ANNUAL REPORT
20/21
CORPORATE DIRECTORY
CURRENT DIRECTORS
Tony Sacre - Chairman
Peter Gan - Non Executive Director
Dana Larson - Non Executive Director
STOCK EXCHANGE
1414 Degrees Limited shares are quoted
on the Australian Securities Exchange
(ASX:14D)
COMPANY SECRETARY
Tania Sargent
REGISTERED OFFICE &
PRINCIPAL PLACE OF BUSINESS
1414 Degrees Limited
136 Daws Road
Melrose Park SA 5039
Telephone: +61 8 8357 8273
Email: info@1414degrees.com.au
SOLICITORS
HWL Ebsworth Lawyers
Level 21, 91 King William Street
Adelaide SA 5000
PATENT & TRADE MARK ATTORNEYS
Madderns
Level 4, 19 Gouger Street
Adelaide SA 5000
SHARE REGISTRY
Computershare Investor Services Pty Limited
Level 5, 115 Grenfell Street
Adelaide SA 5000
Telephone: +61 3 9415 4000
Website: www.computershare.com.au
AUDITOR
BDO Audit (SA) Pty Ltd
Level 7, 420 King William Street
Adelaide SA 5000
WEBSITE
www.1414degrees.com.au
Chairman's Letter to Shareholders
1414 DEGREES LIMITED | ANNUAL REPORT 20/21
Based on the excellent foundation of work
outlined above, a clear vision for the
Company going forward as outlined to the
board recently by our new Chief Executive;
the strength and quality of our engineering
technical team which is led by our
impressive Chief Operating Officer, Jordan
Parham; and our Board renewal I believe
that the future of 1414 Degrees technology
and its potential for positive business
outcomes is strong.
Finally, I would like to say that I like to
operate an ‘open door’ policy, so if you do
have any questions or would like to discuss
anything with me directly, please feel free
to do so. My details are below.
Best wishes,
TONY SACRE
CHAIRMAN
tsacre@1414degrees.com.au
technology to deliver the global drive to
decarbonisation. In my opinion, 1414
Degrees renewable high temperature heat
technology can provide a solution to one of
the greatest engineering and commercial
challenges for a low-carbon energy future.
This year the team has focussed on the
development and refinement of SiBox™, the
latest generation of our thermal energy
storage technology, to efficiently and
robustly harness the exceptionally high
latent heat capacity of molten silicon to
store energy from intermittent renewable
energy. SiBox offers unique and
competitive advantages to provide heat
solutions for industrial and combined heat
and power applications, the demand for
which will increase in the future, and we are
in a good position to capitalise on this with
the SiBox Demonstration Module.
These advancements have been facilitated
by locating all staff, both corporate and
technical, in one location at the Daws Road
site in Melrose Park, South Australia. The
site delivers excellent space for our
research and development work with
opportunities for collaboration and cost
efficiencies.
In addition, a strategic and measured
approach to the Aurora Energy Project has
been undertaken to ensure the Company
maximises the potential of the site and
return for shareholders.
Supporting all our employees and new
Chief Executive Officer, Matt Squire, is an
important task for the Board and me as we
drive 1414 Degrees’ business plan forward
and deliver a strong pipeline of
opportunities in this increasingly critical
sector. Please be confident that, in Matt,
you have an experienced and capable
executive at the helm who will keep the
Company focussed on meeting the
challenges of successfully commercialising
the SiBox™ technology and delivering
shareholder value.
Tony Sacre
Chairman
Dear Shareholders,
The 2021 Financial Year was a year which
brought quite significant change in the
Company’s executive team and also saw
some key changes to our Board, including
the appointment of myself as Non-
Executive Director and Chairman.
Whilst I have spoken to several of the
shareholder base since I joined, I’m aware
that I would be a new name and face to
many of you. Therefore, as way of
introduction to my background and
experience, I’m the Chief Executive Officer
of Bentleys, one of Australia’s largest
Accounting and Financial Services firms
with nineteen offices and approximately
750 staff across Australia and New
Zealand. I believe my experience in
executive leadership, governance and
strategic planning and execution are the
key skills 1414 Degrees were looking for
when approaching me for the role. In turn,
it was 1414 Degrees’ exciting technology in
the renewable energy and storage space
which attracted me to the role.
