used in determining the
variable amounts of remuneration to be awarded to KMP. As a consequence, there may not always be a direct
correlation between the statutory key performance measures and the variable remuneration awarded.
19 I A NN UAL REP ORT 2019
Remuneration Report (Continued)
2019
2018
2017
2016
2015
Loss for the year attributable to owners of
Aeris Environmental Ltd
(3,628,499)
(3,590,176)
(3,747,555)
(2,062,727)
(2,016,912)
Basic loss per share (cents per share)
(1.98)
(2.28)
(2.40)
(1.35)
(1.55)
Dividend payments
-
-
-
-
-
Increase/(decrease) in share price (%)
121.43%
(50.00%)
(33.33%)
(6.67%)
309.09%
Total KMP remuneration as percentage of
loss for the year (%)
(13.51%)
(12.01%)
(10.20%)
(13.00%)
(5.01%)
The Group’s sales revenue in the 2019 financial year recorded an increase by 149%, complimented by an increase
in share price by 121%.
The Company is also in discussions with management and remuneration consultants to structure and align KMP
remuneration with strategic business objectives, with the aim of creating shareholder wealth.
Share options
1,423,537 options and rights to take up ordinary shares in Aeris Environmental Ltd that were issued to KMP
remain unexercised at 30 June 2019 (2018: 1,473,537 options and rights).
The following options were issued to KMP during the financial year
Peter Bush
2019
-
2018
1,323,537
There were no options issued to KMP that expired or were forfeited during the years 2019 and 2018.
Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company
or any related body corporate, or in the interest of any other registered scheme.
Signed in accordance with a resolution of the Directors made pursuant to section 298(2) of the Corporations
Act 2001.
On behalf of the Directors
M STANG
Director
Sydney, 30 September 2019
AUDITO R’S IN DEP END ENCE
DECLARATION
AERIS ENVIRONMENTAL LTD I 20
Level 11 | 1 York Street | Sydney | NSW | 2000
GPO Box 4137 | Sydney | NSW | 2001
t: +61 2 9256 6600 | f: +61 2 9256 6611
sydney@uhyhnsyd.com.au
www.uhyhnsydney.com.au
Auditor's Independence Declaration under section 307C of the Corporations Act 2001
To the Directors of Aeris Environmental Ltd
As auditor for the audit of Aeris Environmental Ltd for the year ended 30 June 2019, I declare
that, to the best of my knowledge and belief, there have been:
(a) no contraventions of the independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the
audit.
This declaration is in respect of Aeris Environmental Ltd and the entities it controlled during
the year.
Mark Nicholaeff
Partner
Sydney
30 September 2019
UHY Haines Norton
Chartered Accountants
An association of independent (cid:386) rms in Australia and New Zealand and a member
of UHY International, a network of independent accounting and consulting (cid:386) rms.
14
UHY Haines Norton—ABN 85 140 758 156 NSWBN 98 133 826
Liability limited by a scheme approved under Professional Standards Legislation.
Passion beyond numbers
2 1 I A NN UAL REP ORT 2019
CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
For The Financial Year Ended 30 June 2019
Continuing Operations
Revenue
Cost of sales
Gross profit
Other revenue
Administration expenses
Depreciation and amortisation expense
Distribution expense
Employee benefits expense
Financial expenses
Impairment expense
Research and development and patent expense
Occupancy expenses
Sales, Marketing and Travel expenses
Loss before income tax from continuing operations
Income tax benefit
Net loss for the year
Other Comprehensive Income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation differences
Note
2019
$
2018
$
Re-stated
Refer note 1
4
6,851,258
2,751,960
4
5
5
5
5
5
5
(4,403,415)
(1,091,758)
2,447,843
1,660,202
129,515
(1,481,936)
(67,170)
(348,244)
(2,504,114)
(18,615)
(72,198)
(861,090)
(314,355)
(996,364)
18,937
(1,050,558)
(67,190)
(241,565)
(2,272,698)
(46,902)
(468,437)
(503,876)
(276,027)
(1,010,502)
(4,086,728)
458,229
(4,258,616)
667,578
(3,628,499)
(3,591,038)
(3,249)
2,331
Total comprehensive loss for the year, net of tax
(3,631,748)
(3,588,707)
Loss for the year attributable to :
Owners of Aeris Environmental Ltd
Non-controlling interest
Total comprehensive loss for the year attributable to:
Owners of Aeris Environmental Ltd
Non-controlling interest
Earnings per share
Basic loss per share (cents per share)
Loss from continuing operations
Diluted loss per share (cents per share)
Loss from continuing operations
21
21
7
(3,628,499)
-
(3,628,499)
(3,590,176)
(862)
(3,591,038)
(3,631,748)
-
(3,631,748)
(3,587,845)
(862)
(3,588,707)
(1.98)
(2.28)
(1.98)
(2.28)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
As At 30 June 2019
AERIS ENVIRONMENTAL LTD I 2 2
Crrent Assets
Cash And Cash Equivalents
Trade And Other Receivables
Inventories
Other Current Assets
Total Current Assets
Non-Current Assets
Trade And Other Receivables
Property, Plant And Equipment
Total Non-Current Assets
Total Assets
Current Liabilities
Trade And Other Payables
Provisions
Total Current Liabilities
Non-Current Liabilities
Borrowings
Provisions
Note
2019
$
9
10A
11
12
10B
13
2018
$
Re-stated
Refer note 1
157,643
1,716,397
318,196
139,933
3,467,877
3,442,028
770,073
194,435
7,874,413
2,332,169
31,632
91,498
54,487
115,324
123,130
169,811
7,997,543
2,501,980
14A
14B
2,136,041
272,135
1,281,441
273,701
2,408,176
1,555,142
15
16
-
24,543
1,200,000
25,770
Total Non-Current Liabilities
24,543
1,225,770
Total Liabilities
2,432,719
2,780,912
Net Assets / (Liabilities)
5,564,824
(278,932)
Equity
Contributed Equity
Reserves
Accumulated Losses
Non-Controlling Interest
Total Equity / (Deficit)
17
19
20
21
50,195,854
2,144,073
(46,778,788)
3,685
41,313,362
1,554,309
(43,150,288)
3,685
5,564,824
(278,932)
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
23 I AN NUAL REP ORT 2019
CON SOL IDATED STATEMENT
OF CHANGE S IN EQUITY
For The Financial Year Ended 30 June 2019
Equity
Reserves
Accumulated
losses
Non-
controlling
interest
Total
attributable to
equity holders
of the entity
$
$
$
$
$
Balance at 1 July 2017
41,312,862
1,354,514 (39,560,112)
4,547
3,111,811
Loss for the year
Other comprehensive income / (loss)
Total comprehensive loss for the year
-
-
-
- (3,230,023)
2,331
-
2,331 (3,230,023)
(862)
-
(862)
(3,230,885)
2,331
(3,228,554)
Transactions with owners in their capacity as owners:
Shares issued during year
Value of employee services under ESOP
500
-
-
197,464
-
-
-
-
500
197,464
Balance at 30 June 2018
41,313,362
1,554,309 (42,790,135)
3,685
81,221
Balance at 1 July 2018
(reported as at 30 June 2018)
Prior period restatement (Note 1)
Re-stated as at 1 July 2018
41,313,362
1,554,309 (42,790,135)
3,685
81,221
-
41,313,362
-
(360,153)
1,554,309 (43,150,288)
-
3,685
(360,153)
(278,932)
Loss for the year
Other comprehensive income / (loss)
Total comprehensive loss for the year
-
-
-
- (3,628,499)
-
(3,628,499)
(3,249)
(3,249)
Transactions with owners in their capacity as owners:
Shares issued to Directors towards loan
repayment
Shares issued to KMP
Share placement - Strategic Investors
Share Placement Plan
Shares issued to consultants on exercise of
options
1,500,000
180,000
7,208,692
257,500
1,500
-
-
-
-
-
Share issue cost
Value of employee services under ESOP
(265,200)
-
-
593,013
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,628,499)
(3,249)
(3,631,748)
1,500,000
180,000
7,208,692
257,500
1,500
(265,200)
593,013
Balance at 30 June 2019
50,195,854
2,144,073 (46,778,788)
3,685
5,564,824
The above statement of changes in equity should be read in conjunction with the accompanying notes.
CON SOL IDATED STATEMENT
OF CASH FLOWS
For The Financial Year Ended 30 June 2019
AERIS ENVIRONMENTAL LTD I 24
Cash flows from operating activities
Receipts from customers (inclusive of gst)
Payments to suppliers and employees (inclusive of gst)
R&d tax offset rebate received
Interest and other income received
Emdg benefit
Interest paid
Note
2019
$
2018
$
5,008,876
(10,583,314)
1,125,509
57,419
46,746
(67,956)
2,723,493
(5,644,375)
425,298
18,937
-
(61,656)
Net cash used in operating activities
33 (b)
(4,412,720)
(2,538,303)
Cash flows from investing activities
Purchase of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from shares issue
Loan repayments
Loan borrowings
(41,489)
(26,326)
(41,489)
(26,326)
7,467,692
(750,000)
1,050,000
-
-
1,200,000
Net cash provided by financing activities
7,767,692
1,200,000
Net increase / (decrease) in cash and cash equivalents
3,313,483
(1,364,629)
Cash and cash equivalents at the beginning of
the financial year
157,643
1,519,941
Effects of exchange rate changes on cash and cash equivalents
(3,249)
2,331
Cash and cash equivalents at the end of the financial year
9
3,467,877
157,643
*During the 2019 financial year Directors’ loan amounting to $1,500,000 was repaid by issuing 8,823,528 company’s ordinary shares.
This transaction did not have any effect on the group’s cash flow.
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
2 5 I AN NUAL REP ORT 2019
NOTE S TO THE CONSO LIDATED
FIN ANCIAL STATEME NTS
For The Financial Year Ended 30 June 2019
NOTE
1
2
3
4
5
6
7
8
9
Summary of significant accounting policies
Financial risk management
Critical accounting estimates and judgments
Revenue
Expenses
Income tax
Loss per share attributable to the ordinary equity-holders of the Company
Auditors' remuneration
Cash and cash equivalents
10 Current trade and other receivables
11
Inventories
12 Other current assets
13 Non-current assets
14 Current trade and other payables and provisions
15 Non-current borrowings
16 Non-current provisions
17
Contributed equity
18 Options
19
Reserves
20 Accumulated losses
21 Non-controlling interests
22
Particulars relating to controlled entities
23 Commitments for expenditure
24
Key management personnel disclosures
25
26
27
Share based payments
Related party disclosures
Financial instruments disclosures
28 Contingent liabilities
29 Additional company information
30
Subsequent events
31 Operating Segments
32
Information relating to Aeris Environmental Ltd (“the Parent Entity”)
33 Notes to cash flow statements
NOTE S TO THE CO NSO LIDATED
FINANCIAL STATEMENTS
1. SU MMARY OF SIGNIFICANT ACCOUNTING POLICIE S
AERIS ENVIRONMENTAL LTD I 26
Corporate information
The financial report of Aeris Environmental Ltd
(the Group) for the year ended 30 June 2019 was
authorised for issue in accordance with a resolution
of the Directors on 27 September 2019.
