Annual Report
2020
Aeris Environmental Ltd
ACN 093977336
01
Chairman and CEO Report
02
Review of Operations
03
Directors’ Report
04
Auditor’s Independence Declaration
05
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
06
Consolidated Statement of Financial Position
07
Consolidated Statement of Changes in Equity
08
Consolidated Statement of Cash Flows
09
Notes to the Consolidated Financial Statements
10
Directors’ Declaration
11
Independent Auditor’s Report
12
Australian Securities Exchange (ASX) Additional Information
13
Corporate Directory
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Chairman and
CEO Report
1
01Aeris | Annual Report 2020 Chairman and CEO Report
It is our pleasure to present you
with the Annual Report for the
year ended 30 June 2020.
hospitals, front and first line responders, by producing and
delivering products that were in short supply, and that facilitated
the operation of key hospitals and health care services for the
Australian community.
As outlined at our Annual General Meeting (AGM) in
November 2019, Aeris has successfully accelerated the global
commercialisation of its portfolio of proprietary environmental
hygiene and energy efficiency technologies.
The global COVID-19 pandemic has created new challenges
for our customers and distributors specifically, and society in
general, and we have focussed our efforts on delivering advanced
solutions to our customers worldwide.
As was the case with most companies, we experienced
significant issues in our supply chain during early 2020, which
our team worked night and day to address. Equally, the number
of regulatory submissions that we have filed, and are continuing
to file, in jurisdictions internationally has grown dramatically. We
have now gained key approvals and listings for our breakthrough
Aeris Active, hospital-grade surface disinfectant in Australia,
Europe, the UK, SE Asia and beyond.
Recently we have been listed on The Australian Register of
Therapeutic Goods (ARTG) with high differentiation claims, which
include: “hard surface hospital-grade disinfectant cleaner effective
against a broad spectrum of bacteria, including Methicillin-
resistant Staphylococcus aureus (MRSA) and Vancomycin-
resistant Enterococci (VRE), fungi and viruses such as COVID-19
(Sars Cov-2), Norovirus, and influenza viruses. [Aeris’ product
provides] residual antibacterial protection for up to 30 days (or
200 touches) against gram-negative E. coli and gram-positive
S. aureus, residual COVID-19 kill for up to seven days, and kills
COVID-19 in one minute.” This demonstrates class-leading initial
kill, with validated residual properties that are second-to-none.
Today Aeris has a network of global distributors across our
heating, ventilating, and air-conditioning (HVAC), environmental
hygiene, and corrosion and mould prevention portfolios.
We have recently restructured our efforts in China, coming
together with Shanghai Taitrust Industrial Group Co., Ltd, and are
in the process of establishing our own Wholly-Owned Foreign
Entity in China.
In the USA, we have a wholly-owned subsidiary based in
Texas, with distribution in place for our HVAC portfolio through
Goodman (Daikin) and other leading entities. We have submitted
documentation to the USA EPA for a Section 18 emergency use
application for Aeris Active, at both Federal and State levels.
These applications are currently being assessed. Aeris has
successfully manufactured Aeris Active in bulk and is awaiting
relevant approvals to sell into the USA market.
Environmental, social and governance (ESG) issues are important
drivers of both Aeris’ strategy and its actions. The Company is
intent on building ESG considerations into the long-term strategy
of the business. Our products are directly aimed at providing
environmentally-friendly solutions to our global customers, whilst
lifting efficacy and performance levels to a new standard of care.
We are actively working to lower the carbon footprint of both the
Company and the users of its products and services by promoting
energy efficiency that derives two benefits, being lower cost of
ownership and longer asset life in the HVAC infrastructure.
We are encouraging our production plants to reduce waste,
improve packaging and, critically, to optimise the entire supply
chain to minimise the Company’s carbon footprint. Our efforts in
the elimination of toxic mould see measurable improvements in
human health and indoor environmental quality whilst our water-
based corrosion treatments see a significant extension to asset
life, thereby meeting best practice standards in extending the
replacement cycle by up to 50%.
Aeris has implemented COVID-19 safety policies throughout its
operations, whilst achieving a new annual record for revenue for
the 2019-20 financial year of $14.6 million. The Company made
a maiden annual pre-tax profit of $1.4 million during this period,
which has been impacted significantly by COVID-19.
We would like to take this opportunity to thank our team, which
has delivered this impressive growth trajectory, whilst noting
that our people’s safety has been paramount, with not a single
COVID-19 case experienced by Aeris’ employees across all of its
activities internationally.
We take this opportunity to express our appreciation for the efforts
of our newest Director, Michael Ford, who is up for nomination at
our upcoming AGM as a Non-Executive Director; he is also the
incoming Chairman of our Audit and Risk Committee. Michael
is the Chief Financial Officer (CFO) of News Corp Australia, and
has over 30 years’ experience in strategy and finance roles, and
is a former Group CFO of QBE Insurance and Deputy CFO of the
Commonwealth Bank of Australia.
Aeris is debt free, and has recently enjoyed outstanding growth
and strong cash flows. The Company looks forward to becoming
the emerging leader in providing the best environmental
protection and energy efficiency in the built environment, whilst
driving the Aeris and AerisGuard brands as the most trusted
partner to our customers around the world, across both our
business and consumer growth markets.
As a consequence of the pandemic, Aeris initiated a number
of specific programmes to support the needs of our local
Maurie Stang
Non-Executive Chairman
Peter Bush
Chief Executive Officer
2
Review of Operations
3
02Aeris | Annual Report 2020 Aeris has continued to achieve
important milestones that were
laid out at the Company’s last
AGM in terms of significant
revenue growth, and geographical
and product expansion.
Today Aeris is successfully operating in North America, Europe,
Asia Pacific and, of course, in its home market of Australia.
The COVID-19 pandemic has created significant supply chain
challenges whilst clearly driving unprecedented demand for
trusted antiseptic and disinfection technologies. The Company
now has key approvals for its leading products in a cross-section
of international markets with near-term approval expected
for Aeris Active in the USA. Fundamental to the ongoing
growth prospects is the fact that Aeris has an entire portfolio
of HVAC products together with a disruptive environmental
hygiene range that will soon cover every vector of transmission,
including skin, hard surface, air and the latest in robotic fogging
technology. The AerisGuard brand is increasingly being
recognised and specified by customers worldwide, including
the US Army, Saudi Aramco, NSW Health, St John’s Ambulance
and many more.
The Company is well capitalised, is profitable and is cash
flow positive, and is building its global leadership team, and
successfully increasing its supply chain and production capacity
internationally. To support its international expansion, Aeris
has validated manufacturing in the USA with the capability to
manufacture at substantial scale and in a variety of packaging
formats required for the US market.
The Company has now expanded its supply chains of raw
material and packaging, and has access to increasing capacity
in the USA for its more specialised products, such as aerosols.
Aeris’ US team continues to develop a broadening range of
HVAC wholesalers and distributors, and the Company’s range
is increasingly recognised as the emerging market leader,
supported by the continuing partnership with Daikin-Goodman
in the USA and elsewhere.
The North American market is demonstrating significant “pent-
up demand” for Aeris’ unique products, and it is anticipated
that, subject to one or more EPA approvals for Aeris Active
and additional products, the USA will quickly become the
lead market for the Company’s products, leveraging Aeris’
outstanding kill-time, extended residual activity and full hospital-
grade efficacy in a single application. The Company’s capability
to deal with the full spectrum of vectors of contamination with
environmentally-friendly product demonstration validated and
approved residual properties provides a platform for growth well
into the future.
Review of Operations
Finance
Annual recorded revenue for the 2019-20 financial year was
$14.6 million and therefore exceeded guidance previously given
to the market of $13 million. Aeris made a maiden annual pre-
tax profit of $1.4 million. A sustained improvement was made
in the gross margin (61% in the June 2020 quarter and 55%
for the 2019-20 financial year) due to an increased mix of the
Company’s higher-margin branded products. It is anticipated
that with greater production efficiency the margin will continue
to increase.
The cash receipts for the June 2020 quarter were $5.8 million and
for the 2019-20 financial year were $14.6 million. The net cash
used in operating activities decreased by $2.4 million. Balance
sheet movements included an increase in inventory of $2.7 million
and an increase in trade debtors of $2.1 million. The significant
growth in demand for Aeris’ products has resulted in a substantial
increase in both the level of inventory and in trade debtors.
The completion of the Company’s $12 million capital raising in
the April 2020 quarter followed strong participation from leading
institutional and sophisticated investors in the placement of
28 million new fully paid ordinary shares at $0.43 per share.
The net proceeds of the fundraising are being used to support
growth in Aeris’ manufacturing and supply chain capability,
together with expanding the Company’s resources for the
growing international distribution network. Aeris is debt free and
presents a strong counter-party profile to its business partners
both at the supply and distribution facets of its business. The
Company continues to drive innovation with an attractive R&D
pipeline, which will be well aligned to its anticipated growth in
production and fulfilment.
North America
As a consequence of the COVID-19 pandemic in North
America, Aeris is scaling up to meet levels of potential demand
unprecedented in the Company’s home markets. Aeris’
regulatory submissions have been supported by high-profile
individuals and organisations together with universities in
America. The Company has commissioned significant additional
production, raw materials and packaging supply, well in excess
of its current Australian output.
Aeris has now manufactured multiple batches of product at
a large volume facility contracted in Texas, which have been
shipped to marquee customers across the USA for evaluation,
and received positive feedback and indications of significant
product demand, pending EPA approval.
Because of the ongoing focus on air-conditioning as an
important vector of virus transmission, there has been a strong
demand for products that address both environmental and
ventilation hygiene. The Company is now well positioned to
extend its line of environmentally-friendly, AerisGuard-branded
cleaners, treatments and hygiene products through multiple
4
quality partners and customers, including Goodman and
Motili, which is a large, national service business (a division
of Goodman Manufacturing). Motili is currently performing
maintenance service on over 45,000 HVAC systems at more
than 50 military bases around the USA using the Aeris Multi-
Enzyme Coil Cleaner.
China
The market demand in China has varied considerably during
the current pandemic, with significant supply chain disruptions
experienced during the period.
Aeris continues to build its presence in the Chinese market,
with an aim of accessing demand from multiple vertical sectors
whilst refining its distribution arrangements and priorities in
this vast market. The Company is currently evaluating options
for certain domestic production, with the aim of expanding
the market opportunity whilst enjoying potential savings
in procurement of key raw materials in a more integrated
manufacturing and supply chain.