With each day we see further evidence
supporting the need for clean energy
CEO's Letter to Shareholders
1414 DEGREES LIMITED | ANNUAL REPORT 20/21
are all looking for solutions to further
decarbonise their operations. The
Australian Renewable Energy Agency has
highlighted that “a key challenge for
industry is the need for high-temperature
heat”.
The need for long duration energy storage,
and the opportunity that is offered by the
delivery of renewable, high temperature
heat was recognised by 1414 Degrees and
its founding shareholders. The initial
concept projects developed by 1414
Degrees, and supported by SA
Government and Commonwealth funding,
remain an excellent platform from which
we have developed our intellectual
property. The Company’s experience in
developing storage techniques that utilise
the latent heat properties of silicon has
culminated in our latest generation thermal
energy storage, SiBox™. SiBox provides us
with the opportunity to create a product
that could prove to be disruptive for energy
users and renewable energy developers in
its scalability and flexibility. I certainly
intend for us to continue the drive to
develop a commercial silicon based energy
storage solution that builds on our prior
investments.
Over the last year the Company’s
Research & Development team has
focussed its development efforts on
thermal storage media options for SiBox
which are significantly different in design
and superior to our previous generation of
storage media. The leading options have
undergone extensive testing in anticipated
real-life conditions and rigorous
assessment of their properties, including
chemical composition, energy storage
density and structural integrity. The
outcomes of this testing and analysis has
enabled us to finalise the SiBox module
design. In parallel with this work, we have
continued our collaboration with the
University of Adelaide to develop new low-
cost silicon-based alloys to further improve
the competitiveness of the SiBox storage
media for different high-temperature
applications.
The key next step in our technology
demonstration and scale up program is to
build a 1 MWh SiBox Demonstration
Module. In the last year we have progressed
full-system design, optimisation activities
and selection of the most robust, energy
dense and lowest cost storage media
option. A final work program and budget
was established enabling construction
activities to commence in 2022. We aim to
commence running and testing the
Demonstration Module at the end of 2022
followed up with a rigorous test program
that proves the commercial utility of SiBox
throughout 2023. We believe that the SiBox
Demonstration Module will prove our
technology’s ability to deliver a commercial
solution for heat intensive industries to
capture renewable energy in a more usable
form. The flexibility of the technology will
also enable it to be configured into existing
industrial energy user infrastructure and
energy supply networks, offering a large
array of commercialisation opportunities.
We are continuing to progress a renewable
energy generation hub at the Aurora Energy
Project (AEP) north of Port Augusta. Our
development approvals are being modified
to allow us to develop an initial commercial
battery storage facility which will underpin
the electrical connection stage of the
Project. This will serve to strengthen and
enhance regional infrastructure and pave
the way for the next stage of solar
generation developments including a
baseload pilot project that demonstrates
our SiBox technology. An expanded solar
monitoring regime is in place and planning
and connection approvals will be
progressed in the next 12 months.
Our Glenelg project is presently utilised as
a demonstration platform, and we will be
looking at further opportunities for this
asset in the future. We have also developed
a more fulsome awareness of how our
Matt Squire
Chief Executive Officer
Dear Shareholders,
I’m very excited to have joined the team at
1414 Degrees and thank you for the
messages of welcome I received when I
started in August.
The last 12 months have seen the world
continue to call for a response to climate
change and the recognition for a need to
create an energy future underpinned by
renewables. The public, governments and
financiers are accelerating their demand for
clean energy solutions. I believe that large,
traditional energy companies will almost
universally expand their allocation of
capital towards clean energy projects which
are offering increasing returns to
shareholders through improved economies
of scale and technological improvements.
We are also seeing the widespread
adoption of renewable energy where
possible within many industries’ supply
chains including manufacturing, minerals
processing, agriculture and transport.
However, the challenges to the adoption of
renewable energy for many industries is
significant. Sectors such as cement,
building products and steel manufacturing
1414 DEGREES LIMITED | ANNUAL REPORT 20/21
energy storage systems can utilise
renewable gas streams and add more
value to water and waste industries. I would
like to acknowledge the excellent support
that we have received from SA Water in
providing us the opportunity to do this.
A prudent focus on shareholder funds has
been maintained by consolidating our
activities to one site at Melrose Park which
ensures our technical, commercial and
corporate staff are able to effectively
collaborate. This will enhance innovation as
we develop our SiBox Demonstration
Module and look for commercial pilot
applications. Adelaide is a city that has
some of the world’s highest concentration
of renewable energy and it is probably no
coincidence it is consistently considered
one of the world’s most liveable. The
support of the SA State Government and
other stakeholders such as SA Water
provides us with the ideal base from which
to operate.