Aeris Environmental Ltd (the parent) is a company
limited by shares incorporated in Australia whose
shares are publicly listed on the Australian Stock
Exchange (ASX code: AEI).
The nature of the operations and principal
activities of the Group are described in the
Directors’ Report.
Basis of preparation
This financial report is a general purpose financial
report that has been prepared in accordance
with Australian Accounting Standards, Australian
Accounting Interpretations, other authoritative
pronouncements of the Australian Accounting
Standards Board and the Corporations Act 2001.
The financial report has been prepared on an
accruals basis and is based on historical costs,
modified where applicable, by the measurement at
fair value of selected non-current assets, financial
assets and financial liabilities.
Going Concern
The Group has incurred an operating loss (after
tax) of $3,628,499 for the year ended 30 June 2019
(2018 re-stated: $3,591,038) and has net assets
of $5,564,824 as at 30 June 2019 (2018 re-stated:
$278,932 net liabilities). The operating cash burn
rate for the financial year ended 30 June 2019 was
$4,412,720 (2018: $2,538,303). The cash balance as at
30 June 2019 was $3,467,877 (2018: $157,643).
Implementation of strategic business develeopment
measures are expected to improve the cash burn
rate significantly. The Directors have an expectation
that the sum of its activities will result in a positive
cash position during the financial year ending 30
June 2020.
As a consequence of the above, the Directors
are of the opinion that the Company will have
adequate resources to continue to be able to meet
its obligations as and when they fall due. For this
reason they continue to adopt the going concern
basis in preparing the Annual Financial Report.
Statement of Compliance
Australian Accounting Standards set out accounting
policies that the AASB has concluded would result
in a financial report containing relevant and reliable
information about transactions, events and conditions.
Compliance with Australian Accounting Standards
ensures that the financial statements and notes
also comply with International Financial Reporting
Standards.
New, revised or amending Accounting Standards and
Interpretations adopted
The consolidated entity has adopted all of the new,
revised or amending Accounting Standards and
Interpretations issued by the Australian Accounting
Standards Board (‘AASB’) that are mandatory for
the current reporting period. Any new, revised or
amending Accounting Standards or Interpretations
that are not yet mandatory have not been early
adopted.
Any significant impact on the accounting policies
of the consolidated entity from the adoption of
these Accounting Standards and Interpretations are
disclosed below.
AASB 15 Revenue from contracts with customers
The AASB has issued a new standard for revenue
recognition. This will replace AASB 118, which covers
contracts for goods and services, and AASB 111,
which covers construction contracts.
The new standard is based on the principle that
revenue is recognised when control of a good or
service transfers to a customer - so the notion of
control replaces the existing notion of risk and
rewards.
AASB Interpretation 22 Foreign Currency Transactions
and Advance Considerations
The Interpretation clarifies that, in determining the
spot exchange rate to use on initial recognition
of the related asset, expense or income (or part
of it) on the derecognition of a non-monetary
asset or non-monetary liability relating to advance
consideration, the date of the transaction is the
date on which an entity initially recognises the non-
monetary asset or non-monetary liability arising
from the advance consideration. If there are multiple
payments or receipts in advance, then the entity
must determine the date of the transactions for each
payment or receipt of advance consideration.
27 I A NN UAL REP ORT 2019
1. Summary of Significant Accounting Policies (Continued)
AASB 2017-1 Amendments to Australian Accounting
Standards – Transfer of Investment Property,
Annual Improvements 2014-2016 Cycle and
Other Amendments
AASB 140 Investment Property
The amendments clarify when an entity should
transfer property, including property under
construction or development into, or out of
investment property. The amendments state that a
change in use occurs when the property meets, or
ceases to meet, the definition of investment property
and there is evidence of the change in use.
AASB 2016-5 Amendments to Australian Accounting
Standards - Classification and Measurement of
Share-based Payment Transactions
The AASB issued amendments to AASB 2 Share-
based Payment that address three main areas: the
effects of vesting conditions on the measurement of
a cash-settled share-based payment transaction; the
classification of a share-based payment transaction
with net settlement features for withholding tax
obligations; and accounting where a modification to
the terms and conditions of a share-based payment
transaction changes its classification from cash-
settled to equity-settled.
AASB 128 Investments in Associates
and Joint Ventures
The amendments clarify that an entity that is a
venture capital organisation, or other qualifying
entity, may elect, at initial recognition on an
investment-by-investment basis, to measure its
investments in associates and joint ventures at fair
value through profit or loss.
AASB 1 First-time Adoption of International Financial
Reporting Standards
Short-term exemptions in paragraphs E3–E7 of AASB
1 were deleted because they have now served their
intended purpose.
AASB 2016-6 Amendments to Australian Accounting
Standards - Applying AASB 9 Financial Instruments
with AASB 4 Insurance Contracts
The amendments address concerns arising from
implementing the new financial instruments standard,
AASB 9, before implementing AASB 17 Insurance
Contracts, which replaces AASB 4. The amendments
introduce two options for entities issuing insurance
contracts: a temporary exemption from applying IFRS
9 and an overlay approach. These amendments are
not relevant to the Group.
The adoption of the above standards did not have
any material impact on the group.
Re-statement of comparatives
The Group has made a retrospective adjustment to a receivable from a customer to reflect the information
that was available as at 30 June 2018 but was not provided for in the 2018 financial report. The retrospective
adjustment has resulted in an additional impairment charge of $360,153 for the year ended 30 June 2018 with
a corresponding decrease in the carrying value of trade receivables. For details of the restatement refer to the
table below:
June 2018
Reported
Adjustment
June 2018
Restated
$
$
$
Extract from the financial statements for the year ended 30 June 2018
Trade and other receivables
Net assets
Accumulated losses
Total Equity
2,131,037
81,221
(360,153)
(360,153)
1,770,884
(278,932)
(42,790,135)
(360,153)
(43,150,288)
81,221
(360,153)
(278,932)
Impairment of trade receivables
108,284
360,153
468,437
Loss after tax
(3,230,885)
(360,153)
(3,591,038)
AERIS ENVIRONMENTAL LTD I 28
Significant accounting policies
Accounting policies are selected and applied in a
manner which ensures that the resultant financial
information satisfies the concepts of relevance and
reliability, thereby ensuring that the substance of
the underlying transactions and other events are
reported.
The following significant accounting policies have
been adopted in the preparation and presentation
of the financial report and have been consistently
applied unless otherwise stated.
i. Business Combinations
The acquisition method of accounting is used
to account for business combinations regardless
of whether equity instruments or other assets
are acquired. The consideration transferred is
the sum of the acquisition-date fair values of
the assets transferred, equity instruments issued
or liabilities incurred by the acquirer to former
owners of the acquiree and the amount of any
non-controlling interest in the acquiree. For each
business combination, the non-controlling interest
in the acquiree is measured at either fair value
or at the proportionate share of the acquiree’s
identifiable net assets. All acquisition costs are
expensed as incurred to profit or loss.
The difference between the acquisition-date fair
value of assets acquired, liabilities assumed and
any non-controlling interest in the acquiree and
the fair value of the consideration transferred
and the fair value of any pre-existing investment
in the acquiree is recognised as goodwill. If
the consideration transferred and the pre-
existing fair value is less than the fair value of
the identifiable net assets acquired, being a
bargain purchase to the acquirer, the difference
is recognised as a gain directly in profit or loss
by the acquirer on the acquisition-date, but only
after a reassessment of the identification and
measurement of the net assets acquired, the
non-controlling interest in the acquiree, if any,
the consideration transferred and the acquirer’s
previously held equity interest in the acquirer.
ii. Borrowing costs
Borrowing costs include interest or finance
charges in respect of finance leases. Interest
payments in respect of financial instruments
classified as liabilities are included in borrowing
costs. Borrowing costs are expensed as incurred.
iii. Cash and cash equivalents
Cash and cash equivalents comprise cash on
hand, cash in banks, investments in money
market instruments and short-term deposits
with a maturity of three months or less, net of
outstanding bank overdrafts.
iv. Comparative amounts
Where necessary, comparative amounts have
been changed to reflect changes in disclosures in
the current year.
v. Depreciation
All assets have limited useful lives and are
depreciated/amortised using the straight line
method over their estimated useful lives, taking
into account residual values. Depreciation and
amortisation rates and methods are reviewed
annually for appropriateness. Depreciation and
amortisation are expensed.
Depreciation and amortisation are calculated
on a straight line basis so as to write off the net
cost or other revalued amount of each asset
over its expected useful life.
The following estimated useful lives are used in the
calculation of depreciation.
Computer equipment
Computer software
Field equipment
Office furniture
Plant and equipment
Leasehold improvements
2-3 years
3 years
2-3 years
5 years
2-3 years
6 years
Field equipment under finance lease
2-3 years
vi. Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing
the profit attributable to equity holders of the
company, excluding any costs of servicing equity
other than ordinary shares, by the weighted
average number of ordinary shares outstanding
during the year, adjusted for bonus elements in
ordinary shares issued during the year.
2 9 I AN NUAL REP ORT 2019
1. Summary of Significant Accounting Policies (Continued)
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.
vii. 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 within
12 months of the reporting date are recognised
in current liabilities 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.
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 recognised
in non-current liabilities, provided there is an
unconditional right to defer settlement of the
liability. The liability is measured as 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 national
government 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.
Share-based payment
Share-based compensation benefits are provided
to employees via the Aeris Environmental Ltd
Employee Option Plan. Information relating to
these schemes is set out in Note 25.
The fair value of options granted under the
Employee Option Plan is recognised as an
employee benefit expenses with a corresponding
increase in equity. The fair value is measured
at grant date and recognised over the
period during which the employees become
unconditionally entitled to the options.
The fair value at grant date is independently
determined using a Black-Scholes option pricing
model. At each balance sheet date, the entity
revises its estimate of the number of options
that are expected to become exercisable. The
employee benefit expense recognised each
period takes into account the most recent
estimate. The impact of the revision to original
estimates, if any, is recognised in the income
statement with a corresponding adjustment to
equity.
viii. Financial assets
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.
They are subsequently measured at either
amortised cost or fair value depending on
their classification. Classification is determined
based on the purpose of the acquisition and
subsequent reclassification to other categories is
restricted.
Financial assets are derecognised when the rights
to receive cash flows from the financial assets
have expired or have been transferred and the
consolidated entity has transferred substantially
all the risks and rewards of ownership.
Financial assets at fair value through profit or
loss
Financial assets at fair value through profit or
loss are 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 ii) designated as such upon initial recognition,
where they are managed on a fair value basis or
to eliminate or significantly reduce an accounting
mismatch. Except for effective hedging
instruments, derivatives are also categorised
as fair value through profit or loss. Fair value
movements are recognised in profit or loss.