Whilst material volumes of products were shipped into China
during the financial year, it is anticipated that the restructuring
of Aeris’ arrangements in China could lead to a growing annuity
business together with priority access to the key government
sector.
Europe, the Middle East, India and Africa
Approvals for Aeris Active have been granted in Europe
following relevant EN testing (European Standards). The key
residual bactericidal and viricidal claims for COVID-19 have
been confirmed, and this approval further demonstrates the
Company’s product differentiation. Aeris has in place a growing
number of distributors in Europe, with an initial focus on the
United Kingdom and France, together with a growing range of
additional customers and distributors throughout Europe, the
Middle East and Africa. The Company is examining European
contract manufacturers to better service the European market.
Mould Remediation
Aeris has invested in a unique suite of detection, assessment,
quality control, remediation of mould products and management
of mould, and the Company is targeting the industrial,
commercial and consumer markets.
The remediation of mould continues to be a significant unmet
need worldwide, with the USA EPA equating the risk from
mould contamination to be comparable to that of asbestos in
respect of human health. Aeris is receiving endorsements from
global insurance loss adjusters, and its platinum and wholesale
partners.
The Company’s mould remediation system is being taken up by
distributors and customers internationally because it provides
not only a rapid mould kill, but also uniquely long-term residual
protection on a full spectrum of hard and soft surfaces.
Significant efforts continued during the year on the successful
delivery of large-scale mould remediation projects in Townsville,
Queensland, with Aeris as the master contractor. Recent
successfully-completed large mould remediation projects
include a leading not-for-profit group in Sydney, a large
university and a Government health service.
5
Aeris | Annual Report 2020 Review of Operations
of environmental hygiene and HVAC technologies to support
the growing needs of Aeris’ domestic and global customers.
The Company is in material discussions with potentially large-
scale market opportunities covering a variety of geographies,
and accessing both business-to-business and business-
to-consumer high-volume channels. Aeris believes that its
objective of becoming the emerging leader in environmental
hygiene is on track, and the Company remains committed to
being the trusted partner to its customers and distributors
based on Aeris’ proprietary portfolio of disruptive products
delivering the promise of clean-green-protect.
Corrosion Protection
The Company’s water-based, long-lasting anti-corrosion
products continue to grow in market share with high-profile
customers in Australia, the USA, the Middle East and Asia.
Notable sales in the second half of the financial year include
Carrier, one of the largest air-conditioner brands in the world,
and the supply of products to a leading customer in the oil and
gas market. Aeris believes that the potential to apply its novel
coatings to multiple industrial and HVAC applications provides
a significant growth opportunity for business activity and
production levels to increase over time.
Environmental Hygiene
Aeris Active and its associated products have demonstrated
real world differentiation and superiority in both regulatory and
marketing studies. In terms of ongoing COVID-19 compliance,
Aeris Active uniquely has a dual active, rapid COVID-19 kill
and extended residual protection across the full spectrum
of surfaces, from high risk to social. Key to the Company’s
competitive position is a ‘one step, single application’ in dirty
conditions providing the highest levels of compliance, a new
‘gold standard’ in terms of performance.
Outlook
The opportunities for Aeris continue to strengthen, with each
of its product portfolios demonstrating growth and market
acceptance. Through the COVID-19 pandemic, the Company
has prioritised support of front-line first responders and
health care institutions, together with providing a full range
6
Directors’ Report
7
03Aeris | Annual Report 2020 Directors’ Report
The Directors of Aeris Environmental Ltd submit herewith the Annual Financial Report for the financial year ended 30 June 2020.
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
Bernard Stang
Non-Executive Director
Director since 2002 | Appointed Chairman in 2002
Director since 2002
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.
Directorship of other listed companies held in the last three
years:
• Non-Executive Chairman of Nanosonics Limited (ASX:NAN)
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.
since November 2000.
• Non-Executive Deputy Chairman of Vectus Biosystems
Limited (ASX:VBS) since December 2005.
Directorship of other listed companies held in the last three
years:
None
Steven Kritzler
Non-Executive Director
Director since 2002
Michael Ford
Non-Executive Director
Director since 23 April 2020
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.
Directorship of other listed companies held in the
last three years:
None
Michael Ford (B.Com, MBA, FCA, FCPA, GAICD) was
appointed as a Director in April 2020. He has over 30 years
experience in Finance and Strategy roles in a wide range of
industries including manufacturing, property and financial
services. Michael is the Chief Financial Officer of News Corp
Australia and a Director of Foxtel. He is a former Group CFO
of QBE Insurance and Deputy CFO of Commonwealth Bank
of Australia. Michael is an experienced Company Director
and has completed the Advanced Management program at
Harvard Business School.
Directorship of other listed companies held in the
last three years:
None
8
Alex Sava
Non-Executive Director
Director since 3 October 2016
(Did not seek re-election at 2019 AGM)
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.
Directorship of other listed companies held in the last three
years:
None
Peter Bush
Chief Executive Officer, Alternate Director for M and B Stang,
and Chief Financial Officer
Alternate Director since 2011
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.
Directorship of other listed companies held in the last three
years:
• Non-Executive Director of Vectus Biosystems Limited
(ASX:VBS) since July 2015.
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).
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9
Aeris | Annual Report 2020
Directors’ Report
Directors’ Meetings
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).
Number of meetings held
Number of meetings attended
Maurie Stang
Steven Kritzler
Bernard Stang
Michael Ford **
Alex Sava *
Board of
Directors
Audit and Risk
Committee
Corporate
Governance
Committee
Remuneration
and Nomination
Committee
10
10
7
9
1
-
4
4
N/A
4
N/A
N/A
1
1
N/A
1
N/A
N/A
1
1
1
1
N/A
N/A
* Ceased to be a Director on 27 November 2019.
** Appointed as a Director on 23 April 2020, and appointed as a member of the Audit and Risk Committee on 31 July 2020.
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
Michael Ford
Appointed as a member of the Audit
and Risk Committee on 31 July 2020.
Corporate Governance Committee
Maurie Stang
Bernard Stang
Chairman
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:
Income
Expenses
2020
2019
$
$
14,669,658
6,980,773
(12,686,717)
(10,609,272)
Profit (Loss) after income tax
1,982,941
(3,628,499)
For a comprehensive review of the Company's operational performance please
refer to the Chairman's and Chief Executive Officer's Report.
10
Dividends
Proceedings on behalf of the Company
The Directors do not recommend the payment of a dividend in
respect of the year ended 30 June 2020 (2019: Nil). No dividends
have been paid or declared since the start of the financial year.
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.
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.
The Company was not a party to any such proceedings during
the financial year.
Directors’ interests
Equity Holdings
Ordinary
shares
Rights over
ordinary shares
Maurie Stang
23,698,288
Likely developments and expected results
Bernard Stang
20,527,194
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.
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.
11
-
-
-
-
-
Steven Kritzler
11,252,785
Michael Ford
Alex Sava*
Peter Bush
75,000
518,737
750,000
1,323,537
*Director until 26 November 2019
Options or rights granted to Directors and Officers of
the Company
During or since the end of the 2020 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 (2019: NIL)
Particulars of options or rights granted over unissued
shares
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
or forfeited during the
period
Options or rights granted
during the period
2020
2019
2,207,291
2,899,037
536,411
150,000
305,335
585,000
150,000
-
Full details of options or rights on issue are shown in Note 17 and 24.
Aeris | Annual Report 2020
Directors’ Report
Non-audit services
Remuneration Report (Audited)
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 and Risk
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 and Risk 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.
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.
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 2020 is attached to this Directors’ Report on page 2
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: www.aeris.com.au/investor-centre
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
Michael Ford
Alex Sava
Appointed 23 April 2020
Director until 26 November 2019
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
Total compensation for all Non-Executive Directors, as
set out in the Company’s 2002 Initial Public Offer (IPO)
Prospectus, was $100,000 per annum. It is proposed that
a Resolution will be included in the 2020 Notice of Annual
General Meeting (AGM) to increase the limit of Directors’
Fees to allow for additional Directors and for the payment
of Directors’ Fees for the first time to Directors who have
12
not been compensated with Directors’ Fees since the
IPO. This amount will be set in conjunction with advice
from external advisors in reference to fees paid to Non-
Executive Directors of comparable companies. The base
fee for the Chairman is expected to be $75,000 per annum
and, for other Non-Executive Directors, is expected to be
$60,000 per annum. Directors’ Fees will cover all main
Board activities and membership of Committees of the
Board. This may be re-assessed if Directors sit on more
than one Committee. While it is recognised that various
organisations recommend that Non-Executive Directors do
not receive performance-related compensation, in the case
of Aeris Environmental Ltd, because it is at an early stage of
commercialising its technologies and wishes to minimise
its cash outgoings, it has in the past, and plans in the future
to, partially remunerate its Non-Executive Directors with
options, as detailed in the Remuneration Report. There are
no retirement benefits provided to Non-Executive Directors,
apart from statutory superannuation.
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.
Incentive Plan (EIP). The EIP was approved by shareholders
at the Annual General Meeting (AGM) held on 27
November 2014 and was re-approved by shareholders at
the AGM held on 29 November 2018. The terms where
options or shares issued under the EIP normally have the
following conditions:
i.
Vesting
33.3% vest on the first anniversary of grant of options
or performance rights,
33.3% vest on the first anniversary of grant of options
or performance rights,
33.3% vest on the first anniversary of grant of options
or performance rights,
ii. The contractual life of the options or performance
rights issued ranges from three to five years.
iii. The exercise price determined in accordance with
the Rules of the EIP is determined by the Board when
the performance of staff and contractors is evaluated
following a recommendation of the Remuneration
and Nomination Committee, normally with external
remuneration adviser assistance. The option exercise
price will normally be based on the volume weighted
average price (VWAP) of the Company’s shares for the
20 trading days prior to the offer.
d. Short-term incentives (STI)
iv. Each option or performance right is convertible into
one fully paid ordinary share.
v. All options or performance rights expire on the
earlier of their expiry date or 90 days after voluntary
termination of the participant’s employment, with a
Board discretion in special circumstances.
vi. There are no voting or dividend rights attached to
options or performance rights. 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
or when the performance rights have been converted
into fully paid ordinary shares.
vii. The options or performance rights issued are on an
equity-settled basis. There are no cash settlement
alternatives.