Finally, I would like to acknowledge the
outstanding efforts and dedication of the
staff at 1414 Degrees in what has been a
difficult year. It is not easy to progress new
technologies such as ours, however I’m
very confident that we have a diligent and
collaborative team that will deliver this for
shareholders in the future.
Thank you for your ongoing support of 1414
Degrees and we look forward to updating
you on an exciting year in 2022.
Yours sincerely,
Matthew Squire
Chief Executive Officer
1414 DEGREES LIMITED | ANNUAL REPORT 20/21
This has been a transformative year for the
advancement of 1414 Degrees’ technology.
Renewed emphasis on our core thermal storage,
and its unmatched potential to provide high
temperature renewable heat, has culminated in
a robust and efficient design for our next
generation modular SiBox."
Dr Mahesh Venkataraman
Technology Manager
"My focus this year has been on optimising the
storage media for our next generation of silicon
storage. We’ve run six months of testing in
real-life conditions which sets us up to deliver
the SiBox Demonstration Module.
Nathan Levinson
Mechanical Research Engineer
After a busy year of testing, experiments
and design work our Demonstration Module is
taking shape. I’m looking forward to seeing it all
come to fruition when we begin
building in 2022."
Josh Zowtyj
Product Development Engineer
1414 DEGREES LIMITED | ANNUAL REPORT 20/21
Leveraging the learnings from Glenelg I’ve
been focussed on developing the commercial
model for gas-fired thermal energy storage. It’s
encouraging to see that energy value can be
maximised by pairing with conventional
generating assets to create a hybrid system
with synergistic value."
Wil Grosser
Project Engineer
"Joining 14D and having the opportunity to
contribute to cutting edge thermal energy
storage technology is a dream come true. To be
a graduate engineer and have the opportunity to
learn from a team of specialists in this
groundbreaking industry is amazing.
Callum Phelps
Graduate Engineer
This year we brought the whole company
together in one location, setting us up to
commercialise the SiBox technology. In SiBox
we’ve created a technology that will enable
large industrial and utility customers to
cost-effectively decarbonise."
Dr Jordan Parham
Chief Operating Officer
1414 DEGREES LIMITED | ANNUAL REPORT 20/21
1414 DEGREES LIMITED | ANNUAL REPORT 19/20
Corporate
Governance
1414 Degrees Limited and the Board are
committed to achieving and demonstrating
the highest standards of corporate
governance.
The Company has reviewed its corporate
governance practices against the Corporate
Governance Principles and
Recommendations (4th edition) published
by the ASX Corporate Governance Council.
The 2021 Corporate Governance
Statement is dated as at 30 June 2021 and
reflects the corporate governance practices
in place throughout the 2021 financial year.
The 2021 Corporate Governance
Statement has been approved by the
Board.
A description of the Company’s current
corporate governance practices is set out in
the Corporate Governance Statement
which can be viewed at
www.1414degrees.com.au
1414 DEGREES LIMITED
ACN 138 803 620
ANNUAL REPORT
FOR THE YEAR ENDED
30 JUNE 2021
1414 DEGREES LIMITED
ACN 138 803 620
ANNUAL REPORT
FOR THE YEAR ENDED 30 JUNE 2021
CONTENTS
Directors' Report
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
Notes to the Financial Statements
Directors' Declaration
Independent Auditor's Report
Page
1
11
12
13
14
15
30
31
1414 DEGREES LIMITED
ACN 138 803 620
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2021
Page 1
The directors of 1414 Degrees Limited present their report on the Group for the financial year ended 30 June 2021.
DIRECTORS
The following persons were directors of 1414 Degrees Limited during the whole of the financial year and up to the date of this report, unless otherwise stated:
Kevin Charles Moriarty - Resigned as Director 19 July 2021 and as Executive Chairman 2 September 2021
Dana Larson
Penelope Bettison - Appointed 27 September 2019. Resigned 28 July 2020
Ian Little - Appointed 27 September 2019. Resigned 1 July 2020
Richard Willson - Appointed 2 July 2020, Resigned 24 May 2021
Tony Sacre - Appointed 3 June 2021
Peter Gan - Appointed 4 January 2021
Jamie Summons - Managing Director - Appointed 14 January 2021, Ceased Employment 23 June 2021
COMPANY SECRETARY
Richard Willson - Resigned 24 May 2021
Tania Sargent - Appointed 25 May 2021
PRINCIPAL ACTIVITIES
1414 Degrees Limited is commercialising bulk energy storage solutions to transform intermittent renewable generation into baseload electricity and decarbonise heat supply. Its technology uses
renewable electricity or biogas to provide combined heat and power solutions for consumers while stabilising electricity grids. Its silicon-based thermal energy storage devices provide compact
solutions with the advantages of scalability, low cost, long life and flexible placement.