Available-for-sale financial assets
Available-for-sale financial assets are
non-derivative financial assets, principally equity
securities, that are either designated as
AERIS ENVIRONMENTAL LTD I 30
available-for-sale or not classified as any
other category. After initial recognition, fair
value movements are recognised in other
comprehensive income through the available-
for-sale reserve in equity. Cumulative gain or
loss previously reported in the available-for-sale
reserve is recognised in profit or loss when the
asset is derecognised or impaired.
ix. Financial Instruments issued by the company
Debt and Equity Instruments
Debt and equity instruments are classified as
either liabilities or as equity in accordance with
the substance of the contractual agreement
Interest
Interest is classified as an expense consistent with
the balance sheet classification of the related
debt or equity instruments.
x. Financial liabilities
The Group classifies its financial liabilities as
measured at amortised cost. The Group does
not use derivative financial instruments in
economic hedges of currency or interest rate risk.
These financial liabilities include the following
items:
•
•
Trade payables and other short-term
monetary liabilities, which are initially
recognised at fair value and subsequently
carried at amortised cost using the effective
interest method.
Lease liabilities are initially recognised at fair
value net of any transaction costs directly
attributable to the issue of the instrument and
subsequently carried at amortised cost using
the effective interest method.
xi. Foreign currency
Foreign currency transactions
All foreign currency transactions during the
financial year are brought to account using
the exchange rate in effect at the date of the
transaction. Foreign currency monetary items at
reporting date are translated at the exchange
rate existing at reporting date. Non-monetary
assets and liabilities carried at fair value that are
denominated in foreign currencies are translated
at the rates prevailing at the date when the fair
value was determined.
Exchange differences are recognised in statement
of profit or loss and other comprehensive income
in the period in which they arise.
Group companies
The results and financial positions of all the
Group entities that have a functional currency
different from the presentation currency are
translated into the presentation currency as
follows:
• Assets and liabilities for each balance sheet
presented are translated at the closing rate
at the date of that balance sheet;
•
Income and expenses for each income
statement are translated at average
exchange rates; and
• All resulting exchange differences are
recognised as a separate component of
equity.
On consolidation, exchange difference arising
from the translation of any net investment in
foreign entities, and of borrowings and other
financial instruments designated as hedges of
such investments, are recognised in the foreign
currency translation reserve. When a foreign
operation is sold or any borrowings forming part
of the net investment are repaid, a proportionate
share of such exchange differences are
recognised in the statement of profit or loss and
other comprehensive income as part of the gain
or loss on sale where applicable.
xii. Functional and presentation currency
The functional and presentation currency of Aeris
Environmental Ltd and its Australian subsidiaries
is Australian dollars (A$). Overseas subsidiaries
use the currency of the primary economic
environment in which the entity operates, which
is translated to the presentation currency upon
consolidation.
xiii. Goods and services tax
Revenues, expenses and assets are recognised
net of the amount of goods and services tax
(GST), except where the amount of GST incurred
is not recoverable from the taxation authority. In
these circumstances, it is recognised as part of
the cost of acquisition of an asset or as part of
an item of expense.
31 I AN NUAL REP ORT 2019
1. Summary of Significant Accounting Policies (Continued)
Receivables and payables are recognised
inclusive of GST.
The net amount of GST recoverable from, or
payable to, the taxation authority is included as
part of receivables or payables.
Cash flows are included in the statement of cash
flows on a gross basis. The GST component of
cash flows arising from investing and financing
activities which is recoverable from, or payable
to, the taxation authority is classified as
operating cash flows.
xiv. Impairment of assets
At each reporting date, the company reviews
the carrying amounts of its tangible and
intangible assets to determine whether there is
any indication that those assets have suffered an
impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in
order to determine the extent of the impairment
loss (if any). Where the asset does not generate
cash flows that are independent from other
assets, the company estimates the recoverable
amount of the cash-generating unit to which the
asset belongs.
If the recoverable amount of an asset (or
cash-generating unit) is estimated to be less
than its carrying amount, the carrying amount
of the asset (cash-generating unit) is reduced
to its recoverable amount. An impairment loss is
recognised in profit or loss immediately, unless
the relevant asset is carried at fair value, in
which case the impairment loss is treated as a
revaluation decrease.
Where an impairment loss subsequently
reverses, the carrying amount of the asset
(cash-generating unit) is increased to the revised
estimate of its recoverable amount, but only to
the extent that the increased carrying amount
does not exceed the carrying amount that would
have been determined had no impairment loss
been recognised for the asset (cash-generating
unit) in prior years. A reversal of an impairment
loss is recognised in profit or loss immediately,
unless the relevant asset is carried at fair value,
in which case the reversal of the impairment loss
is treated as a revaluation increase.
xv. Income tax
Income tax on the profit or loss for the year
comprises current and deferred tax. Income tax
is recognised in the income statement except
to the extent that it relates to items recognised
directly in equity, in which case it is recognised
in equity.
Current tax is the expected tax payable on the
taxable income for the year, using tax rates
enacted or substantially enacted at the balance
sheet date, and any adjustment to tax payable in
respect of previous years.
Deferred tax is accounted for using the balance
sheet liability method, providing for temporary
differences between the carrying amounts of
assets and liabilities for financial reporting
purposes and the amounts used for taxation
purposes. The following temporary differences
are not provided for: goodwill not deductible
for tax purposes, the initial recognition of
assets or liabilities that affect neither accounting
nor taxable profit, and differences relating
to investments in subsidiaries to the extent that
they will probably not reverse in the foreseeable
future.
The amount of deferred tax provided is based
on the expected manner of realisation or
settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively
enacted at the balance sheet date.
A deferred tax asset is recognised only to the
extent that it is probable that future taxable
profits will be available against which the asset
can be utilised. Deferred tax assets are reduced
to the extent that it is no longer probable that
the related tax benefit will be realised.
Tax consolidation
The company and all its wholly-owned Australian
resident entities have entered into a tax
consolidated group under Australian taxation law.
The company is the head entity in the
tax-consolidated group comprising all the
Australian wholly-owned subsidiaries set out in
Note 22. The head entity recognises all of the
current and deferred tax assets and liabilities of
the tax consolidated group (after elimination of
intragroup transactions).
AERIS ENVIRONMENTAL LTD I 32
consolidated entity has control. The consolidated
entity controls an entity when the consolidated
entity 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 to direct the activities of the entity.
Subsidiaries are fully consolidated from the
date on which control is transferred to the
consolidated entity. They are de-consolidated
from the date that control ceases.
Intercompany transactions, balances and
unrealised gains on transactions between
entities in the consolidated entity are eliminated.
Unrealised losses are also eliminated unless the
transaction provides evidence of the impairment
of the asset transferred. Accounting policies of
subsidiaries have been changed where necessary
to ensure consistency with the policies adopted
by the consolidated entity.
The acquisition of subsidiaries is accounted for
using the acquisition method of accounting.
A change in ownership interest, without the
loss of control, is accounted for as an equity
transaction, where the difference between the
consideration transferred and the book value of
the share of the non-controlling interest acquired
is recognised directly in equity attributable to
the parent. Non-controlling interest in the results
and equity of subsidiaries are shown separately
in the statement of profit or loss and other
comprehensive income, statement of financial
position and statement of changes in equity
of the consolidated entity. Losses incurred by
the consolidated entity are attributed to the
non-controlling interest in full, even if that results
in a deficit balance.
Where the consolidated entity loses control over
a subsidiary, it derecognises the assets including
goodwill, liabilities and non-controlling interest
in the subsidiary together with any cumulative
translation differences recognised in equity. The
consolidated entity recognises the fair value of
the consideration received and the fair value of
any investment retained together with any gain
or loss in profit or loss.
Subsidiaries are accounted for at cost in
the separate financial statements of Aeris
Environmental Ltd less any impairment charges.
xvi. Inventories
Inventories and raw materials are carried at the
lower of cost and net realisable value. Costs are
assigned on first in first out basis.
xvii. 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 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 consolidated entity 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.
xviii.
Principles of consolidation
The consolidated financial statements incorporate
the assets and liabilities of all subsidiaries of
Aeris Environmental Limited (‘company’ or
‘parent entity’) as at 30 June 2019 and the
results of all subsidiaries for the year then
ended. Aeris Environmental Limited and its
subsidiaries together are referred to in these
financial statements as the ‘consolidated entity’.
Subsidiaries are all those entities over which the
33 I AN NUAL REP ORT 2019
1. Summary of Significant Accounting Policies (Continued)
xix. Provisions
xxii. Revenue recognition
Provisions are recognised when the consolidated
entity has a present obligation, the future
sacrifice of economic benefits is probable,
and the amount of the provision can be
measured reliably.
When some or all of the economic benefits
required to settle a provision are expected to
be recovered from a third party, the receivable
is recognised as an asset if it is probable that
recovery will be received and the amount of the
receivable can be measured reliably.
The amount recognised as a provision is the
best estimate of the consideration required to
settle the present obligation at reporting date,
taking into account the risks and uncertainties
surrounding the obligation. Where a provision is
measured using the cash flows estimated to settle
the present obligation, its carrying amount is the
present value of those cash flows.
xx. Research and development
Research and development expenditure is
expensed as incurred except to the extent that
development expenditure recoverability is assured
beyond reasonable doubt, in which case it is
capitalised. Deferred development expenditure is
amortised on a straight line basis over the period
during which the related benefits are expected
to be realised once commercial production has
commenced.
xxi. Recoverable amount of non-current assets
The carrying amounts of non-current assets
valued on the cost basis are reviewed to
determine whether they are in excess of their
recoverable amount at reporting date. If the
carrying amount of a non-current asset exceeds
its recoverable amount, the asset is written down
to the lower amount. The write-down is expensed
in the reporting period in which it occurs.
Where a group of assets working together
supports the generation of cash inflows,
recoverable amount is assessed in relation to
that group of assets. In assessing recoverable
amounts of non-current assets, the relevant
cash flows have been discounted to their
present value.
Revenue is recognised to the extent that it is
probable that the economic benefits will flow
to the Group and the revenue can be reliably
measured. The following specific recognition
criteria must also be met before revenue is
recognised:
Sale of goods and disposal of assets
Revenue from the sale of goods and disposal of
assets is recognised when the consolidated entity
has passed the risks and rewards of the goods
or assets to the buyer.
Revenue from services
Revenue from consultancy and engineering
services is recognised by reference to the stage
of completion. Stage of completion is measured
by reference to labour hours incurred to date
as a percentage of total estimated labour
hours for each contract. When the contract
outcome cannot be measured reliably, revenue is
recognised only to the extent that the expenses
incurred are eligible to be recovered.
Government grants
Grants from the government are recognised
at their fair value where there is a reasonable
assurance that the grant will be received and the
Group will comply with all attached conditions.
Government grants related to costs are deferred
and recognised in the income statement over the
period necessary to match them with the costs
that they are intended to compensate.
Interest income
Interest income is recognised as it is accrued
using the effective interest rate method.
Other income
Other income is recognised as it is earned.
xxiii.
Share capital
Financial instruments issued by the Group are
treated as equity only to the extent that they do
not meet the definition of a financial liability.
The Group’s ordinary shares are classified
as equity instruments. Any transaction costs
associated with the issuing of shares are
deducted from share capital.