During the financial year ended 30 June 2020 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 2020 no amounts
were paid as LTIs.
f.
Share-based compensation
In October 2014, the Board established an Employee
13
Aeris | Annual Report 2020 Directors’ Report
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:
Number held on
30 June 2019
Acquired during
year
Sold during year
Issued on
exercise of
options
Number held on
30 June 2020
22,630,218
1,068,070
19,459,124
1,068,070
11,252,785
-
-
75,000
-
-
-
-
665,085
-
(146,348)
750,000
992,326
-
-
-
-
55,749,538
2,211,140
(146,348)
-
-
-
-
-
-
-
-
23,698,288
20,527,194
11,252,785
75,000
518,737
750,000
992,326
57,814,330
Number held on
30 June 2019
Granted during
year
Lapsed during
year
Exercised
during year
Number held on
30 June 2020
2020
Shares
Specified Directors
Maurie Stang
Bernard Stang
Steven Kritzler
Michael Ford
Appointed 23 April 2020
Alex Sava
Director until 26 November 2019
Specified Executives
Peter Bush
Robert Waring
Options and rights
Specified Directors
Maurie Stang
Bernard Stang
Steven Kritzler
Michael Ford
Appointed 23 April 2020
-
-
-
-
Alex Sava
Director until 26 November 2019
100,000
Specified Executives
Peter Bush
Robert Waring
1,323,537
50,000
1,473,537
-
-
-
-
-
-
-
-
-
-
-
-
(100,000)
-
-
(100,000)
-
-
-
-
-
-
-
-
-
-
-
-
1,323,537
50,000
1,373,537
14
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
Director until 26 November 2019
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
Number held on
30 June 2018
Granted
during year
Lapsed
during year
Exercised
during year
Number held on
30 June 2019
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
1,323,537
50,000
1,473,537
Options and rights
Specified Directors
Maurie Stang
Steven Kritzler
Bernard Stang
Alex Sava
Director until 26 November 2019
100,000
Specified Executives
Peter Bush
Robert Waring
1,323,537
50,000
1,473,537
15
Aeris | Annual Report 2020 Directors’ Report
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.
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
2020
$
2019
$
119,229
154,841
55,483
54,753
70,894
51,767
88,169
88,520
Mr M Stang and Mr B Stang are Directors and shareholders of Regional Healthcare Group Pty Ltd.
Novapharm Research (Australia) Pty Ltd
The Company and its controlled entities incur expenses for services provided by
Novapharm Research (Australia) Pty Ltd.
Research and development
Patent and other expenses
233,575
313,919
148,819
64,696
Mr M Stang, S Kritzler and B Stang are Directors and shareholders of Novapharm Research
(Australia) Pty Ltd.
Ramlist Pty Ltd
The Company and its controlled entities incur expenses for rent and utility outgoings
to Ramlist Pty Ltd.
34,789
45,396
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.
109,901
7,570
Mr M Stang is a shareholder of Ensol Systems Pty Ltd.
16
2020
$
2019
$
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.
3,199
8,231
Mr M Stang is a shareholder of Teknik Lighting Solutions Pty Ltd.
Bright Accountants
The Company and its controlled entities incur expenses for accounting services to
Bright Accountants.
68,250
61,840
Mr P Bush is a related party to Bright Accountants.
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.
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.
-
-
-
-
52,209
1,050,000
750,000
1,500,000
74,479
24,259
30,891
14,892
3,332
882
6,875
6,545
41,531
82,387
216
3,520
17
Aeris | Annual Report 2020 Directors’ Report
Details of Directors' and Executive officers' remuneration for the year ended 30 June 2020
Short term benefits
Post employment
benefits
Equity based benefits
Salary and
Director's
Fees
STI Cash
bonus
Non-
monetary
benefits
Other long-
term benefits
Superannuation
Shares
Options and
rights
(Note (ii))
Total
Performance
Related
$
$
$
$
$
$
$
$
%
Non-
Executive
Directors
Maurie Stang
Bernard Stang
Steven Kritzler
-
-
-
Michael Ford
10,180
Alex Sava
14,361
24,541
-
24,541
Total Non-
Executive
Directors
Executive
Directors
Total
Directors
Executives
(Note (i))
Peter Bush
285,295
Robert Waring
92,217
Total
402,053
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
967
-
967
-
967
27,103
-
28,070
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,147
4,705
19,066
4,705
30,213
0.0%
0.0%
0.0%
0.0%
0.0%
-
-
-
0.0%
4,705
30,213
-
20,279
332,677
2,357
94,574
27,341
457,464
0.0%
0.0%
-
18
Details of Directors’ and Executive officers’ remuneration for the year ended 30 June 2019
Short term benefits
Salary and
Director's
Fees
STI Cash
bonus
Non-
monetary
benefits
Post employment
benefits
Superannuation
Other long-
term benefits
Equity based benefits
Shares
Options and
rights
(Note (ii))
Total
Performance
Related
$
$
$
$
$
$
$
$
%
Non-
Executive
Directors
Maurie Stang
Bernard Stang
Steven Kritzler
-
-
-
Alex Sava
40,411
40,411
-
40,411
Total Non-
Executive
Directors
Executive
Directors
Total
Directors
Executives
(Note (i))
Peter Bush
238,816
Robert Waring
100,493
Total
379,720
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,647
-
22,647
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.0%
0.0%
0.0%
9,410
49,821
0.0%
9,410
49,821
-
-
0.0%
9,410
49,821
73,708
335,171
0.0%
4,713
105,206
0.0%
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.
19
Aeris | Annual Report 2020 Directors’ Report
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
14-Oct-21
23-Dec-16
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
Vesting date
Price of shares
on grant date
Exercise price
30-May-18
30-May-18
30-May-18
11-Apr-19
11-Apr-20
11-Apr-21
$0.1650
Not applicable
$0.1650
Not applicable
$0.1650
Not applicable
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
$312,398
This is reviewed annually.
Notice period
To terminate his employment, Mr Bush is required to provide Aeris with 3 months written notice.
Aeris must provide 3 months written notice.
Resignation or termination
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
interfere with the relationship between the Company and its customers, employees or
suppliers; or
ii.
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 25 to the financial statements.
20
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.
2020
2019
2018
2017
2016
Profit (Loss) for the year attributable to owners of Aeris
Environmental Ltd
1,982,941
(3,628,499)
(3,590,176)
(3,747,555)
(2,062,727)
Basic earnings (loss) per share (cents per share)
0.90
(1.98)
(2.28)
(2.40)
(1.35)
Dividend payments
-
-
-
-
-
Increase/(decrease) in share price (%)
70.97%
121.43%
(50.00%)
(33.33%)
(6.67%)
Total KMP remuneration as percentage of profit
(loss) for the year (%)
23.07%
(13.51%)
(12.01%)
(10.20%)
(13.00%)
The Group’s sales revenue in the 2020 financial year recorded
an increase by 114%, complimented by an increase in share
price by over 70%.
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
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
1,373,537 options and rights to take up ordinary shares in Aeris
Environmental Ltd that were issued to KMP remain unexercised
at 30 June 2020 (2019: 1,423,537 options and rights).
M STANG
Director
Sydney, 31 August 2020
No options or rights to take up ordinary shares in Aeris
Environmental Ltd were issued to KMP during the financial
years 2020 and 2019.
Options issued to KMP that expired or were forfeited during the
year:
Alex Sava
Number of options and rights
2020
100,000
2019
-
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.