DIVIDENDS
No dividends have been paid during or since the financial year ended 30 June 2021.
REVIEW OF OPERATIONS
The Company’s strategies, structure and people have continued to evolve as it progresses through the development of a new technology in a dynamic market. In the past year, there have been
several significant achievements regarding the technical and commercial development of our silicon based thermal energy storage technology and Aurora Energy Project. This is occurring as we
continue to see a very favourable investment environment for clean energy technology and renewable energy generation projects.
The Company relocated to new premises in April 2021, uniting all staff for the first time, which will enhance our internal collaboration and provide for ongoing cost efficiencies.
GAS-TESS
The GAS-TESS pilot facility (Glenelg project) has operated since April 2019 at SA Water’s Glenelg Wastewater Treatment Plant (WWTP). The project was granted acceptance as an embedded
generator in the NEM in July 2019 and received final permanent development approvals by local council in November 2020. Sufficient testing and operation has been undertaken to validate
design models and assess the GAS-TESS pilot’s strengths and weakness versus conventional generating plant. The Glenelg project as presently configured is not commercial for continuous
operation however it remains available for periodic demonstration of the Company’s technology and a backup for biogas to energy conversion on the site. Future investment opportunities to
enhance its utilisation and performance are available and SA Water remains supportive of the ongoing development of the GAS-TESS technology.
The total carrying value of the Gas-TESS asset was impaired in June 2021 ($2,863,285).
In the last year studies have continued on broader applications of the GAS-TESS technology and future commercialisation pathways. In particular these have focussed on hybrid approaches with
other conventional generating assets. We continue to look for and work with potential partners interested in the value GAS-TESS technology can add to their operations, including water utilities
and other applications where there is waste gas or variable/ intermittent gas streams with calorific value that require emissions management solutions.
SIBOX THERMAL ENERGY STORAGE TECHNOLOGY
The Company’s core research and development to harness the high energy density of molten silicon has resulted in a new, robust, scalable and energy dense storage media concept. This
breakthrough technology, arranged in a new internal heat exchanger design, is called ‘SiBox™’. Over the past year R&D efforts have focussed on refining the three preferred thermal storage
media concepts for SiBox. Samples have now completed six months of rigorous testing under anticipated real-life conditions.
As the key next step in commercialisation of the SiBox™ technology, we plan to construct a 1 MWh SiBox Demonstration Module by September 2022. The Demonstration Module will be a full-scale
single module of the large scale SiBox concept with a focus on storage of renewable electricity and delivery of this energy as high temperature heat when required. Following its construction,
the Demonstration Module will undergo a period of rigorous operations and testing in an environment that simulates commercial operations. This will advance the Technical Readiness Level of
the SiBox technology and provide confidence to large scale industrial and utility customers, thereby accelerating SiBox commercialisation as a flexible and scalable clean energy solution. In the
last year full-system design, optimisation activities and selection of the most robust, energy dense and lowest cost storage media option have been progressed. A final work program and budget
was established enabling construction activities to commence in 2022.
1414 DEGREES LIMITED
ACN 138 803 620
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2021
Page 2
AURORA ENERGY PROJECT
In December 2019, the Company acquired SolarReserve Australia II Pty Ltd, now renamed SiliconAurora Ltd a fully owned subsidiary of 1414 Degrees Ltd. SiliconAurora is developing the Aurora
Energy Project (AEP) near Port Augusta in South Australia. The Company made the strategic acquisition as part of a strategy to participate in dispatchable renewable energy generation
developments, which will increasingly be in demand.
The AEP site has had significant investment including the 275kV transmission line which is immediately adjacent to the project and is the primary energy source for OzMinerals’ long-term
operations at Prominent Hill and Carapateena mines. The line, operated by Electranet, also provides a connection point to the National Electricity Market (NEM), making the site well suited for
wholesale renewable energy generation, electricity storage and grid stability support services. Once an initial renewable energy development is established, the site also provides the Company
with a potential location to demonstrate its SiBox technology on a larger scale following successful operation of the Demonstration Module.