The Group is not subject to any externally
imposed capital requirements.
xxiv.
Borrowings and Convertible notes
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 if the impact is material to the
financial report.
Where there is an unconditional right to defer
settlement of the liability for at least 12 months
after the reporting date, the loans or borrowings
are classified as non-current.
Convertible notes are separated into liability
and equity components based on the terms
of the contract.
On issuance of the convertible notes, the fair
value of the liability component is determined
using a market rate for an equivalent
non-convertible bond. This amount is classified
as a financial liability measured at amortised
cost (net of transaction costs) until it is
extinguished on conversion or redemption.
The remainder of the proceeds is allocated
to the conversion option that is recognised
and included in equity. Transaction costs are
deducted from equity, net of associated income
tax. The carrying amount of the conversion
option is not remeasured in subsequent years.
Transaction costs are apportioned between the
liability and equity components of the convertible
notes based on the allocation of proceeds to
the liability and equity components when the
instruments are initially recognised.
xxv. Trade and other payables
Trade payables and other accounts payable
are recognised when the consolidated entity
becomes obliged to make future payments
resulting from the purchase of goods and
services. Trade accounts payable are normally
settled within 30 days.
xxvi.
Trade and other receivables
Trade and other receivables are recognised
initially at fair value and generally due for
settlement within 60 days. The collectability of
debts is reviewed on an ongoing basis. Debts
which are known to be uncollectible are written
off. A provision for impairment of receivables
is established when there is objective evidence
that the Group will not be able to collect all
amounts due according to the original terms of
the receivables. The amount of the provision is
AERIS ENVIRONMENTAL LTD I 34
recognised in the income statement as financial
expenses.
xxvii.
Parent entity information
In accordance with the Corporations Act 2001,
these financial statements present the results
of the consolidated entity only. Supplementary
information about the parent entity is disclosed
in note 32.
xxviii.
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 principle
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 interest. 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 each reporting
date and transfers between levels are
determined based on a reassessment of the
lowest level input that is significant to the fair
value measurement.
For recurring and non-recurring fair value
measurements, external valuers may be used
when internal expertise is either not available or
when the valuation is deemed to be significant.
External valuers are selected based on market
knowledge and reputation. Where there is a
significant change in fair value of an asset or
liability from one period to another, an analysis
is undertaken, which includes a verification of the
major inputs applied in the latest valuation and
a comparison, where applicable, with external
sources of data.
35 I A NN UAL REP ORT 2019
2. F INANCI AL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks; market risk (including currency risk, credit risk, fair
value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The Group’s overall
risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the financial performance of the Group.
a)
Foreign exchange risk
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities
are denominated in a currency that is not the entity’s functional currency. The Group is exposed to
foreign exchange risk predominantly arising from currency exposures to the US dollar on its loans to its
overseas subsidiaries. Currency protection measures may be deemed appropriate in specific commercial
circumstances and are subject to strict limits laid down by the Board. The Group has not entered into
any foreign currency hedging contracts during the year.
b)
Credit risk
Credit risk arises from the potential failure of counterparties to meet their obligations under the
respective contracts at maturity. There is negligible credit risk on financial assets of the Group since
there is limited exposure to individual customers and the economic entity’s exposure is limited to the
amount of cash, short term deposits and receivables which have been recognised in the balance sheet.
c)
Cash flow and fair value interest rate risk
As the Group has no significant interest-bearing assets or liabilities, the Group’s income and operating
cash flows are not materially exposed to changes in market interest rates.
d)
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding to
enable the company to operate as a going concern. The Board monitors liquidity on a monthly basis
and management monitors liquidity on a daily basis.
2. FINANCIAL RISK MANAGEMENT
3. CR ITICAL ACCOUNTING E STIMATE S AND JUDGMENTS
AERIS ENVIRONMENTAL LTD I 3 6
The preparation of the financial statements requires management to make judgments, estimates and assumptions
that affect the reported amounts in the financial statements. Management continually evaluates its judgments
and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its
judgments and estimates on historical experience and on other various factors it believes to be reasonable under
the circumstances, the result of which form the basis of the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these estimates under different assumptions
and conditions.
Management has identified the following critical accounting policies for which significant judgments, estimates
and assumptions are made. Actual results may differ from these estimates under different assumptions and
conditions and may materially affect financial results or the financial position reported in future periods.
Further details of the nature of these assumptions and conditions may be found in the relevant notes to the
financial statements.
The following critical estimates and judgments have been made in respect of the following items:
a)
Recovery of deferred tax assets
Deferred tax assets are not recognised for deductible temporary differences until management considers
that it is probable that future taxable profits will be available to utilise those temporary differences.
b)
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair
value of the equity instruments at the date at which they are granted. The fair value is determined
using the Black & Scholes model, with the assumptions detailed in Note 25. The accounting estimates
and assumptions relating to equity-settled share-based payments would have no impact on the
carrying amounts of assets and liabilities within the next annual reporting period but may impact
expenses and equity.
c)
Fair value of financial instruments
When the fair value of financial assets and financial liabilities recorded in the statement of financial
position cannot be derived from active markets, their fair value is determined using valuation techniques
including the discounted cash flow model. The inputs to these models are taken from observable markets
where possible, but where this is not feasible, a degree of judgement is required in establishing fair
values. The judgements include considerations of inputs such as liquidity risk, credit risk and volatility.
Changes in assumptions about these factors could affect the reported fair value of financial instruments.
37 I A NN UAL REP ORT 2019
4. REVENUE
Revenue
Revenue from sales
Revenue from services
Other revenue
Financial income
EMDG benefit
Miscellaneous
5. EXPENSE S
Loss before income tax includes the following items of expense:
Depreciation and amortisation expense
Depreciation of leasehold assets
Depreciation of plant and equipment
Total depreciation and amortisation expense
Employee benefit expenses
Base salary and fees
Superannuation & statutory oncosts
Share based payment expense (Note 25(a) )
Other employee expenses
Total employee benefit expenses
Financial expenses
Interest, bank fees and other financial expenses
Other expenses
Impairment of receivables
Rental & occupancy expenses
Research and development and patent expenses
2019
$
2018
$
2,777,113
2,007,944
4,074,145
744,016
6,851,258
2,751,960
57,399
46,746
25,370
129,515
13,348
-
5,589
18,937
2019
$
6,332
60,838
67,170
2018
$
6,332
60,858
67,190
1,594,103
283,454
593,013
33,544
1,862,285
201,028
197,464
11,921
2,504,114
2,272,698
18,615
18,615
46,902
46,902
72,198
314,355
861,090
468,437
276,027
503,876
4. REVENUE
6. I NCO M E TAX
AERIS ENVIRONMENTAL LTD I 38
2019
$
2018
$
a) Income tax benefit
The prima facie income tax benefit on pre-tax accounting loss reconciles to the income tax benefit in the
financial statements as follows:
Loss for year
(4,086,728)
(4,258,616)
Income tax benefit calculated at 30%
(1,226,019)
(1,277,585)
Temporary differences and tax losses not recognised
589,884
550,766
- Non deductible expenses
- Share based payments
177,905
59,240
5. EXPENSE S
Income tax benefit attributable to loss
(458,229)
(667,578)
b) Deferred tax balances not recognised
Calculated at 30% not brought to account as assets:
Deferred tax assets
Tax losses
2019
$
2018
$
Revenue tax losses available for offset against future tax income
7,951,360
7,305,778
Temporary differences
Provision for doubtful debts
Provision for employee entitlements
Difference between book and tax values of fixed assets
Accruals
235,537
89,003
29,540
8,700
362,780
122,594
89,841
60,356
7,200
279,991
Total deferred tax assets
8,314,140
7,585,769
Net deferred tax asset not recognised
8,314,140
7,585,769
39 I AN NUAL REP ORT 2019
6. Income Tax (Continued)
c) Tax consolidation
i) Relevance of tax consolidation to the consolidated entity
Legislation to allow groups comprising a parent entity and its Australian resident wholly-owned entities, to elect
to consolidate and be treated as a single entity for income tax purposes (‘the tax consolidation system’) was
substantively enacted on 21 October 2002. The Company, its wholly-owned Australian resident entities and its
sister entities within Australia are eligible to consolidate for tax purposes under this legislation and have elected
to implement the tax consolidation system from 1 July 2005.
ii) Method of measurement of tax amounts
The tax consolidated group has adopted the “stand-alone” method of measuring current and deferred tax
amounts applicable to each company.
iii) Tax sharing agreements
There are no tax sharing or funding agreements in place.
iv) Tax consolidation contributions
There were no amounts recognised for the period as tax consolidations contributions by (or distributions to)
equity participants of the tax consolidated group.
7. LOS S PER SHARE ATTRIBUTABLE TO THE ORDINARY
EQ UIT Y-HOLDERS OF THE COMPANY
Basic loss per share (cents per share)
2019
$
(1.98)
2018
$
(2.28)
Diluted loss per share (cents per share)
(1.98)
(2.28)
Net loss used to calculate basic EPS
(3,628,499)
(3,590,176)
Net loss used to calculate diluted EPS
(3,628,499)
(3,590,176)
Weighted average number of ordinary shares used to calculate basic EPS
183,224,455
157,750,866
Weighted average number of ordinary shares used to calculate diluted EPS
183,224,455
157,750,866
Options and rights eligible for conversion into ordinary shares in future have an anti-dilutive effect, hence diluted
EPS is reported same as basic EPS.
7. LOSS PER SHARE ATTRIBUTABL E TO T H E OR D I N A RY
EQUITY-HOLDERS O F THE COMPA N Y
8. AUD ITOR S’ REMUNERATION
Remuneration of UHY Haines Norton for:
Audit of the annual financial report
Review of the half yearly financial report
Other services
Total auditors remuneration
9. CAS H AN D CASH EQUIVALENTS
Cash and Cash Equivalents
Cash at bank and on hand
Deposits on call
AERIS ENVIRONMENTAL LTD I 40
2019
$
26,000
17,050
8,500
51,550
2018
$
26,000
17,000
4,550
47,550
1,450,012
2,017,865
3,467,877
152,070
5,573
157,643
The carrying amounts of the Group’s cash are a reasonable approximation of their fair values.
10. CU RRE NT T RADE AND OTHER RECEIVABLE S
A) Current trade and other receivables
Trade receivables
Less provision for doubtful debts
R&D tax offset rebate receivable
B) Non-current trade and other receivables
Trade Receivables
Less provision for doubtful debts
3,836,978
1,560,891
(394,950)
-
(511,774)
667,280
3,442,028
1,716,397
421,805
311,513
(390,173)
(257,026)
31,632
54,487
The carrying amounts of non-current trade and other receivables represent amount due from customers
for SmartENERGY® projects completed during 2017 financial year which are receivable over 60 months and
accounted at fair values.
The fair values were calculated based on cash flows discounted using rate appropriate to credit rating of
customers.
The carrying amounts of the Group’s trade and other receivables are a reasonable approximation of their
fair values.