21
Aeris | Annual Report 2020 Aeris for the Built Environment
Product Portfolios: Hygiene - HVAC&R - Corrosion - Remediation
CLEANS
PROTECTS
OPTIMISES
22
Auditor’s Independence
Declaration
23
04Aeris | Annual Report 2020 Auditor’s Independence Declaration
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 2020, 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
31 August 2020
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
24
Consolidated Statement
of Profit or Loss and Other
Comprehensive Income
For the Financial Year ended 30 June 2020
25
05Aeris | Annual Report 2020 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
Note
4
4
5
5
5
5
5
5
2020
$
14,632,962
(6,634,623)
7,998,339
36,696
2019
$
6,851,258
(4,403,415)
2,447,843
129,515
(1,547,040)
(1,481,936)
(134,378)
(493,700)
(67,170)
(348,244)
(2,497,037)
(2,504,114)
(38,178)
(135,781)
(572,602)
(249,245)
(953,704)
(18,615)
(72,198)
(861,090)
(314,355)
(996,364)
Profit (Loss) before income tax from continuing operations
1,413,370
(4,086,728)
Income tax benefit
Net profit (loss) for the year
Other Comprehensive Income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation differences
Total comprehensive profit (loss) for the year, net of tax
Profit (loss) for the year attributable to:
Owners of Aeris Environmental Ltd
Non-controlling interest
Total comprehensive profit (loss) for the year attributable to:
Owners of Aeris Environmental Ltd
Non-controlling interest
Earnings per share
Basic earnings (loss) per share (cents per share)
Earnings (loss) from continuing operations
Diluted earnings (loss) per share (cents per share)
Earnings (loss) from continuing operations
6a
569,571
458,229
1,982,941
(3,628,499)
20
20
7
(12,687)
(3,249)
1,970,254
(3,631,748)
1,982,941
(3,628,499)
-
-
1,982,941
(3,628,499)
1,970,254
(3,631,748)
-
-
1,970,254
(3,631,748)
0.90
0.89
(1.98)
(1.98)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
26
Consolidated Statement
of Financial Position
As at 30 June 2020
27
06Aeris | Annual Report 2020 Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total Current Assets
Non-Current Assets
Trade and other receivables
Right-of-use assets
Property, plant and equipment
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Lease liabilities
Provisions
Total Current Liabilities
Non-Current Liabilities
Lease Liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Accumulated losses
Non-controlling interest
Total Equity
Note
9
10A
11
12
10B
13
13
14A
14B
14C
15B
15A
16
18
19
20
2020
$
12,949,339
5,535,881
3,486,862
262,034
2019
$
3,467,877
3,442,028
770,073
194,435
22,234,116
7,874,413
3,945
375,501
65,359
444,805
31,632
-
91,498
123,130
22,678,921
7,997,543
2,656,871
2,136,041
88,568
291,964
3,037,403
301,488
31,702
333,190
3,370,593
19,308,328
-
272,135
2,408,176
-
24,543
24,543
2,432,719
5,564,824
62,195,687
1,904,803
50,195,854
2,144,073
(44,795,847)
(46,778,788)
3,685
3,685
19,308,328
5,564,824
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
28
Consolidated Statement
of Changes in Equity
For the Financial Year ended 30 June 2020
29
07Aeris | Annual Report 2020 Equity
Reserves
Accumulated
losses
Non-controlling
interest
Total attributable
to equity holders of
the entity
$
$
$
$
$
Balance at 1 July 2018
41,313,362
1,554,309
(42,790,135)
3,685
81,221
(reported as at 30 June 2018)
Prior period restatement (Note 1)
-
-
(360,153)
-
(360,153)
Re-stated as at 1 July 2018
41,313,362
1,554,309
(43,150,288)
3,685
(278,932)
Loss for the year
Other comprehensive income / (loss)
Total comprehensive loss for the year
-
-
-
-
(3,628,499)
(3,249)
(3,249)
-
(3,628,499)
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
Share issue cost
1,500,000
180,000
7,208,692
257,500
1,500
(265,200)
-
-
-
-
-
-
Movement in share-based payments reserve
-
593,013
.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at 30 June 2019
Balance at 1 July 2019
Profit for the year
Other comprehensive income / (loss)
Total comprehensive profit (loss) for the year
50,195,854
2,144,073
(46,778,788)
50,195,854
2,144,073
(46,778,788)
3,685
3,685
-
-
-
-
1,982,941
(12,687)
(12,687)
-
1,982,941
Transactions with owners in their capacity as owners:
Share placement - Strategic Investors
12,040,000
Shares issued against exercise of options and
rights
Shares issued to consultants
Share issue cost
57,533
489,300
(587,000)
-
-
-
-
Movement in share-based payments reserve
-
(226,583)
-
-
-
-
-
Balance at 30 June 2020
62,195,687
1,904,803
(44,795,847)
3,685
19,308,328
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
30
(3,628,499)
(3,249)
(3,631,748)
1,500,000
180,000
7,208,692
257,500
1,500
(265,200)
593,013
5,564,824
5,564,824
1,982,941
(12,687)
1,970,254
12,040,000
57,533
489,300
(587,000)
(226,583)
-
-
-
-
-
-
-
-
Consolidated Statement
of Cash Flows
For the Financial Year ended 30 June 2020
31
08Aeris | Annual Report 2020 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
Government Grants
Interest and bank fees
Net cash used in operating activities
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
Share issue cost
Loan repayments
Loan borrowings
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash and Cash Equivalents at the Beginning of the Financial Year
Effects of exchange rate changes on cash and cash equivalents
Note
2020
$
2019
$
14,600,592
5,008,876
(16,671,310)
(10,583,314)
-
1,125,509
19,157
17,540
57,419
46,746
(16,939)
(67,956)
32 (b)
(2,050,960)
(4,412,720)
(24,291)
(41,489)
(24,291)
(41,489)
12,042,000
7,467,692
(472,600)
-
-
-
(750,000)
1,050,000
11,569,400
7,767,692
9,494,149
3,313,483
3,467,877
157,643
(12,687)
(3,249)
Cash and Cash Equivalents at the End of the Financial Year
9
12,949,339
3,467,877
*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.
32
Notes to the Consolidated
Financial Statements
For the Financial Year ended 30 June 2020
33
09Aeris | Annual Report 2020 Notes to the Consolidated Financial Statements
Notes
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
Summary of significant accounting policies
Financial risk management
Critical accounting estimates and judgments
Revenue
Expenses
Income tax
Earnings (loss) per share attributable to the ordinary equity holders of the Company
Auditors' remuneration
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Non-current assets
Current trade and other payables and provisions
Non-current liabilities and provisions
Contributed equity
Options
Reserves
Accumulated losses
Non-controlling interests
Particulars relating to controlled entities
Commitments for expenditure
Key management personnel disclosures
Share based payments
Related party disclosures
Financial instruments disclosures
Contingent liabilities
Additional company information
Subsequent events
Operating Segments
Information relating to Parent Entity
Notes to cash flow statements
34
1. Summary of significant accounting policies
Corporate information
The financial report of Aeris Environmental Ltd (the Group)
for the year ended 30 June 2020 was authorised for issue in
accordance with a resolution of the Directors on 27 August
2020.
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.
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 31.
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 2020 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 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.
Going Concern
The Group has recorded an operating profit (after tax) of
$1,982,941 for the year ended 30 June 2020 (2019 Loss:
$3,628,499) and has net assets of $19,308,328 as at 30
June 2020 (2019: $5,564,824). The operating cash burn rate
for the financial year ended 30 June 2020 was $2,050,960
(2019: $4,412,720). The cash balance as at 30 June 2020 was
$12,949,339 (2019: $3,467,877).
Directors are of the opinion that this positive trend will continue
and 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.
35
Aeris | Annual Report 2020 Notes to the Consolidated Financial Statements
Any significant impact on the accounting policies of the
consolidated entity from the adoption of these Accounting
Standards and Interpretations are disclosed below.
AASB 16 Leases
The standard replaces AASB 117 ‘Leases’ and for lessees
eliminates the classifications of operating leases and finance
leases.
The consolidated entity has adopted AASB 16 from 1 July 2019.
The standard replaces AASB 117 ‘Leases’ and for lessees
eliminates the classifications of operating leases and finance
leases. Except for short-term leases and leases of low-value
assets, right-of-use assets and corresponding lease liabilities
are recognised in the statement of financial position. Straight-
line operating lease expense recognition is replaced with a
depreciation charge for the right-of-use assets (included in
operating costs) and an interest expense on the recognised
lease liabilities (included in finance costs). In the earlier periods
of the lease, the expenses associated with the lease under
AASB 16 will be higher when compared to lease expenses
under AASB 117. However, EBITDA (Earnings Before Interest,
Tax, Depreciation and Amortisation) results improve as the
operating expense is now replaced by interest expense and
depreciation in profit or loss.
The table below presents a reconciliation of the operating lease
commitments as disclosed in the Group’s 30 June 2019 financial
statements, to the lease liabilities recognised on the transition
date:
Operating lease as at 30 June 2019
Less: Rent and outgoings
Impact of discounting commitment at
company's incremental borrowing rate
Add: Others – contracts reassessed as short-
term leases and low value assets
$
412,882
(85,989)
(2,167)
131,240
Lease liability recognised as at 1 July 2019
455,966
Old Value
under
New Value
under
AASB 117
AASB 16
Statement of profit or loss and other
comprehensive income
$
$
Financial expenses
18,099
38,178
Depreciation
53,913
134,378
Occupancy expenses
335,234
249,245
Statement of financial position
Right-of-use asset
Lease liabilities - current
Lease liabilities - non-current
-
-
-
375,501
88,568
301,488
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
$
June
2018
$
$
Reported Adjustment
Restated
2,131,037
(360,153)
1,770,884
Extract from the
financial statements
for the year ended
30 June 2018
Trade and other
receivables
AASB16 was adopted using the modified retrospective
approach and as such the comparatives have not been restated.
Under this approach the Group has determined the principal
portion of their current operating leases which are subject to be
accounted for under this standard and recognised as a lease
liability (split between current and non-current) and a right to
use asset for the same amount as at 1 July 2019. The impact of
adoption of this standard is outlined as follows:
Net assets
81,221
(360,153)
(278,932)
Accumulated losses
(42,790,135)
(360,153) (43,150,288)
Total Equity
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)
36
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.
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.
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.
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.
(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/
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
Field equipment under finance lease
2-3 years
3 years
2-3 years
5 years
2-3 years
6 years
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.
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
37
Aeris | Annual Report 2020
Notes to the Consolidated Financial Statements
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 24.
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 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.
38
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.
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
39
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.
Aeris | Annual Report 2020
Notes to the Consolidated Financial Statements
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 21. The head entity recognises
all of the current and deferred tax assets and liabilities of
the tax consolidated group (after elimination of intragroup
transactions).
(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) Right-of-use Assets
A right-of-use asset is recognised at the commencement
date of a lease. The right-of-use asset is measured at
cost, which comprises the initial amount of the lease
liability, adjusted for, as applicable, any lease payments
made at or before the commencement date net of any
lease incentives received, any initial direct costs incurred,
and, except where included in the cost of inventories, an
estimate of costs expected to be incurred for dismantling
and removing the underlying asset, and restoring the site
or asset.
Right-of-use assets are depreciated on a straight-line basis
over the unexpired period of the lease or the estimated
useful life of the asset, whichever is the shorter. Where
the consolidated entity expects to obtain ownership of the
leased asset at the end of the lease term, the depreciation
is over its estimated useful life. Right-of use assets are
subject to impairment or adjusted for any remeasurement
of lease liabilities.
The consolidated entity has elected not to recognise a
right-of-use asset and corresponding lease liability for
short-term leases with terms of 12 months or less and
leases of low-value assets. Lease payments on these
assets are expensed to profit or loss as incurred.
(xviii) Lease Liabilities
A lease liability is recognised at the commencement date
of a lease. The lease liability is initially recognised at the
present value of the lease payments to be made over the
term of the lease, discounted using the interest rate implicit
in the lease or, if that rate cannot be readily determined,
the consolidated entity’s incremental borrowing rate.
Lease payments comprise of fixed payments less any lease
incentives receivable, variable lease payments that depend
on an index or a rate, amounts expected to be paid under
residual value guarantees, exercise price of a purchase
option when the exercise of the option is reasonably
certain to occur, and any anticipated termination penalties.
The variable lease payments that do not depend on an
index or a rate are expensed in the period in which they are
incurred.
Lease liabilities are measured at amortised cost using
the effective interest method. The carrying amounts are
remeasured if there is a change in the following: future
lease payments arising from a change in an index or a
rate used; residual guarantee; lease term; certainty of a
purchase option and termination penalties. When a lease
liability is remeasured, an adjustment is made to the
corresponding right-of use asset, or to profit or loss if the
carrying amount of the right-of-use asset is fully written
down.
(xix) Provisions
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.
40
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.
(xxii) Revenue recognition
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 receivables are initially recognised at fair value
and subsequently measured at amortised cost using the
effective interest method, less any allowance for expected
credit losses. Trade receivables are generally due for
settlement within 30 days.