The AEP has development approval for a 70 MW solar PV farm and 150 MW of generation from a concentrated solar thermal plant (CSP). During the year the Company has undertaken a
significant review of the AEP and revised the preferred development concept in order to maximise commercial return whilst progressing electrical connection to the site and opening up the
development of large-scale solar energy generation in the future. Relevant approvals for the updated AEP project design have been obtained, including Crown Sponsorship and Office of the
Technical Regulator Certificate. A variation to the existing Development Approval has also been lodged to include a 140MW/280MWh hr battery and the SiBox pilot.
Solar monitoring activities at the location are continuing and will provide suitable data for future CSP and solar generation development.
The Company has been progressing commercial discussions with relevant third parties including customers and Electranet, as well as undertaking the technical studies required for the granting
of a transmission connection agreement. We have also been working with potential providers for key equipment.
INTELLECTUAL PROPERTY
Current status of patents and trade names
• Patent 2010282232– “Thermal Energy Storage Apparatus, Arrangement and Method”. Granted in AU, NZL, EU, China and US.
• Patent 2012292959 – Thermal Energy Storage Apparatus” joint ownership. CCT dispute resolved. Granted in AU, NZL, EU, China and US.
• PCT Application 2018239960 “Energy Storage and Retrieval System” (TESS-IND). Some issues raised in EU, response in progress. Granted in AU, NZL and US.
• PCT Application PCT/AU2019/000113 “Energy Recovery System” (GAS-TESS). Proceeding with National/Regional Phase registration Aus, NZL, EU and US.
• Australian provisional patent application No. 2020904050 (SiBox Storage Media). In application/patent pending.
• SiBox trademark registered in AU, PRC, USA, EU.
The Company continues to actively manage, document and protect all its intellectual property. As part of this, during the year the Company successfully resolved a dispute with Climate Change
Technologies (CCT) concerning a very early patent.
COVID-19
The COVID-19 pandemic caused the Group to review its budgets and work practices. The Company continues to monitor its finances and workplace arrangements to manage the risk from COVID-
19 and related lockdowns.
1414 DEGREES LIMITED
ACN 138 803 620
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2021
Page 3
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
An oversubscribed Share Purchase Place (SPP) closed in October 2020 securing further investment of $3,175,539. The SPP provided an opportunity for all eligible shareholders to subscribe up to
$30,000 at 12 cents a share, a 12.6% discount to the volume weighted average price of shares on the ASX during the 5 trading days immediately prior to the announcement of the SPP Offer on 3
September 2020. 26,463,035 Ordinary Shares were issued on Wednesday, 21st of October 2020.
On June 30, 2021 the Company had 200,310,458 Ordinary Shares on issue and 3677 shareholders.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
The company has new leadership at Management and Board level, with the appointment of Matthew Squire as Chief Executive Officer and Tony Sacre as Chair of the Board. These appointments
significantly enhance the commercial, strategic and governance capabilities of the Company.
ENVIRONMENTAL REGULATION
The Group is not subject to significant environmental regulations and is not aware of any breaches of any environmental regulations during the year.
MEETINGS OF DIRECTORS
The number of meetings of the board of directors (including board committees) held during the year ended 30 June 2021, and the number of meetings attended by each director are set out
below:
Directors
Kevin Moriarty
Dana Larson
Peter Gan
Jamie Summons
Richard Willson
Tony Sacre
Board
Committee
Held
Attended
Held
Attended
4
4
2
2
4
0
4
2
2
2
4
0
0
1
1
0
0
1
0
1
1
0
0
1
INFORMATION ON DIRECTORS
Name:
Title:
Qualifications:
Kevin Moriarty
Executive Chairman
BSc (Hons), Ph.D., MAusIMM
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Interests in shares:
Interests in options:
Contractual rights to shares:
Kevin has over 40 years of mining and oil exploration and development experience and 29 years of corporate experience in roles including Chairman
and Managing Director of listed companies. He founded and led several companies to develop mines in Australia and Africa. He has served as director
and chairman of a number of ASX listed companies guiding their restructure and relisting. He has researched deep sea sediments, cave and fossil
deposits and published papers on climate change as an honorary research fellow of Flinders University and the Australian National University.