41 I A NN UAL REP ORT 2019
10. Current Trade And Other Receivables (Continued)
C) Impairment of receivables
Less than 6 months overdue
More than 6 months overdue
Movements in provision for impairment of receivables
Opening balance
Additional provisions recognised
Foreign exchange difference and other adjustments
Closing balance
2019
$
2018
$
-
-
785,123
768,800
768,800
44,879
(28,555)
785,123
308,555
460,245
-
768,800
Amounts recognised in profit or loss
During the year, the following losses were recognised in profit or loss in relation to impaired receivables.
Impairment losses
Individually impaired receivables
Movement in provision for impairment
11. INV ENTOR IE S
Inventories - at cost
(27,319)
(44,879)
(72,198)
(8,192)
(460,245)
(468,437)
770,073
770,073
318,196
318,196
The carrying amounts of the Group’s inventories are a reasonable approximation of their fair values.
12. OT HER CURRENT ASSETS
Prepayments
Advance payment to suppliers
Accrued income
Deposits and bonds
167,965
-
12,306
14,164
83,932
39,578
4,606
11,817
194,435
139,933
The carrying amounts of the Group’s other current assets are a reasonable approximation of their fair values.
13. N O N-CUR RENT ASSETS
Carrying Values
2019
Property, plant and equipment
R & D equipment
Computer equipment
Field equipment
Leasehold improvements
Office furniture
Plant and equipment
2018
Property, plant and equipment
R & D equipment
Computer equipment
Field equipment
Leasehold improvements
Office furniture
Plant and equipment
Reconciliations
Cost
$
25,011
233,613
58,747
130,228
176,456
129,210
753,265
25,011
208,784
58,747
130,228
175,566
111,585
709,921
AERIS ENVIRONMENTAL LTD I 42
Accumulated depreciation /
impairment
Net carrying
value
$
$
(25,011)
(206,421)
(58,747)
(116,583)
(145,485)
(109,520)
(661,766)
(25,011)
(179,247)
(58,747)
(110,251)
(123,411)
(97,930)
-
27,192
-
13,645
30,971
19,690
91,498
-
29,537
-
19,977
52,155
13,655
(594,597)
115,324
Opening net
carrying
value
Additions Disposals
Depreciation
/ Impairment
Exchange
movements
Closing net
carrying
value
2019
R & D equipment
$
-
$
-
Computer equipment
29,537
24,829
Leasehold improvements
Office furniture
Plant and equipment
19,977
52,155
13,655
-
890
17,625
115,325
43,344
2018
R & D equipment
187
-
Computer equipment
36,624
20,820
Leasehold improvements
Office furniture
Plant and equipment
26,309
74,329
-
-
18,741
5,504
156,190
26,324
$
-
-
-
-
-
-
-
-
-
-
-
-
$
-
(27,174)
(6,332)
(22,074)
(11,590)
(67,170)
(187)
(27,907)
(6,332)
(22,174)
(10,590)
(67,190)
$
-
-
-
-
-
-
-
-
-
-
-
-
$
-
27,192
13,645
30,971
19,690
91,498
-
29,537
19,977
52,155
13,655
115,324
11. INVENTORIE S
12. OTHER CURRENT ASSETS
43 I A NN UAL REP ORT 2019
14. CURRENT TRADE AND OTHER PAYABLES AND PROVISIONS
a) Unsecured trade and other payables
Trade creditors
Other payables and accruals
GST and PAYG payable
b) Provisions
Annual leave
Long service leave
2019
$
1,884,786
223,884
27,371
2018
$
964,562
281,065
35,814
2,136,041
1,281,441
248,785
23,350
272,135
250,930
22,771
273,701
The carrying amounts of the Group’s current trade and other payables and provisions are a reasonable
approximation of their fair values.
15. NON-CURRENT BORROWINGS
Unsecured loans from Directors
-
-
1,200,000
1,200,000
The carrying amounts of the Group’s non-current borrowings are a reasonable approximation of their fair values.
Interest on loans from Directors and related entities is charged at ATO benchmark rates
16. NON-CURRENT PROVISIONS
Long service leave
24,543
24,543
25,770
25,770
The carrying amounts of the Group’s non-current provisions are a reasonable approximation of their fair values.
AERIS ENVIRONMENTAL LTD I 4 4
17. CONTRIBUTED EQUITY
Share capital
211,746,510 fully paid ordinary shares - no par value
50,090,978
41,208,486
(2018: 157,795,387)
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
2019
$
2018
$
Other contributed equity
Consideration for issue of share options
104,876
104,876
50,195,854
41,313,362
Movement in ordinary share capital of
Aeris Environmental Ltd
Balance at beginning of year
Shares issued during year
2019
Number
of shares
2018
Number
of shares
2019
$
2018
$
157,795,387
41,208,486 157,745,387
41,207,986
Shares issued to Directors towards repayment of their loan
8,823,528
1,500,000
Shares issued to KMP
Share placement - Strategic Investors
Share Placement Plan
1,058,824
180,000
42,404,073
7,208,692
1,514,698
257,500
-
-
-
-
-
-
-
-
Shares issued to consultants on exercise of options
150,000
1,500
50,000
500
Transaction costs relating to share issues
-
(265,200)
-
-
211,746,510
50,356,178 157,795,387
41,208,486
Balance at end of year
211,746,510 50,090,978 157,795,387
41,208,486
For the purposes of these disclosures, the Group considers its capital to comprise its ordinary share capital
and accumulated losses. Neither the share based payments reserve nor the translation reserve is considered as
capital.
15. NON-CURRENT BORROWINGS
16. NON-CURRENT PROVISIONS
45 I AN NUAL REP ORT 2019
18. O PTIONS
2019
Unlisted
Grant
Date
Expiry
Exercise
Date
Price
Number
on issue
30 June
2018
Granted
during
year
Expired or
forfeited
Exercised
during
year
**
*
*
*
*
31-Jul-14
31-Jul-19
0.20
500,000
-
(500,000)
23-Dec-16
14-Oct-21
0.42
100,000
23-Dec-16
23-Oct-21
0.42
745,000
23-Dec-16
01-Aug-20
0.01
250,000
30-May-18
01-Mar-21
0.01
100,000
-
-
-
-
-
(75,000)
-
-
-
-
-
-
-
Number
on issue
30 June
2019
-
100,000
670,000
250,000
100,000
Total options on issue
1,695,000
-
(575,000)
-
1,120,000
2018
Unlisted
Grant Date
Expiry
Exercise
Date
Price
Number
on issue
30 June
2017
Granted
during
year
Expired or
forfeited
Exercised
during
year
Number
on issue
30 June
2018
**
*
*
*
*
31-Jul-14
31-Jul-19
0.20
500,000
23-Dec-16
14-Oct-21
0.42
100,000
-
-
-
-
23-Dec-16
23-Oct-21
0.42
945,000
-
(200,000)
-
-
-
500,000
100,000
745,000
23-Dec-16
01-Aug-20
0.01
300,000
-
30-May-18
01-Mar-21
0.01
-
100,000
-
-
(50,000)
250,000
-
100,000
Total options on issue
1,845,000
100,000 (200,000)
(50,000)
1,695,000
These options do not entitle the holder to participate in any share issue of the Company or any other body
corporate unless the options are exercised prior to the new share issue entitlement date.
**Share options issued as consideration for business combinations
*These options expire on the earlier of their expiry date or the date of termination of the employee’s
employment, or, in the case of voluntary termination, 90 days after voluntary termination of the employee’s
employment
19. RE SERV E S
Foreign currency translation reserve
Share based payments reserve
Foreign currency translation reserve
Balance at beginning of financial year
Foreign exchange translation difference
Balance at end of financial year
Nature and purpose of reserve
AERIS ENVIRONMENTAL LTD I 4 6
2019
$
2018
$
(52,796)
(49,547)
2,196,869
1,603,856
2,144,073
1,554,309
(49,547)
(3,249)
(52,796)
(51,878)
2,331
(49,547)
The foreign currency translation reserve records the impact of the movement of the exchange rate as it relates
to the company’s investment in overseas subsidiaries.
Share based payments reserve
Balance at beginning of financial year
Share based payments during the year allocated to:
Employees and consultants
Key Management Personnel
1,603,856
1,406,392
505,182
87,831
170,612
26,852
Balance at end of financial year
2,196,869
1,603,856
Nature and purpose of reserve
The share based payments reserve records the value of options issued to employees, consultants and Directors,
as part of the remuneration for their services and issued in consideration for business combinations.
47 I A NN UAL REP ORT 2019
20. ACCUMULATED LOSSE S
Balance at beginning of financial year
Net loss for year
2019
$
2018
$
(43,150,288)
(39,560,112)
(3,628,499)
(3,590,176)
Balance at end of financial year
(46,778,788)
(43,150,288)
21. NO N -CONTROLLING INTERE STS
Balance at beginning of financial year
Net loss for year
3,685
-
4,547
(862)
Balance at end of financial year
3,685
3,685
22. PA RTICULARS RELATING TO CONTROLLED ENTIT IE S
Name of entity
Controlled entities
Aeris Pty Ltd
Aeris Biological Systems Pty Ltd
Aeris Hygiene Services Pty Ltd
Aeris Environmental LLC
Aeris Cleantech Pte Ltd
Aeris Cleantech Europe Ltd
Country of
incorporation
Ownership
interest 2019
Ownership
interest 2018
Australia
Australia
Australia
USA
Singapore
Malta
%
100
100
100
100
75
100
%
100
100
100
100
75
100
AERIS ENVIRONMENTAL LTD I 4 8
23. COM MI TM ENTS FOR EXPENDITURE
Lease commitments
Operating leases
Commitments on operating leases that relate to below office facilities:
Thailand operations branch - up to 1 year
-
4,284
2019
$
2018
$
Registered office in Sydney - up to 1 year
Branch office in Brisbane - up to 1 year
- 1 to 3 years
- 1 to 3 years
- 3 to 5 years
Townsville lease - up to 1 year
55,495
55,495
109,559
178,033
-
14,300
412,882
-
-
107,076
214,152
71,384
-
396,896
24. KEY MA NAGEMENT PERSONNEL DISCLOSURE S
a)
The Directors of Aeris Environmental Ltd during the year were:
Maurie Stang
Bernard Stang
Steven Kritzler
Alex Sava
Peter Bush (Alternate Director and Chief Executive Officer)
b)
c)
Other key management personnel
Robert Waring (Company Secretary)
Compensation
The aggregate compensation made to directors and other members of key management personnel of
the consolidated entity is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
2019
$
379,720
22,647
87,831
490,198
2018
$
381,545
22,817
26,852
431,214
Further, disclosures relating to key management personnel are set out in remuneration report in the Directors’ Report.
49 I AN NUAL REP ORT 2019
25. S HARE BAS ED PAYMENTS
a) Recognised share-based payment expenses
The expense recognised for employee services received during the year is shown in the table below:
Employee Share Option Plan
Employees and consultant
Key Management Personnel
Total amount arising from share-based payment transactions
2019
$
505,182
87,831
593,013
2018
$
170,612
26,852
197,464
b) Details of share-based payment plan
The share-based payment plan is described in the remuneration report in Directors’ Report.
There have been no cancellations or modifications to the plan during 2019 and 2018.