The consolidated entity has applied the simplified
approach to measuring expected credit losses, which
uses a lifetime expected loss allowance. To measure
the expected credit losses, trade receivables have been
grouped based on days overdue.
Other receivables are recognised at amortised cost, less
any allowance for expected credit losses.
(xxvii) Fair value measurement
When an asset or liability, financial or non-financial,
is measured at fair value for recognition or disclosure
41
Aeris | Annual Report 2020
Notes to the Consolidated Financial Statements
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.
(xxviii) Current and non-current classification
Assets and liabilities are presented in the statement
of financial position based on current and non-current
classification. An asset is current when it is expected to
be realised or intended to be sold or consumed in normal
operating cycle; it is held primarily for the purpose of
trading; it is expected to be realised within twelve months
after the reporting period; or the asset is cash or cash
equivalent unless restricted from being exchanged or used
to settle a liability at least twelve months after the reporting
period. All other assets are classified as non-current.
A liability is current when; it is expected to be settled in
normal operating cycle; it is held primarily for the purpose
of trading; it is due to be settled within twelve months after
the reporting period; or there is no unconditional right
to defer the settlement of the liability for at least twelve
months after the reporting period. All other liabilities are
classified as non-current.
42
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 24. 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.
2. Financial 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.
3. Critical Accounting Estimates and
Judgments
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
43
Aeris | Annual Report 2020
Notes to the Consolidated Financial Statements
(h) Employee benefits provision
As discussed in note 1, the liability for employee benefits
expected to be settled more than 12 months from the
reporting date are recognised and measured at the
present value of the estimated future cash flows to be
made in respect of all employees at the reporting date. In
determining the present value of the liability, estimates of
attrition rates and pay increases through promotion and
inflation have been taken into account.
4. Revenue
Revenue
2020
$
2019
$
Revenue from sales
12,576,309
2,777,113
Revenue from services
2,056,653
4,074,145
14,632,962
6,851,258
Other revenue
2020
$
2019
$
Financial income
9,180
57,399
Government Grants
Miscellaneous
17,540
9,976
46,746
25,370
36,696
129,515
(d) Allowance for expected credit losses
The allowance for expected credit losses assessment
requires a degree of estimation and judgement. It is based
on the lifetime expected credit loss, grouped based on
days overdue, and makes assumptions to allocate an
overall expected credit loss rate for each group. These
assumptions include recent sales experience, historical
collection rates, the impact of the Coronavirus (COVID-19)
pandemic and forward-looking information that is available.
The allowance for expected credit losses, as disclosed in
note 10, is calculated based on the information available at
the time of preparation. The actual credit losses in future
years may be higher or lower.
(e) Provision for impairment of inventories
The provision for impairment of inventories assessment
requires a degree of estimation and judgement. The level
of the provision is assessed by taking into account the
recent sales experience, the ageing of inventories and
other factors that affect inventory obsolescence.
(f) Estimation of useful lives of assets
The consolidated entity determines the estimated useful
lives and related depreciation and amortisation charges for
its property, plant and equipment and finite life intangible
assets. The useful lives could change significantly as a
result of technical innovations or some other event. The
depreciation and amortisation charge will increase where
the useful lives are less than previously estimated lives, or
technically obsolete or non-strategic assets that have been
abandoned or sold will be written off or written down.
(g) Lease term
The lease term is a significant component in the
measurement of both the right-of-use asset and lease
liability. Judgement is exercised in determining whether
there is reasonable certainty that an option to extend the
lease or purchase the underlying asset will be exercised, or
an option to terminate the lease will not be exercised, when
ascertaining the periods to be included in the lease term.
In determining the lease term, all facts and circumstances
that create an economical incentive to exercise an
extension option, or not to exercise a termination option,
are considered at the lease commencement date. Factors
considered may include the importance of the asset to
the consolidated entity’s operations; comparison of terms
and conditions to prevailing market rates; incurrence of
significant penalties; existence of significant leasehold
improvements; and the costs and disruption to replace the
asset. The consolidated entity reassesses whether it is
reasonably certain to exercise an extension option, or not
exercise a termination option, if there is a significant event
or significant change in circumstances.
44
5. Expenses
Profit (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
Other employee expenses
Total employee benefit expenses
Financial expenses
Interest, bank fees and other financial expenses
Total financial expenses
Other expenses
Impairment of receivables
Rental & occupancy expenses
Research and development and patent expenses
45
2020
$
6,332
128,046
134,378
2020
$
2,007,835
263,514
145,150
80,538
2,497,037
2020
$
38,178
38,178
2020
$
135,781
249,245
572,602
2019
$
6,332
60,838
67,170
2019
$
1,594,103
283,454
593,013
33,544
2,504,114
2019
$
18,615
18,615
2019
$
72,198
314,355
861,090
Aeris | Annual Report 2020 Notes to the Consolidated Financial Statements
6. Income tax
(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:
Profit (Loss) for year
Income tax expense (benefit) calculated at 30%
R&D tax offset receivable
Temporary differences and tax losses not recognised
- Non deductible expenses
- Share based payments
Income tax attributable to profit (loss)
(b) Deferred tax balances not recognised
Calculated at 30% of not brought to account as assets or liabilities:
2020
$
1,413,370
424,011
(569,571)
(467,555)
43,544
(569,571)
2019
$
(4,086,728)
(1,226,019)
-
589,886
177,904
(458,229)
2020
$
2019
$
Deferred tax assets
Tax losses
Revenue tax losses available for offset against future tax income
7,652,475
7,951,360
Temporary differences
Provision for doubtful debts
Provision for employee entitlements
Difference between book and tax values of fixed assets
Accruals
Future lease obligations
Total deferred tax assets
Deferred tax liabilities
51,000
97,100
24,431
14,250
4,366
235,537
89,003
29,540
8,700
-
7,843,622
8,314,140
Difference between book and tax values of fixed assets
Total deferred tax liabilities
-
-
-
-
Net deferred tax asset not recognised
7,843,622
8,314,140
46
(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. Earnings (loss) per share attributable to the ordinary equity holders of the Company
Basic earnings (loss) per share (cents per share)
Diluted earnings (loss) per share (cents per share)
Net profit (loss) used to calculate basic EPS
Net profit (loss) used to calculate diluted EPS
2020
$
0.90
0.89
2019
$
(1.98)
(1.98)
1,982,941
(3,628,499)
1,982,941
(3,628,499)
Weighted average number of ordinary shares used to calculate basic EPS
219,677,482
183,224,455
Convertible performance rights and share options
2,207,291
-
Weighted average number of ordinary shares used to calculate diluted EPS
221,884,773
183,224,455
In 2019, options and rights eligible for conversion into ordinary shares in future had an anti-dilutive effect, hence diluted EPS was reported same as basic EPS.
8. Auditors’ renumeration
Remuneration of UHY Haines Norton for:
Audit of the annual financial report
Review of the half yearly financial report
Other services
Total auditors remuneration
47
2020
$
30,500
15,850
-
46,350
2019
$
26,000
17,050
8,500
51,550
Aeris | Annual Report 2020
Notes to the Consolidated Financial Statements
9. Cash and cash equivalents
Cash at bank and on hand
Deposits on call
The carrying amounts of the Group’s cash are a reasonable approximation of their fair values.
10. Trade and other receivables
(a) Current trade and other receivables
Trade receivables
Less: Allowance for expected credit losses
R&D tax offset rebate receivable
The carrying amounts of the Group’s current trade and other receivables are a reasonable approximation of their fair values.
(b) Non-current trade and other receivables
Trade Receivables
Less: Allowance for expected credit losses
2020
$
2019
$
2,375,477
1,450,012
10,573,862
2,017,865
12,949,339
3,467,877
2020
$
2019
$
5,136,310
3,836,978
(170,000)
(394,950)
569,571
-
5,535,881
3,442,028
2020
$
3,945
2019
$
421,805
-
(390,173)
3,945
31,632
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.
(c) Allowance for expected credit losses
Less than 6 months overdue
More than 6 months overdue
Movements in provision for impairment of receivables
Opening balance
Additional provisions recognised
Previous provisions written off
Foreign exchange difference and other adjustments
Closing balance
2020
2019
$
-
$
-
170,000
785,123
785,123
170,000
(785,123)
-
170,000
768,800
44,879
-
(28,556)
785,123
48
(c) Allowance for expected credit losses (continued)
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
Previous provisions written back
Movement in provision for impairment
2020
$
(34,660)
68,879
(170,000)
(135,781)
2019
$
(27,319)
-
(44,879)
(72,198)
(d) The Group applies the simplified approach to providing for expected credit losses prescribed by AASB 9, which permits the
use of the lifetime expected loss provision for all trade receivables. To measure the expected credit losses, trade receivables have
been grouped based on shared credit risk characteristics and the days past due. The loss allowance provision as at 30 June 2020 is
determined as follows, the expected credit losses incorporate forward looking information.
Current
receivables
Past due
Past due
Past due
Total
> 30 days
> 60 days
> 90 days
$
-
-
2.5%
7.5%
1,835,970
867,003
1,109,600
1,897,253
5,709,826
-
-
-
-
27,740
142,294
170,034
27,700
142,300
170,000
Expected credit loss %
Gross carrying amount
Expected credit loss provision
Expected credit loss provision (rounded off)
11. Inventories
Inventories - at cost
2020
$
3,486,862
3,486,862
2019
$
770,073
770,073
2020
$
2019
$
218,493
167,965
21,397
7,962
14,182
-
12,306
14,164
262,034
194,435
The carrying amounts of the Group’s inventories are a reasonable approximation of their fair values.
12. Other current assets
Prepayments
Advance payment to suppliers
Accrued income
Deposits and bonds
The carrying amounts of the Group’s other current assets are a reasonable approximation of their fair values.