None
None
12,653,000 ordinary shares
None
None
Name:
Title:
Qualifications:
Dana Larson
Non-Executive Director
B.Sc Chemical and Petroleum Engineering
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in options:
Contractual rights to shares:
Dana is an energy expert with 16 years’ of experience primarily focusing on acquisitions, reservoir engineering, financial modelling, and engineering
management. He has a passion for cultivating a culture of success and for leveraging technical knowledge to create and optimise value for companies.
He consults for hedge funds and wealthy individuals on exploration & production, mining, and renewable energy and is currently running an energy
acquisition and divestiture consultancy.
None
None
Member of the Independent Board Committee
250,000 ordinary shares
None
None
Name:
Title:
Qualifications:
Penelope Bettison - Appointed 27 September 2019. Resigned 28 July 2020.
Executive Director
BBus, GAICD, FAMI, CPM
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Interests in shares:
Interests in options:
Contractual rights to shares:
Penelope has 20 years' experience in marketing and business management and is the Company's Head of Corporate Services. She founded and was a
Director and Brand Strategist at Pitstop Marketing. Her experience spans a wide range of industries including financial services, engineering, education,
government, business events and tourism.
None
None
0 ordinary shares
None
None
1414 DEGREES LIMITED
ACN 138 803 620
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2021
Page 4
Name:
Title:
Qualifications:
Richard Willson - Appointed 2 July 2020, Resigned 24 May 2021.
Non-Executive Director & Company Secretary
BAcc, FCPA, FAICD
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Interests in shares:
Interests in options:
Contractual rights to shares:
Richard is an experienced Non-Executive Director, Company Secretary and CFO with more than 20 years’ experience with both publicly listed and
private companies. Richard has a Bachelor of Accounting from the University of South Australia, is a Fellow of CPA Australia, and a Fellow of the
Australian Institute of Company Directors. He is a Non-Executive Director of Titomic Limited (ASX:TTT), AusTin Mining Limited (ASX:ANW), Thomson
Resources Limited (ASX:TMZ), 1414 Degrees Limited (ASX:14D), Graphene Technology Solutions Limited, the not-for-profit Unity Housing Company and
Variety SA; and Company Secretary of a number of ASX Listed Companies. Richard is the Chairman of the Audit Committee of Titomic Limited, AusTin
Mining Limited, and Unity Housing Company, and is the Chairman of the Remuneration & Nomination Committee of Titomic Limited.
Titomic Limited (ASX:TTT), AusTin Mining Limited (ASX:ANW), Thomson Resources Limited (ASX:TMZ)
None
0 ordinary shares
None
None
Name:
Title:
Qualifications:
Peter Gan
Non-Executive Director
BEng (Hons), MBA
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in options:
Contractual rights to shares:
Peter is an experienced executive and governance professional, having held positions as Chief Executive Officer, Chief Operating Officer and Company
Secretary with both listed and private companies. Peter's experience includes roles with energy companies, technology start-ups and professional
services, whilst also having extensive experience in capital markets. Peter has an Engineering degrees (Hons) and also holds a Masters in Business
Administration.
Royal Wins Corporation
None
Member of the Independent Board Committee
0 ordinary shares
None
None
Name:
Title:
Qualifications:
Tony Sacre
Chairman and Non-Executive Director
BBus, FINSIA, ACA, ACPA, MBA, GAICD
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in options:
Contractual rights to shares:
Tony is an experienced Non-Executive Director and Executive with more than 25 years' experience with both publicly listed and private companies.
Tony is currently the CEO of Bentleys, Australia's twelfth largest national accounting organisation. Tony's experience includes roles with international
financial institutions, Australia's primary securities exchange and large professional services organisations. Tony has a Bachelor of Business (Queensland
University of Technology), is a Fellow of the Securities Institute of Australia, a Chartered Accountant and Certified Practising Accountant, holds a
Masters in Business Administration (Macquarie University) and is a Graduate of the Australian Institute of Company Directors.
None
None
Chair of the Independent Board Committee
0 ordinary shares
None
None
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated.
COMPANY SECRETARY
Tania Sargent is an experienced governance, company secretary and non-executive director and is the current State Chair of the Governance Institute. Tania has a Bachelor of Arts (Accounting)
from the University of South Australia, is a member of the Institute of Chartered Accountants (Aust & NZ), has completed a Masters in Business Administration, is a graduate member of the
Australian Institute of Company Directors and has completed a Diploma of Applied Corporate Governance with the Governance Institute of Australia.