Fair value of options issued
The fair value of the options granted under the plan is estimated using the Black & Scholes valuation
methodology taking into account the terms and conditions under which the options are granted.
The fair value of performance rights granted is based on the market price of shares at the date of issue.
Options
Rights
2019
2018
2019
2018
Weighted average remaining contractual life
1.98 years
2.44 years
1.28 years
1.78 years
Range of exercise prices
$0.01 to $0.42
$0.01 to $0.42
Following options or rights were issued during the year.
To employees and consultants
To Key Management Personnel
-
-
-
100,000
-
100,000
-
-
-
-
-
515,500
1,323,537
1,839,037
The following table shows the inputs to the valuation of options and rights granted during 2018 financial year.
Value of Underlying Stock
Exercise Price
Dividend Yield
Volatility (per Year)
Risk free rate
Maturity
Pricing Date
Value of Option
Options
0.170
0.010
0.00%
12.90%
2.50%
01/03/2021
30/05/2018
0.1607
Rights
0.165
0.000
N/A
N/A
N/A
11/04/2021
30/05/2018
0.1650
AERIS ENVIRONMENTAL LTD I 5 0
26. RE LAT ED PARTY DISCLOSURE S
a) Parent Entity
Aeris Environmental Ltd is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 22.
b) Key management personnel
Disclosures relating to key management personnel are set out in note 24 and the remuneration report in the
Directors’ Report.
c) Transactions with Directors and Director related entities
Disclosures relating to transactions with Directors and Director related entities are set out in the remuneration
report in the Directors’ Report.
27. FIN ANC IA L INSTRUMENTS DISCLOSURE S
a) Capital
The Group considers its capital to comprise its ordinary share capital and accumulated losses.
In managing its capital, the Group’s primary objective is to ensure its continued ability to provide a consistent
return for its equity shareholders through a combination of capital growth and distributions. In order to achieve
this objective, the Group seeks to maintain a sufficient funding base to enable the Group to meet its working
capital and strategic investment needs. In making decisions to adjust its capital structure to achieve these aims,
either through new share issues or debt, the Group considers not only its short-term position but also its
long-term operational and strategic objectives.
b) Financial instrument risk exposure and management
In common with all other businesses, the Group is exposed to risks that arise from its use of financial
instruments. This note describes the Group’s objectives, policies and processes for managing those risks and the
methods used to measure them.
Further quantitative information in respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives,
policies and processes for managing those risks or the methods used to measure them from previous periods
unless otherwise stated in this note.
c) Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risks arise, are as follows:
• cash at bank;
• trade and other receivables;
• deposits and bonds;
• trade and other payables; and
• borrowings.
51 I AN NUAL REP ORT 2019
27. Financial Instruments Disclosures (Continued)
d) General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and
policies and has the responsibility for designing and operating processes that ensure the effective implementation
of the objectives and policies to the Group’s finance function. The Board receives monthly reports through which
it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies
it sets.
The overall objective of the board is to set policies that seek to reduce risk as far as possible without unduly
affecting the Group’s competitiveness and flexibility. Further details regarding these policies are set out below:
(i) Credit risk
Credit risk arises principally from the Group’s trade receivables, cash and term deposits. It is the risk that the
counterparty fails to discharge its obligation in respect of the instrument.
The maximum exposure to credit risk at balance sheet date is as follows :
Without external credit rating
Trade receivables
R&D tax offset rebate receivable
Deposits and bonds
With external credit rating (Moody's)
Deposits with Bankwest (credit rating Aa2)
Deposits with Wells Fargo, USA (credit rating Aa1)
Deposits with ANZ Bank (credit rating Aa2)
2019
$
2018
$
3,473,660
1,103,604
-
22,265
2,017,519
76,081
1,349,821
6,939,346
667,280
19,709
1,070
20,973
103,560
1,916,197
(ii) Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the finance charges and principal
repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due.
The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they
become due. To achieve this aim, it seeks to maintain cash balances (or agreed facilities) to meet expected
requirements for a period of at least 45 days.
The Board receives cash flow projections on a monthly basis as well as information regarding cash balances.
At the balance sheet date, these projections indicated that the Group expected to have sufficient liquid resources
to meet its obligations under all reasonably expected circumstances.
Maturity analysis of financial assets and liability based on management’s expectations
The risk implied from the values shown in the table below, reflects a balanced view of cash inflows and outflows.
Trade payables and other financial liabilities mainly originate from the financing of assets used in our ongoing
operations such as property, plant, equipment and investments in working capital (e.g. trade receivables and
inventories). These assets are considered in the Group’s overall liquidity risk.
AERIS ENVIRONMENTAL LTD I 52
(ii) Liquidity risk (continued)
Maturity analysis of financial assets and liability based on management’s expectations
Cash flows
< 6 mths
6- 12 mths
1-3 years
> 3 years
Maturity analysis - 2019
Financial assets
Cash and cash equivalents
3,467,877
3,467,877
$
$
$
-
$
-
3,486,857
3,424,125
28,953
33,779
14,164
-
-
-
6,968,898
6,892,002
28,953
33,779
Receivables
Security deposits
Total
Financial liabilities
Trade Creditors
Receivables
Security deposits
Total
Financial liabilities
Trade Creditors
1,884,786
1,884,786
Other payables and accruals
251,256
251,256
Loans
Total
-
-
2,136,042
2,136,042
-
-
-
-
-
-
-
-
Net Maturity
4,832,856
4,755,960
28,953
33,779
14,164
Maturity analysis - 2018
Financial assets
Cash and cash equivalents
157,643
157,643
-
-
1,844,587
1,436,670
61,721
246,883
11,817
-
-
-
2,014,047
1,594,313
61,721
246,883
Other payables and accruals
316,878
316,878
964,562
964,562
-
-
-
-
Loans
Total
1,295,400
31,800
63,600
1,200,000
2,576,840
1,313,240
63,600
1,200,000
Net Maturity
(562,793)
281,073
(1,879)
(953,117)
111,130
$
-
-
14,164
14,164
-
-
-
-
-
99,313
11,817
111,130
-
-
-
-
53 I AN NUAL REP ORT 2019
27. Financial Instruments Disclosures (Continued)
(iii) Market risk
a) Interest rate risk
The Group’s exposure to fluctuations in interest rates that are inherent in financial markets arise predominantly
from assets and liabilities bearing variable interest rates.
The company’s exposure to interest rate risk and the effective weighted average interest rate for classes of
financial assets and financial liabilities is set out below:
2019
Financial assets
Cash and cash equivalents
Deposits
Receivables
Total Assets
Financial liabilities
Trade and other payables
Borrowings
Total Liabilities
Net financial assets
2018
Financial assets
Cash and cash equivalents
Deposits
Receivables
Total Assets
Financial liabilities
Trade and other payables
Borrowings
Total Liabilities
Note
Weighted
Average
Interest
Rates
Floating
Interest
Rates
Fixed
Interest
Rates
Non-Interest
Bearing
Total
9
12
10
14
15
9
12
10
14
15
1.00%
2,017,865
2.20%
5.50%
-
-
-
-
1,450,012
3,467,877
14,164
14,164
65,578
3,408,083
3,473,660
2,017,865
65,578
4,872,259
6,955,701
0.00%
5.30%
-
-
-
-
-
-
2,136,041
2,136,041
-
-
2,136,041
2,136,041
2,017,865
65,578
2,736,218
4,819,660
1.00%
2.20%
5.50%
5,573
-
-
-
-
152,070
157,643
11,817
11,817
395,935
1,374,950
1,770,885
5,573
395,935
1,538,837
1,940,345
0.00%
5.30%
-
-
-
1,281,441
1,281,441
1,200,000
-
1,200,000
-
1,200,000
1,281,441
2,481,441
Net financial assets
5,573
(804,065)
257,396
(541,096)
AERIS ENVIRONMENTAL LTD I 5 4
The following sensitivity analysis is based on the interest rate risk exposure in existence at the balance sheet
date. The analysis assumes all other variables remain constant.
Sensitivity analysis
2019
Deposits on call
Tax charge of 30%
Post tax profit increase / (decrease)
2018
Deposits on call
Tax charge of 30%
Post tax profit increase / (decrease)
b) Currency risk
Carrying amount
+3% interest rate
Profit & Loss
-3% interest rate
Profit & Loss
2,017,865
2,017,865
5,573
5,573
60,536
60,536
(18,161)
42,375
167
167
(50)
117
(60,536)
(60,536)
18,161
(42,375)
(167)
(167)
50
(117)
The Group’s policy is, where possible, to allow group entities to settle liabilities denominated in their functional
currency with the cash generated from their own operations in that currency. Where group entities have liabilities
denominated in a currency other than their functional currency (and have insufficient reserves of that currency to
settle them) cash already denominated in that currency will, where possible, be transferred from elsewhere within
the Group.
The Group’s exposure to foreign currency risk is as follows:
2019
US$
2018
US$
2019
SGD
2018
SGD
2019
Euro
2018
Euro
Cash at bank
53,373
15,527
9,334
9,334
5,000
5,000
Trade and other receivables
385,893
18,056
12,500
12,500
Trade and other payables
(310,420)
(2,912)
-
-
-
-
-
-
Net Exposure
128,846
30,671
21,834
21,834
5,000
5,000
Sensitivity analysis on the foreign currency exposure risk is not disclosed as the foreign currency balances are
not material and the impact of any change in exchange rates would be immaterial.
c) Fair value measurement
The carrying amounts of trade and other receivables and trade and other payables are assumed to
approximate their fair values due to their short-term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current
market interest rate that is available for similar financial liabilities.
Therefore, table detailing the consolidated entity’s assets and liabilities, measured or disclosed at fair value, using
a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement
is not required.
55 I A NN UAL REP ORT 2019
28. CO NTI NGE NT LIABILITIE S
There are no contingent liabilities of the company or the Group other than commitments disclosed in note 23
(2018: NIL)
29. AD DITI ONAL COMPANY INFORMATION
Aeris Environmental Ltd is a listed public company, incorporated in Australia.
Principal registered office and principal place of business
5/26-34 Dunning Avenue
ROSEBERY
NSW 2018
30. SUB SE QUE NT EVENTS
There have been no matters or circumstances, which have arisen since 30 June 2019 that have significantly
affected or may significantly affect:
a) the operations, in financial years subsequent to 30 June 2019, of the consolidated entity; or
b) the results of those operations;
c) the state of affairs, in the financial years subsequent to 30 June 2019, of the consolidated entity.
31. OPERAT ING SEGMENTS
Identification of reportable segments
From Board of Directors’ (Chief Operating Decision Makers’ - CODM) perspective, the Group is organised into
business units based on its geographical area of operation. The Group has identified two reportable segments
as mentioned below.
The reportable segments are based on aggregated operating segments determined by the similarity of the
revenue stream and products sold and/or the services provided in Australia and internationally, as these are the
sources of the Group’s major risks and have the most effect on the rates of return.
The CODM reviews revenue, COGS, operating expenses, profit before tax, assets & liabilities for the following
segments:
a) Australia - Sales and service on account of Australian operations
b) International - Sales & service on account of international operations.