49
Aeris | Annual Report 2020
Notes to the Consolidated Financial Statements
Cost
Accumulated depreciation / impairment
Net carrying value
$
25,011
252,985
58,747
130,228
176,456
137,449
455,966
1,236,842
25,011
233,613
58,747
130,228
176,456
129,210
753,265
$
(25,011)
(222,163)
(58,747)
(122,915)
(165,642)
(121,039)
(80,465)
(795,982)
(25,011)
(206,421)
(58,747)
(116,583)
(145,485)
(109,520)
(661,766)
-
30,822
-
7,313
10,814
16,410
375,501
440,860
-
27,192
-
13,645
30,971
19,690
91,498
13. Non-current assets
Carrying Values
2020
Property, plant and equipment
R & D equipment
Computer equipment
Field equipment
Leasehold improvements
Office furniture
Plant and equipment
Right-of-use asset
2019
Property, plant and equipment
R & D equipment
Computer equipment
Field equipment
Leasehold improvements
Office furniture
Plant and equipment
Reconciliations
Opening net
carrying value
Additions
Disposals Depreciation /
impairment
Foreign exchange
movements
Closing net
carrying value
2020
$
$
Computer equipment
Leasehold improvements
Office furniture
Plant and equipment
27,192
13,645
30,971
19,690
19,372
-
-
8,240
Right-of-use asset
-
455,966
2019
Computer equipment
Leasehold improvements
Office furniture
Plant and equipment
91,498
483,578
29,537
19,977
52,155
13,655
24,829
-
890
17,625
115,325
43,344
$
-
-
-
-
-
-
-
-
-
-
-
$
(15,904)
(6,332)
(20,157)
(11,520)
(80,465)
$
162
-
-
-
-
$
30,822
7,313
10,814
16,410
375,501
(134,378)
162
440,860
(27,174)
(6,332)
(22,074)
(11,590)
(67,170)
-
-
-
-
-
27,192
13,645
30,971
19,690
91,498
50
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. Lease liabilities
C. Provisions
Annual leave
Long service leave
2020
$
2019
$
2,270,461
1,884,786
395,587
(9,177)
223,884
27,371
2,656,871
2,136,041
88,568
-
266,193
25,771
291,964
248,785
23,350
272,135
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 liabilities and provisions
A. Provisions
Long service leave
B. Lease liabilities
The carrying amounts of the Group’s non-current liabilities and provisions are a reasonable approximation of their fair values.
16. Contributed equity
Share capital
2020
$
31,702
31,702
301,488
2019
$
24,543
24,543
-
2020
$
2019
$
242,545,479 fully paid ordinary shares - no par value
62,195,687
50,195,854
(2019: 211,746,510)
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
62,195,687
50,195,854
51
Aeris | Annual Report 2020
Notes to the Consolidated Financial Statements
Movement in ordinary share capital of Aeris Environmental Ltd
Balance at beginning of year
211,746,510
50,195,854
157,795,387
41,313,362
2020
2020
2019
Number of shares
$
Number of shares
2019
$
Shares issued during year
Shares issued to Directors towards
repayment of their loan
Shares issued to KMP
-
-
-
-
8,823,528
1,500,000
1,058,824
180,000
Share placement - Strategic Investors
28,000,000
12,040,000
42,404,073
7,208,692
Share Placement Plan
Shares issued against exercise
of options and rights
-
-
1,514,698
257,500
536,411
57,533
-
-
Shares issued to consultants and advisors
2,262,558
489,300
150,000
1,500
242,545,479
62,782,687
211,746,510
50,461,054
Transaction costs relating to share issues
-
(587,000)
-
(265,200)
Balance at end of year
242,545,479
62,195,687
211,746,510
50,195,854
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.
Grant
Date
Expiry
Date
Exercise
price
Number on issue
30 June 2019
Granted
during
year
Expired or
forfeited
Exercised
during year
Number on
issue
30 June 2020
17. Options
2020 Unlisted
*
*
*
*
23-Dec-16
14-Oct-21
23-Dec-16
23-Oct-21
23-Dec-16
01-Aug-20
30-May-18
01-Mar-21
Total options on issue
2019 Unlisted
**
*
*
*
*
31-Jul-14
31-Jul-19
23-Dec-16
14-Oct-21
23-Dec-16
23-Oct-21
23-Dec-16
01-Aug-20
30-May-18
01-Mar-21
Total options on issue
0.42
0.42
0.01
0.01
0.20
0.42
0.42
0.01
0.01
100,000
670,000
200,000
100,000
.
-
-
-
-
(100,000)
(175,000)
-
-
-
495,000
-
-
(200,000)
-
-
100,000
1,070,000
-
(275,000)
(200,000)
595,000
500,000
100,000
745,000
350,000
100,000
1,795,000
-
-
-
-
-
-
(500,000)
-
(75,000)
-
-
-
-
100,000
670,000
-
-
(150,000)
200,000
-
100,000
(575,000)
(150,000)
1,070,000
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
52
18. Reserves
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
2020
$
2019
$
(65,483)
(52,796)
1,970,286
2,196,869
1,904,803
2,144,073
2020
$
(52,796)
(12,687)
(65,483)
2019
$
(49,547)
(3,249)
(52,796)
Nature and purpose of reserve
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
Utilised for share issue
Balance at end of financial year
2020
$
2019
$
2,196,869
1,603,856
117,809
27,341
(371,733)
1,970,286
505,182
87,831
-
2,196,869
Nature and purpose of reserve
The share based payments reserve records the value of options or rights issued to employees, consultants and Directors, as part of
the remuneration for their services and issued in consideration for business combinations.
19. Accumulated losses
Balance at beginning of financial year
Net profit (loss) for year
Balance at end of financial year
53
2020
$
2019
$
(46,778,788)
(43,150,288)
1,982,941
(3,628,499)
(44,795,847)
(46,778,788)
Aeris | Annual Report 2020
Notes to the Consolidated Financial Statements
20. Non-controlling interests
Balance at beginning of financial year
Net profit (loss) for year
Balance at end of financial year
2020
$
3,685
-
3,685
2019
$
3,685
-
3,685
21. Particulars relating to controlled entities
Name of entity
Country of incorporation
Ownership interest
Ownership interest
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
22. Commitments for expenditure
Lease commitments
Australia
Australia
Australia
USA
Singapore
Malta
Operating leases
Commitments on operating leases that relate to below office facilities:
Registered office in Sydney - up to 1 year
- 1 to 3 years
Townsville lease - up to 1 year
These commitments relate to short-term leases.
2020
%
100
100
100
100
75
100
2020
$
56,604
-
-
2019
%
100
100
100
100
75
100
2019
$
55,495
55,495
14,300
56,604
125,290
54
23. Key management personnel disclosures
24. Share based payments
(a) The Directors of Aeris Environmental Ltd during the
year were:
Maurie Stang
Bernard Stang
Steven Kritzler
Michael Ford
Alex Sava
Peter Bush
Appointed 23 April 2020
Director until 26 November 2019
(Alternate Director and Chief
Executive Officer)
(b) Other key management personnel
Robert Waring (Company Secretary)
(c) Compensation
The aggregate compensation made to directors and other
members of key management personnel of the consolidated
entity is set out below:
2020
2019
$
$
Short-term employee benefits
402,053
379,720
Post-employment benefits
Share-based payments
28,070
22,647
27,341
87,831
457,464
490,198
(a) Recognised share-based payment expenses
The expense recognised for employee services and external
consultants during the year is shown in the table below:
Employee Share Option Plan
2020
2019
$
$
Employees and consultant
117,809
505,182
Key Management Personnel
27,341
87,831
Total amount arising from share-based
payment transactions
145,150
593,013
(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 2020.
Fair value of options or rights granted
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.
Further, disclosures relating to key management personnel are set out in
remuneration report in the Directors’ Report.
Particulars of options or rights granted over unissued shares
See table below.
Particulars of options or rights granted over unissued shares
Options
2020
2019
Rights
2020
2019
Weighted average remaining contractual life
1.21 years
1.98 years
0.90 years
1.28 years
Range of exercise prices
Options or rights on issue
Employees and consultants
Key Management Personnel
Options or rights issued during the year
Employees and consultants
Key Management Personnel
Shares issued as a result of exercise of options or rights
Employees and consultants
Key Management Personnel
Options or rights expired or forfeited
Employees and consultants
Key Management Personnel
55
$0.01 to $0.42
$0.01 to $0.42
-
-
545,000
920,000
288,754
505,500
50,000
150,000
1,323,537
1,323,537
595,000
1,070,000
1,612,291
1,829,037
-
-
-
-
-
-
150,000
-
150,000
200,000
150,000
336,411
-
-
-
200,000
150,000
336,411
-
-
-
-
-
-
175,000
100,000
575,000
30,335
10,000
-
-
-
275,000
575,000
30,335
10,000
Aeris | Annual Report 2020
Notes to the Consolidated Financial Statements
The following table shows the inputs to the valuation of options
and rights granted during 2020 financial year (2019: NIL)
Further quantitative information in respect of these risks is
presented throughout these financial statements.
Value of Underlying Stock
Exercise Price
Dividend Yield
Volatility (per Year)
Risk free rate
Maturity
Pricing Date
Value of Option
Rights
0.230
0.000
N/A
N/A
N/A
25/7/22
9/9/19
0.2300
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
25. Related party disclosures
(a) Parent Entity
Aeris Environmental Ltd is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 21.
(b) Key management personnel
Disclosures relating to key management personnel are set out in
note 23 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.
26. Financial instruments disclosures
(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.
(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:
2020
2019
$
$
Trade receivables
4,970,255
3,473,660
R&D tax offset rebate receivable
569,571
-
Deposits and bonds
22,347
22,265
Deposits with Bankwest
10,573,694
2,017,519
Deposits with Wells Fargo, USA
31,625
76,081
Deposits with Bank of America, USA
264,978
285
Deposits with ANZ Bank
2,069,226
1,349,821
18,501,696
6,939,631
56
(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.