1414 DEGREES LIMITED
ACN 138 803 620
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2021
Page 5
REMUNERATION REPORT (AUDITED)
The remuneration report details the key management personnel remuneration arrangements for the consolidated entity, in accordance with the requirements of the Corporations Act 2001 and its
Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
●
●
●
●
Principles used to determine the nature and amount of remuneration
Details of remuneration
Employment agreements
Share-based compensation
Additional disclosures relating to key management personnel
●
Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns
executive reward with the achievement of strategic objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of reward.
The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward governance practices:
●
●
●
●
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency
The Board is responsible for determining and reviewing remuneration arrangements for its directors and executives. The performance of the Group depends on the quality of its directors and
executives. The remuneration philosophy is to attract, motivate and retain high performance and high quality personnel.
The Board has structured an executive remuneration framework that is market competitive and complementary to the reward strategy of the Group.
The reward framework is designed to align executive reward to shareholders' interests. The Board have considered that it should seek to enhance shareholders' interests by:
●
having economic profit as a core component of plan design
focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering constant or increasing return on assets as well as focusing the
executive on key non-financial drivers of value
attracting and retaining high calibre executives
●
●
Additionally, the reward framework should seek to enhance executives' interests by:
●
●
●
rewarding capability and experience
reflecting competitive reward for contribution to growth in shareholder wealth
providing a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive director and executive director remuneration is separate.
Non-executive directors’ remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. The Board may, from time to time, receive advice from independent remuneration consultants
to ensure non-executive directors' fees and payments are appropriate and in line with the market. Non-executive directors do not receive share Performance Rights or other incentives. The
chairman's fees are determined independently to the fees of non-executive directors based on comparative roles in the external market.
ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general meeting. The maximum annual aggregate remuneration for non-executive
directors has been set at $300,000.
1414 DEGREES LIMITED
ACN 138 803 620
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2021
Page 6
Executive remuneration
The Group aims to reward executives based on their position and responsibility, with a level and mix of remuneration which has both fixed and variable components.
The executive remuneration and reward framework has three components:
●
●
●
base pay and non-monetary benefits
share-based payments
other remuneration such as superannuation and long service leave
The combination of these comprises the executive's total remuneration.
The Group has a Performance Rights Plan under which it can issue Performance Rights to staff and executives.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the Group are set out in the following tables.
The key management personnel of the Group consisted of the following directors of 1414 Degrees Ltd:
●
●
●
●
●
●
Jamie Summons - Managing Director - Ceased Employment 23 June 2021
Dana Larson - Non-Executive Director
Tony Sacre - Chairman and Non-Executive Director- Appointed 3 June 2021
Peter Gan - Non-Executive Director - Appointed 4 January 2021
Penelope Bettison - Executive Director (Appointed 27 September 2019. Resigned 28 July 2020) and Head of Corporate Services (Resigned 28 August 2020)
Kevin Moriarty – Executive Chairman - Resigned as Director 19 July 2021 and as Executive Chairman 2 September 2021
And the following persons:
●
●
●
●
Matthew Squire - Chief Executive Officer - Appointed 1 August 2021
Richard Willson - Non-Executive Director and Company Secretary - Appointed as director on 1 July 2020 - Resigned 24 May 2021
Jordan Parham - Chief Operating Officer
Marie Pavlik - Chief Executive Officer (SiliconAurora) and Business Development Manager - Appointed 14 January 2020, Redundancy 5 March 2021
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based payments
Salary
and fees
$
Cash
bonus
$
Non-
monetary
Super-
annuation
Long service
leave
$
$
$
Equity-
settled
shares
$
Equity-settled
Performance
Rights
$
Total
$
5,417
30,000
20,000
80,438
182,500
73,362
-
132,002
170,937
128,635
823,291
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,048
-
-
-
-
17,337
5,424
7,443
-
-
10,847
16,239
10,444
67,339
-
-
5,669
-
13,112
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,000
35,800
50,800
5,417
30,000
20,000
87,486
207,280
78,786
142,849
207,845
174,879
954,542
2021
Non-Executive Directors:
Tony Sacre *
Dana Larson