AERIS ENVIRONMENTAL LTD I 56
Intersegment transactions
Intersegment transactions are made at arm’s length and are eliminated on consolidation.
Intersegment receivables, payables and loans
Intersegment loans are initially recognised at the consideration received & are eliminated on consolidation.
Major Customer
The Group supplied to one of its major customers, through Australian sales and services segment,
(who individually amount to 10% or more of its total revenue) that combined account for 40% of external revenue
(2018: Two major customers combined account for 33%).
During the year ended 30 June 2019 the most significant client accounts for approximately 40% (2018: 17%) of the
consolidated entity’s external revenue through Australian Sales and Services operating segment.
Operating segment information of the consolidated entity
2019
Revenue
Sales
Other Income
Total Revenue
Expenses
Cost of goods sold
Operating expenses
Total Expenses
Australia
International
Intersegment
eliminations
$
6,305,400
129,515
6,434,915
4,139,133
6,481,944
10,621,077
$
$
570,832
(24,975)
-
-
Consolidated
$
6,851,257
129,515
570,832
(24,975)
6,980,772
289,257
557,407
846,664
(24,975)
(375,266)
(400,241)
4,403,415
6,664,085
11,067,500
Loss before tax
(4,186,162)
(275,832)
375,266
(4,086,728)
2018
Revenue
Sales
Other Income
Total Revenue
Expenses
Cost of goods sold
Operating expenses
Total Expenses
2,719,850
18,937
2,738,787
1,089,663
5,910,543
7,000,206
47,943
-
47,943
17,930
27,406
45,336
(15,833)
-
(15,833)
(15,833)
(196)
(16,029)
2,751,960
18,937
2,770,897
1,091,760
5,937,753
7,029,513
Loss before tax
(4,261,419)
2,607
196
(4,258,616)
57 I A NN UAL REP ORT 2019
31. Operating Segments (Continued)
Segment assets and liabilities
Assets
Liabilities
Australia
International
Total
2019
$
2018
$
2019
$
2018
$
7,538,662
2,580,841
3,802,631
4,592,382
860,028
84,219
3,184,701
2,019,977
8,398,690
2,665,060
6,987,332
6,612,359
Intersegment elimination
(401,146)
(163,080)
(4,554,613)
(3,831,447)
Consolidated
7,997,544
2,501,980
2,432,719
2,780,912
32. IN FOR M ATI ON RELATING TO AERIS
EN VIRON MENTAL LTD (“ THE PARENT ENTITY ”)
Current Assets
Total Assets
Current Liabilities
Total Liabilities
Issued Capital (net of costs)
Accumulated losses
Share-based payment reserve
Net loss after tax for the period
Total comprehensive loss for the period
Contractual Obligations / Commitments (Refer Note 23)
2019
$
7,375,870
7,538,240
1,961,530
1,986,073
2018
$
2,425,961
2,537,685
1,507,476
2,733,246
50,195,854
41,313,361
(46,840,555)
(43,112,777)
2,196,868
5,552,166
1,603,855
(195,560)
(3,727,778)
(3,593,641)
(3,731,027)
(3,951,463)
AERIS ENVIRONMENTAL LTD I 5 8
33. N OTE S TO CASH FLOW STATE MENTS
a) Reconciliation of cash
For the purposes of the statement of cash flows, cash includes cash on hand and in banks and investments in
money market instruments, net of outstanding bank overdrafts. Cash at the end of the financial year as shown
in the statement of cash flows is reconciled in the related items in the statement of financial position as follows:
Cash at bank and on hand
Deposits on call
2019
$
1,450,012
2,017,865
3,467,877
2018
$
152,070
5,573
157,643
b) Reconciliation of operating loss after income tax to net cash flows from operating activities
Operating loss after income tax
Non cash/non-operating items included in profit and loss
Depreciation and amortisation
Impairment expense
Share based payments
Changes in assets and liabilities
Increase in receivables
Increase in inventory
(Increase) / Decrease
Increase in trade creditors
Increase in other creditors and accruals
(Decrease) / Increase in employee entitlement expense
2019
$
2018
$
(3,628,499)
(3,591,038)
67,170
72,198
412,287
67,190
468,437
197,964
(1,774,973)
(441,087)
(451,877)
(28,565)
918,367
3,966
(2,793)
(61,472)
15,704
545,478
199,592
60,929
Net cash used in operating activities
(4,412,720)
(2,538,303)
59 I AN NUAL REP ORT 2019
DIRECTORS’ DECLARATION
In accordance with a resolution of directors, I state that:
1. In the opinion of the Directors:
a) the financial statements and notes, as set out on pages 21 to 58, are in accordance with the Corporations
Act 2001 and
i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2019 and its
performance for the year ended on that date; and
ii) complying with Accounting Standards and the Corporations Regulations 2001;
b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed
in note 1; and
c) There are reasonable grounds to believe that the company and the consolidated entity will be able to pay
its debts as and when they become due and payable;
2. This declaration has been made after receiving the declarations required to be made to the directors in
accordance with section 295A of the Corporations Act 2001 for the financial year ending 30 June 2019.
On behalf of the Board of Directors
Maurie Stang
Director
Sydney, 30 September 2019
AERIS ENVIRONMENTAL LTD I 60
61 I A NN UAL REP ORT 2019
INDEPE NDENT AU DITO R’S REP ORT
INDEPENDENT AUDITOR’S REPORT
To the Members of Aeris Environmental Ltd
Report on the Audit of the Financial Report
Level 11 | 1 York Street | Sydney | NSW | 2000
GPO Box 4137 | Sydney | NSW | 2001
t: +61 2 9256 6600 | f: +61 2 9256 6611
sydney@uhyhnsyd.com.au
www.uhyhnsydney.com.au
Opinion
We have audited the financial report of Aeris Environmental Ltd (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2019, 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 2019 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 Group 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 given to the directors 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.
An association of independent (cid:386) rms in Australia and New Zealand and a member
of UHY International, a network of independent accounting and consulting (cid:386) rms.
UHY Haines Norton—ABN 85 140 758 156 NSWBN 98 133 826
Liability limited by a scheme approved under Professional Standards Legislation.
47
Passion beyond numbers
AERIS ENVIRONMENTAL LTD I 62
Key Audit Matters
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 year. 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.
GOING CONCERN
Why a key audit matter
How our audit addressed the risk
Risk pervasive to Financial Statements
Our audit procedures included, amongst others:
As disclosed in Note 1 in the financial report,
the Group has prepared the financial report
on a going concern basis.
The Group’s net asset position has changed
from net liabilities of $0.28 million as at 30
June 2018 to net assets of $5.56 million as
at 30 June 2019. The Group made a loss of
$3.63 million for the year ended 30 June
2019 compared to a loss of $3.59 million in
the corresponding previous year. For the
year ended 30 June 2019, the Group had
negative operating cash flow of $4.41
million. The cash balance as at 30 June 2018
was $3.47 million.
The history of loss making operations and
negative operating cash flows increases the
risk that the company may not be able to
continue as a going concern for the next 12
months.
► Analysis of the cash flow projections.
► Review of the Board minutes and the ASX
announcements for the issue of shares in
December 2018 to raise $4 million and issue
of shares in January 2019 to raise $3.21
million.
► Assessing significant non-routine forecast
cash inflows and outflows for quantum and
timing. We used our knowledge of the Group
and its industry to assess the level of the
associated uncertainty.
the
financial
the Group’s going concern
► Evaluating
disclosures
report by
in
comparing them to our understanding of the
matter,
conditions
events
incorporated into the cash flow projection
assessment, the Group’s plans to address
those events or conditions, and accounting
standards requirements.
the
or
► Discussions with
and
management regarding their going concern
assessment.
directors
the
►
Inquiry with the management regarding any
large capital commitments in place.
An association of independent (cid:386) rms in Australia and New Zealand and a member
of UHY International, a network of independent accounting and consulting (cid:386) rms.
UHY Haines Norton—ABN 85 140 758 156 NSWBN 98 133 826
Liability limited by a scheme approved under Professional Standards Legislation.
48
Passion beyond numbers
63 I A NN UAL REP ORT 2019
REVENUE RECOGNITION
Why a key audit matter
How our audit addressed the risk
Revenue was identified as a key audit
matter as it is considered to be a key
performance indicator to the users of the
financial report and because of the extent
of judgment involved in the recognition and
measurement of revenue.
Overall revenue has increased from $2.77
million for the year ended 30 June 2018 to
$6.98 million for the year ended 30 June
2019.
Occurrence and Cut off
AASB 15 ‘Revenue from Contracts with
Customers’ establishes a framework for
determining whether, how much and when
revenue is recognised. Under AASB 15,
revenue is recognised when a customer
obtains control of the goods or services.
Under AASB 15, an entity recognises
revenue when (or as) a performance
obligation is satisfied, i.e. when 'control’ of
the goods or services underlying a particular
performance obligation is transferred to the
customer.
UHY Haines Norton note that $694k sales
were made
in June 2019 to various
customers. Sales made at the end of the
period are of higher risk of cut off error due
to strict revenue recognition requirements
of the accounting standards (i.e. when
customer obtains control of goods and
services).
A key audit matter
is not
materially correct for year ended 30 June
2019.
is revenue
General procedures
the accounting policies
► Discussions were held with management
for
regarding
recognising sales revenue and assessing the
appropriateness of
in
accordance with the requirements of the
Standards. We
Australian Accounting
reviewed
to determine
whether they have been consistently and
appropriately applied.
these policies
these policies
► Agreeing the revenue per the trial balance to
sales ledger listing.
Occurrence and Cut off
► Reviewing contracts with customers to
determine if the revenue was recognised in
line with the requirements of Australian
Accounting Standards.
► Performing analytical procedures on revenue
recorded during the year by comparing the
current year revenue with the prior year. We
also compared gross margins with prior
period. We obtained explanations of
significant variations from management and
corroborated those with our understanding
of the business and other evidence obtained
during the audit.
► For a high dollar and additional sales of goods
samples, we have tested the sales recorded
during the year to the documentation such as
invoice, contract, purchase order, deliveries
and acceptances from the customer and bank
receipts.
An association of independent (cid:386) rms in Australia and New Zealand and a member
of UHY International, a network of independent accounting and consulting (cid:386) rms.
UHY Haines Norton—ABN 85 140 758 156 NSWBN 98 133 826
Liability limited by a scheme approved under Professional Standards Legislation.
49
Passion beyond numbers
AERIS ENVIRONMENTAL LTD I 64
► For a high dollar and additional sales of
services (remediation project) samples, we
have tested the sales recorded during the
year to the documentation such as invoice,
contract, project reports and bank receipts.
► We inquired whether any sales transactions
represent goods shipped on consignment
and,
the appropriate
adjustments have been made to reverse
these transactions.
so, whether
if
► We held discussions whether any
large
credits relating to recorded income have
been issued after the balance sheet date and
whether any provision has been made for
the
assessed
such
reasonableness of any such provisions.
amounts. We
► For a sample of revenues recorded around
year end, we have checked invoices, purchase
orders and shipping documents to check
whether
been
implemented.
proper
cut-off
has
An association of independent (cid:386) rms in Australia and New Zealand and a member
of UHY International, a network of independent accounting and consulting (cid:386) rms.