Maturity analysis of financial assets and liability based on management’s expectations
Cash and cash equivalents
12,949,339
12,949,339
Maturity analysis
2020
Financial assets
Receivables
Security deposits
Total
Financial liabilities
Trade Creditors
Other payables and accruals
Lease liabilities *
Total
Net Maturity
Receivables
Security deposits
Total
Financial liabilities
Trade Creditors
Other payables and accruals
Total
Net Maturity
57
Cash flows
< 6 mths
6- 12 mths
1-3 years
> 3 years
$
$
5,539,826
5,535,881
3,945
14,182
-
-
18,503,347
18,485,220
3,945
2,270,461
2,270,461
386,410
386,410
-
-
$
-
$
-
-
-
-
-
-
$
-
-
14,182
14,182
-
-
390,056
35,002
36,716
253,687
64,651
3,046,927
2,691,873
36,716
253,687
64,651
15,456,420
15,793,347
(32,771)
(253,687)
(50,469)
-
-
3,486,857
3,424,125
28,953
33,779
14,164
-
-
-
14,164
6,968,898
6,892,002
28,953
33,779
14,164
1,884,786
1,884,786
251,256
251,256
2,136,042
2,136,042
-
-
-
-
-
-
-
-
-
4,832,856
4,755,960
28,953
33,779
14,164
* Lease liabilities calculated under AASB 16 which is effective from 1 July 2019
2019
Financial assets
Cash and cash equivalents
3,467,877
3,467,877
-
-
Aeris | Annual Report 2020
Notes to the Consolidated Financial Statements
(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 :
2020
Financial assets
Cash and cash equivalents
Deposits
Receivables
Total Assets
Financial liabilities
Note
Weighted average
interest rates
Floating
interest rates
Fixed interest
rates
Non-interest
bearing
Total
9
12
10
1.00%
10,573,862
2.20%
5.50%
-
-
-
-
2,375,477
12,949,339
14,182
14,182
47,612
5,492,214
5,539,826
10,573,862
47,612
7,881,873
18,503,347
Trade and other payables
14
0.00%
-
-
-
-
2,656,871
2,656,871
2,656,871
2,656,871
10,573,862
47,612
5,225,002
15,846,476
Note
Weighted average
interest rates
Floating
interest rates
Fixed interest
rates
Non-interest
bearing
Total
9
12
10
1.00%
2.20%
5.50%
2,017,865
-
-
-
-
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
Total Liabilities
Net financial assets
2019
Financial assets
Cash and cash equivalents
Deposits
Receivables
Total Assets
Financial liabilities
Trade and other payables
14
0.00%
Total Liabilities
Net financial assets
-
-
-
-
2,136,041
2,136,041
2,136,041
2,136,041
2,017,865
65,578
2,736,218
4,819,660
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
2020
Carrying
amount
+2% interest
rate
Profit & Loss
-1% interest
rate
Profit & Loss
2019
Carrying
amount
+3% interest
rate
Profit & Loss
-3% interest
rate
Profit & Loss
Deposits on call
10,573,862
211,477
(105,739)
Deposits on call
2,017,865
60,536
(60,536)
10,573,862
211,477
(105,739)
2,017,865
60,536
(60,536)
Tax charge of 30%
(63,443)
31,722
Tax charge of 30%
(18,161)
18,161
Post tax profit
increase / (decrease)
148,034
(74,017)
Post tax profit
increase / (decrease)
42,375
(42,375)
58
(B) Currency risk
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:
Cash at bank
Trade and other receivables
Trade and other payables
Net Exposure
2020
US$
2019
US$
2020
SGD
2019
SGD
2020
Euro
2019
Euro
204,447
53,373
9,334
9,334
5,000
5,000
217,919
385,893
12,500
12,500
(559,163)
(310,420)
-
-
-
-
-
-
(136,797)
128,846
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.
(e) Fair value of 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.
27. Contingent liabilities
There are no contingent liabilities of the company or the Group
other than commitments disclosed in note 22 (2019: NIL)
28. Additional 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
29. Subsequent events
30. Operating 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:
There have been no matters or circumstances, which have
arisen since 30 June 2020 that have significantly affected or may
significantly affect:
a. Australia - Sales and service on account of Australian
operations
b. International - Sales & service on account of international
operations
a. the operations, in financial years subsequent to 30 June 2020,
of the consolidated entity;
b. the results of those operations; or
c. the state of affairs, in the financial years subsequent to
30 June 2020, of the consolidated entity.
Intersegment transactions
Intersegment transactions are made at arm’s length and are
eliminated on consolidation.
59
Aeris | Annual Report 2020
Notes to the Consolidated Financial Statements
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 22% of external revenue (2019: One major customer account for 40%).
During the year ended 30 June 2020 the most significant client accounts for approximately 22% (2019: 40%) of the consolidated
entity’s external revenue through Australian Sales and Services operating segment.
Operating segment information of the consolidated entity
2020
Revenue
Sales
Other Income
Total Revenue
Expenses
Cost of goods sold
Operating expenses
Total Expenses
Profit before tax
2019
Revenue
Sales
Other Income
Total Revenue
Expenses
Cost of goods sold
Operating expenses
Total Expenses
Loss before tax
Segment assets and liabilities
Australia
International
Total
Intersegment elimination
Consolidated
Australia
International
Intersegment eliminations
Consolidated
$
$
$
$
13,813,583
36,508
13,850,091
6,170,158
6,310,101
12,480,259
1,369,832
6,305,400
129,515
6,434,915
4,139,133
6,481,944
10,621,077
(4,186,162)
1,410,585
189
1,410,774
1,055,670
774,348
1,830,018
(419,244)
570,832
-
570,832
289,257
557,407
846,664
(275,832)
(555,509)
14,668,659
-
36,697
(555,509)
14,705,356
(555,509)
(462,782)
6,670,319
6,621,667
(1,018,291)
13,291,985
462,782
1,413,370
(24,975)
6,851,257
-
129,515
(24,975)
6,980,772
(24,975)
(375,266)
4,403,415
6,664,085
(400,241)
11,067,500
375,266
(4,086,728)
Assets
2020
$
Liabilities
2020
$
2019
$
2019
$
22,570,313
7,538,662
5,064,275
3,802,631
1,316,076
860,028
4,156,956
3,184,701
23,886,389
8,398,690
9,221,231
6,987,332
(1,207,468)
(401,146)
(5,850,638)
(4,554,613)
22,678,921
7,997,544
3,370,593
2,432,719
60
31. Information relating to Parent Entity
Current Assets
Total Assets
Current Liabilities
Total Liabilities
Issued Capital (net of costs)
Accumulated losses
Share-based payment reserve
Net profit (loss) after tax for the period
Total comprehensive loss for the period
Contractual Obligations / Commitments (Refer Note 22)
32. Notes to cash flow statements
2020
$
22,163,863
22,646,291
2,877,507
3,210,697
2019
$
7,375,870
7,538,240
1,961,530
1,986,073
62,195,686
50,195,854
(44,730,376)
(46,840,555)
1,970,285
19,435,595
2,196,868
5,552,166
2,110,178
(3,727,778)
2,097,491
(3,731,027)
-
-
(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
2020
$
2,375,477
10,573,862
12,949,339
2019
$
1,450,012
2,017,865
3,467,877
61
Aeris | Annual Report 2020
Notes to the Consolidated Financial Statements
(b) Reconciliation of operating profit (loss) after income tax to net cash flows from operating activities
Operating profit (loss) after income tax
Non cash/non-operating items included in profit and loss
Depreciation and amortisation
Impairment expense
Interest on lease liability
Share based payments
Changes in assets and liabilities
Increase in receivables
Increase in inventory
Increase in other assets
Increase in trade creditors
Increase in other creditors and accruals
Increase / (Decrease) in employee entitlement expense
2020
$
2019
$
1,982,941
(3,628,499)
134,378
135,781
20,079
145,150
67,170
72,198
-
412,287
(2,201,947)
(2,716,789)
(1,774,973)
(451,877)
(67,599)
385,675
104,383
26,988
(28,565)
918,367
3,966
(2,793)
Net cash used in operating activities
(2,050,960)
(4,412,720)
62
Directors’ Declaration
63
10Aeris | Annual Report 2020 Directors’ Declaration
In the opinion of the Directors:
1.
2.
3.
4.
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity’s financial position as at
30 June 2020 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the Board of Directors
Maurie Stang
Director
Sydney, 31 August 2020
64
Independent Auditor’s
Report
For the Financial Year ended 30 June 2020
65
11Aeris | Annual Report 2020 Independent Auditor’s 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
INDEPENDENT AUDITOR’S REPORT
To the Members of Aeris Environmental Ltd
Report on the Audit of the Financial Report
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 2020, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, notes to the financial
statements, including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
i. giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial
performance for the year ended on that date; 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
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.
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
66
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.
As disclosed in Note 4 of the financial
report, total revenue has increased from
$6.85 million for the year ended 30 June
2019 to $14.63 million for the year ended
30 June 2020.
Occurrence
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 performance
obligation is satisfied, i.e. when 'control’ of
the goods or services underlying a particular
performance obligation is transferred to the
customer.
For the sale of goods, the performance
obligation is for transfer of goods to the
customer depending on the terms of
shipment.
Cut-off
Sales made at the end of the year and
subsequent to the year-end 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).
The appropriate
recognition needs
carefully.
revenue
to be considered
timing of
Our procedures included, amongst others:
General procedures
► Assessed the Group’s revenue recognition
accounting policies for compliance with the
requirements of the Australian Accounting
Standards. We reviewed these policies to
determine whether
they have been
consistently and appropriately applied.
► Performed walkthroughs around the revenue
recognition process and tested controls
where appropriate.
Occurrence
► Performed analytical procedures on revenue
transactions recorded during the period by
comparing the current year revenue with the
prior year. We also compared gross margins
and sales product mix with prior year and
obtained explanations from the management
for significant variations.
► Tested a sample of sales from the general
ledger to the supporting documents such as
invoice, purchase order from customer, proof
of delivery and receipts.
► Assessed whether any sales transactions
represent goods shipped on consignment
and,
the appropriate
adjustments have been made to reverse
these transactions.
so, whether
if
A key audit matter
is not
materially correct for year ended 30 June
2020.
is revenue
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
67
Aeris | Annual Report 2020
Independent Auditor’s Report
Cut-off
► Tested sales cut-off by selecting sales made
around 30 June 2020 and agreeing it to the
invoice, purchase order, proof of delivery and
other shipping documents.
► Reviewed the terms of shipping and tested
that the customer has obtained the control of
goods or services and the sales are recorded
within the correct period.
Other procedures
► Reviewed the general
journals for any
unusual transaction to the revenue accounts.
► Reviewed sales return/credit notes after year
end to test revenue is recorded in the correct
year.