UHY Haines Norton—ABN 85 140 758 156 NSWBN 98 133 826
Liability limited by a scheme approved under Professional Standards Legislation.
50
Passion beyond numbers
65 I A NN UAL REP ORT 2019
RECOVERABILITY OF TRADE RECEIVABLES
Why a key audit matter
How our audit addressed the risk
We note that the aging profile of the
debtors has deteriorated mainly because of
the large outstanding balances have not
been collected. Debtor balances beyond
normal
indicate
recoverability issues.
terms may
credit
The receivables balance as at 30 June 2019
has increased on account of an increase in
the sales in FY2019. The receivables balance
as at 30 June 2019 has increased from $1.77
million as at 30 June 2018 to $3.47 million
as at 30 June 2019. We note that the
company has made high dollar value sales
to a few new customers during the year.
Though the company has a trading history
with majority of the customers, there is a
credit risk as the monies have been
outstanding for a long time. Further, under
Asset Upgrade Plan contracts the revenue is
collectible over a period of five years, hence
the company is exposed to default risk from
such customers over an extended period.
A key audit matter is receivables are not
recoverable and they are not disclosed
appropriately in the financials.
Our procedures included, amongst others:
► During the 30 June 2018 audit, we had
requested the management to take up an
additional provision for doubtful debts for
Fresh Freight Tasmania of $334k due to
payments by the customer being on hold for
an extended time. However, management
disagreed with our conclusion and we issued
a qualified opinion in relation to this matter.
During the half-year ended 31 December
2018, Fresh Freight Tasmania provision for
doubtful debts for $360k was again raised
with management. Management agreed to
take this provision as a prior period error and
to adjust the opening balance of provision for
doubtful debts and retained earnings.
► Agreeing a sample of receivables balances to
supporting documentation.
► Reviewing and testing aging of trade and
other receivables.
► Assessing the recoverability of a sample of
large outstanding trade and other receivables
to subsequent cash receipts.
► Discussions with management regarding
their views of the recoverability of amounts
outstanding.
► Challenging management’s views of credit
risk and noting the historical patterns for long
outstanding trade receivables. Reviewing
other
customer
correspondence,
and discussions with
management personnel to challenge their
knowledge of future conditions that may
impact expected customer receipts.
including
evidence
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AERIS ENVIRONMENTAL LTD I 66
► Assessing the adequacy of the Group’s
disclosures in respect of credit risk.
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 2019, but does not include the financial
report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
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 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 has 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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
An association of independent (cid:386) rms in Australia and New Zealand and a member
of UHY International, a network of independent accounting and consulting (cid:386) rms.
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Liability limited by a scheme approved under Professional Standards Legislation.
52
Passion beyond numbers
67 I AN NUAL REP ORT 2019
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as
a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible
for the direction, supervision and performance of the Group audit. We remain solely responsible for
our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.
An association of independent (cid:386) rms in Australia and New Zealand and a member
of UHY International, a network of independent accounting and consulting (cid:386) rms.
UHY Haines Norton—ABN 85 140 758 156 NSWBN 98 133 826
Liability limited by a scheme approved under Professional Standards Legislation.
53
Passion beyond numbers
AERIS ENVIRONMENTAL LTD I 68
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 8 to 13 of the directors’ report for the year
ended 30 June 2019.
10 to 19
In our opinion, the Remuneration Report of Aeris Environmental Ltd, for the year ended 30 June 2019,
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.
Mark Nicholaeff
Partner
Sydney
30 September 2019
UHY Haines Norton
Chartered Accountants
An association of independent (cid:386) rms in Australia and New Zealand and a member
of UHY International, a network of independent accounting and consulting (cid:386) rms.
UHY Haines Norton—ABN 85 140 758 156 NSWBN 98 133 826
Liability limited by a scheme approved under Professional Standards Legislation.
54
Passion beyond numbers
69 I A NN UAL REP ORT 2019
AUSTRALIAN SEC URITIE S EXC H AN G E
(ASX) ADDIT IO NAL INFORMATIO N
Additional information required by ASX Listing Rule 4.10, and not disclosed
elsewhere in this Annual Report, is detailed below. This information was
prepared based on the Company’s Share Registry information, its option
register, ASX releases and the Company’s Constitution.
Shareholding Information
Distribution of Shareholders
Analysis of the quoted fully paid ordinary shares by holding as at 26 September 2019:
Spread of Holdings
Number of Holders
Ordinary shares % of Total Issue Capital
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – 500,000
500,001 – 1,000,000
1,000,001 and over
Total
49
141
126
333
112
28
37
826
21,984
429,453
1,068,248
12,874,459
25,791,699
18,673,874
154,589,707
213,449,424
0.01
0.20
0.50
6.03
12.08
8.75
72.43
100.00
Based on the market price at 26 September 2019 there were 80 shareholders with less than a marketable parcel
of $500 worth of shares at a share price of $0.25. There are 321,899 shares that are subject to Company-
imposed voluntary escrow.
Statement of Shareholdings as at 26 September 2019
The names of the 20 largest holders of fully paid ordinary shares are listed below:
Rank Shareholder
Number of Shares
% Holding
1
2
3
4
5
6
7
8
9
10
11
12
Maurie Stang
Bernard Stang
J P Morgan Nominees Australia Pty Limited
Link Traders (Aust) Pty Ltd
Steven Kritzler
Netwealth Investments Limited
Girdis Superannuation Pty Ltd
Development Management & Constructions Pty Ltd
Pulitano Family Superannuation Pty Ltd
Meditsuper Pty Ltd
Treplo Pty Limited
Henderson International Pty Limited
13 Wakil Family Group Pty Ltd
14
Bennelong Resources Pty Limited
20,809,160
17,893,084
16,281,034
14,635,539
11,252,785
11,150,573
8,823,531
5,882,353
5,405,018
4,272,281
3,186,000
2,822,714
2,552,497
2,275,000
9.75
8.38
7.63
6.86
5.27
5.22
4.13
2.76
2.53
2.00
1.49
1.32
1.20
1.07
AERIS ENVIRONMENTAL LTD I 70
Australian Securities Exchange (Asx) Additional Information (Continued)
15
16
17
18
19
Radley Investment Co Pty Ltd
Hillridge Pty Ltd
Jamber Investments Pty Ltd
Rosherville Pty Ltd
Joshua Aaron Ehrlich
20
Kefford Holdings Pty Ltd >
Total of Top 20 Holdings
Other Holdings
Total Ordinary Shares
2,225,210
2,063,650
1,782,988
1,750,000
1,700,000
1,543,471
138,306,888
75,142,536
213,449,424
1.04
0.97
0.84
0.82
0.80
0.72
64.80
35.20
100.00
Unquoted Equity Securities
For details of the unissued ordinary shares of the Company, refer below and to the “Share Options” section of
the Directors’ Report.
Number
Class – Options
Number of Holders
100,000
Options held by Director Alex Sava, which expire on 14 October 2021 and have
an exercise price of 42 cents, issued under the Company’s Employee Incentive
Plan (EIP)
450,000
Options held by six staff members, which expire on 23 October 2021 and have
an exercise price of 42 cents, issued under the EIP
220,000
Options held by five key consultants, which expire on 23 October 2021 and have
an exercise price of 42 cents, which includes 100,000 options held by Ian Braby,
and 50,000 options held by each of Robert Waring and Ian Ernst.
100,000
Options held by consultant Carl Henin, which expire on 1 August 2020 and have
an exercise price of 1 cent.
100,000
Options held by consultant Carl Henin, which expire on 1 March 2021 and have
an exercise price of 1 cent.
970,000
Total Options on Issue
1
6
5
1
1
14
7 1 I A NN UAL REP ORT 2019
Number
Class – Performance Rights
Number of Holders
1,642,288
Performance Rights held by Aeris’ CEO Peter Bush (1,323,537 or 81%), eight staff
members and four consultants, which expire on 11 April 2022 with no exercise
price, with one third vesting each year for three years commencing on 11 April
2019.
150,000
Performance Rights held by two consultants, which expire on 25 July 2023 with
no exercise price, with one third vesting each year for three years commencing
on 25 July 2020.
1,792,288
Total Performance Rights on Issue
13
2
15
Voting Rights
At general meetings of the Company, all fully paid ordinary shares carry one vote per share without restriction.
On a show of hands, every member present at such meetings, or by proxy, shall have one vote and, upon a
poll, each share shall have one vote. Option holders and Performance Rights holders have no voting rights until
the options are exercised or the Performance Rights convert.
Substantial Shareholders
Substantial shareholders in Aeris Environmental Ltd, based on Substantial Shareholder Notices received by the
ASX and the Company, are as follows:
Name
Maurie Stang
Bernard Stang
Link Traders (Aust) Pty Ltd
Link Enterprises International Pty Ltd
Link Enterprises International Pty Ltd
Steven Kritzler
Number
Class
Voting Power
23,881,819
15,928,109
Ordinary fully
paid shares
Ordinary fully
paid shares
14,751,539
Ordinary fully
paid shares
8,331,609
Ordinary fully
paid shares
11.28%
10.30%
6.97%
5.40%
On-Market Buy-Back
There is no current on-market buy-back of shares in the Company.
CORPO RATE DIRECTORY
AERIS ENVIRONMENTAL LTD I 72
AERIS ENVIRONMENTAL LTD I 72
Aeris Environmental Ltd
ACN: 093 977 336
ABN:
19 093 977 336
Directors
Maurie Stang Non-Executive Chairman
Steven Kritzler Non-Executive Director
Bernard Stang Non-Executive Director
Non-Executive Director
Alex Sava
Chief Executive Officer
Peter Bush
Chief Executive Officer,
Chief Financial Officer
and Alternate Director
Company Secretary
Robert Waring
Registered and Principal Office
Unit 5, 26-34 Dunning Avenue
Rosebery NSW 2018 Australia
Telephone:
Facsimile:
Email:
Website:
+61 2 8344 1315
+61 2 9697 0944
info@aeris.com.au
www.aeris.com.au
Share Registry
Computershare Investor Services Pty Ltd
Yarra Falls, 452 Johnston Street, Abbotsford VIC 3067
GPO Box 2975, Melbourne VIC 3001 Australia
+61 3 9415 4000
Telephone:
1300 850 505 (within Australia)
Telephone:
+61 3 9473 2500
Facsimile:
Website:
www.computershare.com
Investor Link: www.investorcentre.com
Auditor
UHY Haines Norton Sydney
Level 11, 1 York Street, Sydney NSW 2000
GPO Box 4137, Sydney NSW 2001
Telephone:
Website:
+ 61 2 9256 6600
www.uhyhnsydney.com.au
Stock Exchange
The Company’s fully paid ordinary shares are quoted on
the official list of the Australian Securities Exchange (ASX
Limited).
ASX Code
AEI
ANNUAL
REPORT
2019
73 I AN NUAL REP ORT 2019