RECOVERABILITY OF TRADE RECEIVABLES
Why a key audit matter
How our audit addressed the risk
As disclosed in Note 10 of the financial
trade
report,
receivable balance of $5.14m as at 30 June
2020.
recorded a
the Group
The trade receivables balance as at 30 June
increased on account of an
2020 has
increase
in FY2020. The
receivables balance as at 30 June 2020 has
increased from $4.26 million as at 30 June
2019 to $5.14 million as at 30 June 2020.
in the sales
Valuation of trade receivables is a key audit
matter in the audit due to the size of the
trade receivable balance and the high level
of management
in
determining
loss
provision.
the expected credit
judgement used
Our procedures included, amongst others:
► Reviewed aged debtor listing including long
outstanding receivables and assessed the
recoverability of these through inquiry with
management and by obtaining sufficient
corroborative evidence such as subsequent
receipts etc. to support the conclusions.
► Reviewed management’s allowance
for
expected
calculations and
loss
independently assessed the reasonable of
the amounts provided for.
credit
► Reviewed subsequent credit notes issued to
check for reversal of revenue/receivable.
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
68
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2020, but does not include the financial
report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related
assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations,
or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with the Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of this
financial report.
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
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
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
69
Aeris | Annual Report 2020
Independent Auditor’s Report
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, actions taken to eliminate threats
or safeguards applied.
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 year 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.
51
Passion beyond numbers
70
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 2020.
In our opinion, the Remuneration Report of Aeris Environmental Ltd, for the year ended 30 June 2020,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
Mark Nicholaeff
Partner
Sydney
31 August 2020
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.
52
Passion beyond numbers
71
Aeris | Annual Report 2020
Independent Auditor’s Report
Proven Skin Hygiene Protection
In High Traffic Environments
Patented protection for washrooms, food preparation and health care environments
HAND SANITISING PAPER TOWEL
99.9% reduction in bacteria
Eco-friendly, water activated wipes
Readily biodegradable
Food Preparation
High Touch Areas
Anti-bacterial instant hand sanitiser
Proprietary cosmetic formula
KILLS
99.99% OF
GERMS!
Contains 70% v/v Absolute Ethanol
NET CONTENT
500mL
l
u
If
Bat
Exp
Prod
r o n m e n t a l
s E n v i
i
A e r
L O
F O R E X
D O N O T S W A L
K E E P O U T O F E Y E S
S t o r e b e l o w 3 0 º C
M A D E I N A U S T R A
D I R E C T I O
A p p l y A
i n
e n s u r
S A F E T Y
I n c a s e
I n f o r m
i
c a u t
l e n s
u s e
f
I
s e r
i
t
t a n t h a n d s a n i
i c f o r m u l a
i a l i n s
i e t a r y c o s m e t
- b a c
t e r
P r o p r
i
A n t
K I L L S
9 9 . 9 9 % O F
G E R M S !
t h a n o l
v A b s o l u t e E
/
7 0 % v
C o n t a i n s
N E T C O N T E N T
5 0 0 m L
c o d
i S a n G e l 5 0 0 m L L a b e l ( w B a r
t
s A c
i
Anti-bacterial instant hand sanitiser
Proprietary cosmetic formula
KILLS
99.99% OF
GERMS!
Contains 70% v/v Absolute Ethanol
NET CONTENT
500mL
KILLS
99.99% OF
GERMS!
KILLS
99.99% OF
GERMS!
NET CONTENT
500mL
NET CONTENT
500mL
KILLS
99.99% OF
GERMS!
KILLS
99.99% OF
GERMS!
KILLS
99.99% OF
GERMS!
NET CONTENT
500mL
NET CONTENT
500mL
NET CONTENT
500mL
Non-Alcoholic
For sensitive skin
Leaves soft skin feel
Contains moisturiser & emollient
Mild & skin compatible
KILLS
99.9% OF
GERMS!
NET CONTENT
150mL
KILLS
99.9% OF
GERMS!
KILLS
99.9% OF
GERMS!
KILLS
99.9% OF
GERMS!
NET CONTENT
150mL
NET CONTENT
150mL
NET CONTENT
150mL
KILLS
99.9% OF
KILLS
KILLS
99.9% OF
NET CONTENT
150mL
NET CONTENT
150mL
NET CONTENT
150mL
NET CONTENT
150mL
150mL
Fast acting antiseptic gel
Sanitising foam for sensitive skin
Personal and Social Hygiene
ACTISAN GEL
Anti-bacterial instant hand antiseptic
Fragrance free & pH balanced
Kills 99.99% of germs
Registered on the Australian Register
of Therapeutic Goods
‘Medical grade’ AUST R 336954
70% ethanol
Proprietary emollients
Fragrance free
ACTISAN ALCOHOL FREE FOAM
Anti-bacterial instant hand sanitiser
Fragrance free and pH balanced
Kills 99.9% of germs
Contains emollients and moisturisers
Complies to EN 13727
Highly efficient in use
Cost effective & fast drying sanitising gel
ACTIPRO GEL
pH balanced
Non-sticky gel
Kills 99.99% of germs
Economical for social use
72
MKT-149-02 Australian Securities
Exchange (ASX)
Additional Information
73
12Aeris | Annual Report 2020 Australian Securities Exchange (ASX) Additional Information
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 and performance rights registers, ASX
releases and the Company’s Constitution.
Shareholding Information
Distribution of Shareholders
Analysis of the quoted fully paid ordinary shares by holding as at 22 October 2020:
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
220
436
286
626
140
20
39
1,767
137,353
1,226,913
2,347,748
22,247,075
31,047,654
13,647,439
171,891,297
242,545,479
0.06
0.51
0.97
9.17
12.80
5.63
70.86
100.00
Based on the market price at 22 October 2020 there were 148 shareholders with less than a marketable parcel of $500 worth of
shares at a share price of $0.545. There are 117,000 shares that are subject to Company-imposed voluntary escrow.
Statement of Shareholdings as at 22 October 2020
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
13
14
15
16
17
18
19
20
Maurie Stang
J P Morgan Nominees Australia Pty Limited
Bernard Stang
Link Traders (Aust) Pty Ltd
National Nominees Limited
Steven Kritzler
Girdis Superannuation Pty Ltd
Potski Pty Ltd
HSBC Custody Nominees (Australia) Limited
Meditsuper Pty Ltd
Development Management & Constructions Pty Ltd
BNP Paribas Noms Pty Ltd
Bond Street Custodians Limited
Kefford Holdings Pty Ltd
HSBC Custody Nominees (Australia) Limited – A/C 2
Henderson International Pty Limited
Treplo Pty Limited
Bennelong Resources Pty Limited
Radley Investment Co Pty Ltd
Pulitano Family Superannuation Pty Ltd
Total of Top 20 Holdings
Other Holdings
Total Ordinary Shares
20,809,160
19,406,270
17,893,084
17,345,986
13,503,954
11,252,785
6,772,828
6,767,604
5,873,899
4,272,281
4,247,353
3,821,977
3,650,000
3,400,000
2,342,819
2,300,000
2,275,000
2,274,284
2,204,997
2,007,188
152,421,469
90,124,010
242,545,479
8.58
8.00
7.38
7.15
5.57
4.64
2.79
2.79
2.42
1.76
1.75
1.58
1.50
1.40
0.97
0.95
0.94
0.94
0.91
0.83
62.85
37.15
100.00
74
UNQUOTED EQUITY SECURITIES as at 22 October 2020
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
375,000
120,000
Options held by four staff members, which expire on 23 October 2021 and have an
exercise price of 42 cents, issued under the EIP.
Options held by four key consultants, which expire on 23 October 2021 and have an
exercise price of 42 cents, which includes 50,000 options held by each of Robert Waring
and Ian Ernst.
495,000
Total Options on Issue
4
4
8
Number
Class – Performance Rights
Number of Holders
1,462,291
150,000
Performance Rights held by Aeris’ CEO Peter Bush (1,323,537 or 90.5%), six 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.
1,612,291
Total Performance Rights on Issue
11
2
13
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 as at 22 October 2020
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
Perennial Value Management Limited
Link Traders (Aust) Pty Ltd
Link Enterprises International Pty Ltd
Link Enterprises International Pty Ltd
On-Market Buy Back
Number
23,881,819
20,253,664
19,335,769
Class
Voting Power
Ordinary fully paid shares
Ordinary fully paid shares
Ordinary fully paid shares
9.86%
8.36%
7.97%
13,619,954
Ordinary fully paid shares
5.62%
There is no current on-market buy-back of shares in the Company.
75
Aeris | Annual Report 2020 Australian Securities Exchange (ASX) Additional Information
A Whole-of-System Solution for
12 Month Protection in Air Conditioning Systems
SURFACE CLEANER
& SANITISER
BIOACTIVE
SURFACE TREATMENT
A simple one step cleaning and
sanitising solution, which kills
bacteria and mould on hard surfaces
in HVAC&R systems
MULTI-ENZYME
COIL CLEANER
Safely cleans and removes
biofilm and inorganic
debris from indoor coils
Non-corrosive and safer
for the environment
INDOOR
COIL TREATMENT
Anti-microbial treatment of HVAC&R coils
Minimises contamination & reduces corrosion
Non-corrosive and readily biodegradable
Optimises energy efficiency
Reduces energy consumption
Best used after Multi-Enzyme Coil Cleaner
Protect air handling systems
from mould & bacteria
for up to 12 months!
Invisible biostatic coating prevents
regrowth of mould & bacteria for
up to 12 months
Ready-to-use aerosol or bulk
product for spraying and fogging
Best used after Cleaner & Sanitiser
BIOACTIVE
FILTER TREATMENT
Dramatically reduce mould and
odour-causing bacteria growth
Inhibits the growth of odour-
causing bacteria and mould
Extends filter life
MULTI-ENZYME
CONDENSATE PAN TABLET
Advanced multi-functional composition
containing specifically selected enzymes
& biocides to minimise biofilm formation
in condensate drain pans and drain lines
Available in three sizes to suit any system
76
MKT-149-02 Corporate Directory
For the Financial Year ended 30 June 2020
77
13Aeris | Annual Report 2020 Corporate Directory
Aeris Environmental Ltd
Auditor
ACN:
ABN:
093 977 336
19 093 977 336
Directors
Maurie Stang
Steven Kritzler
Bernard Stang
Michael Ford
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Chief Executive Officer, Chief Financial
Officer and Alternate Director
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
Peter Bush
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 Australia
GPO Box 2975, Melbourne VIC 3001 Australia
Telephone:
Telephone:
Facsimile:
Website:
Investor Link:
1300 850 505 (within Australia)
+61 3 9415 4000 (outside Australia)
+61 3 9473 2500
www.computershare.com
www.investorcentre.com/au
78