Peter Gan *
Richard Willson **
Executive Directors:
Kevin Moriarty
Penelope Bettison ***
Other Key Management Personnel:
Matthew Squire
Jamie Summons ****
Jordan Parham
Marie Pavlik *****
*
**
***
****
*****
No payments in the year to 30 June 2021 - 1st payment in July 2021
Represents remuneration from 1 July 2020 to 24 May 2021
Represents remuneration from 1 July 2020 to 28 August 2020
Represents remuneration from 14 January 2021 to 23 June 2021
Represents remuneration from 1 July 2020 to 5 March 2021
1414 DEGREES LIMITED
ACN 138 803 620
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2021
Page 7
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based payments
Cash
bonus
$
Non-
monetary
Super-
annuation
Long service
leave
$
$
$
Equity-
settled
shares
$
Equity-settled
Performance
Rights
$
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,342
-
2,404
19,255
17,367
5,928
17,367
6,977
70,641
-
-
-
514
2,612
1,043
3,191
1,552
8,911
-
-
-
-
-
-
-
-
-
-
-
-
-
15,469
31,667
27,712
-
(8,696)
278,050
194,096
(737)
29,250
-
19,817
68,634
233,461
81,972
931,060
Cash salary
and fees
$
14,127
31,667
25,308
258,281
182,812
62,400
183,653
73,442
831,690
2020
Robert Shepherd *
Dana Larson
Ian Little **
Executive Directors:
Kevin Moriarty (Chairman)
Penelope Bettison ***
Other Key Management Personnel:
Richard Willson
Jordan Parham
Marie Pavlik ****
*
**
***
****
Represents remuneration from 1 July 2019 to 7 November 2019
Represents remuneration from 27 September 2019 to 30 June 2020
Moved from "Other Key Management Personnel" to "Executive Directors" due to appointment 27 September 2019
Represents remuneration from 14 January 2020 to 30 June 2020
Employment agreements
Remuneration and other terms of employment for key management personnel are formalised in employment agreements. Details of these agreements are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Dana Larson
Non-Executive Director
1 December 2018; varied effective 1 November 2020
Ongoing
Director fee for the year ending 30 June 2021 of $40,000.
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Kevin Moriarty
Executive Chairman
1 January 2020; varied effective 1 April 2020; varied effective 1 July 2021
2 years
Base salary for the year ending 30 June 2021 of $200,000 plus superannuation. 3 month termination notice by either party.
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Tony Sacre
Chairman and Non-Executive Director
3 June 2021
Ongoing
Director fee for the year ending 30 June 2021 of $65,000
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Peter Gan
Non-Executive Director
4 January 2021
Ongoing
Director fee for the year ending 30 June 2021 of $40,000.
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Penelope Bettison
Executive Director (Appointed 27 September 2019, Resigned 28 July 2020) & Head of Corporate Services (resigned 28 August 2020)
1 March 2019; varied effective 1 April 2020
Resigned 28 August 2020
Base salary for the year ending 30 June 2021 of $195,000 plus superannuation. 3 month termination notice by either party.
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Richard Willson
Company Secretary
19 October 2017
Resigned 24 May 2021
Base salary for the year ending 30 June 2021 of $46,800 plus superannuation. 3 month termination notice by either party.
1414 DEGREES LIMITED
ACN 138 803 620
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2021
Page 8
Employment agreements (Continued)
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Matthew Squire
Chief Executive Officer
1 August 2021
Ongoing
Base salary for the year ending 30 June 2022 of $350,000 plus superannuation. 3 month termination notice by either party.
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Jamie Summons
Managing Director
4 January 2021
Ceased Employment 23 June 2021
Base salary for the year ending 30 June 2021 of $250,000 plus superannuation. 3 month termination notice by either party.
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Jordan Parham
Chief Operating Officer
14 January 2019; varied effective 1 April 2020
Ongoing
Base salary for the year ending 30 June 2021 of $180,000 plus superannuation. 3 month termination notice by either party.
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Marie Pavlik
Chief Executive Officer (SiliconAurora) & Business Development Manager
14 January 2020; varied effective 1 April 2020
Redundancy 5 March 2021
Base salary for the year ending 30 June 2021 of $170,000 plus superannuation. 4 week termination notice by either party.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year ended 30 June 2021
Performance Rights
There were no Performance Rights ("PR") issued to directors and other key management personnel as part of compensation during the year ended 30 June 2021.
Values of PR over ordinary shares granted, exercised and lapsed for directors and other key management personnel as part of compensation during the year ended 30 June 2021 are set out below:
Name
Marie Pavlik
Jordan Parham
Richard Willson
Kevin Moriarty
Dana Larson
Company performance link to remuneration
Value of PR
granted
during the
year
$
Value of PR
exercised
during the
year
$
Value of PR
lapsed
during the
year
$
Remuneration
consisting of
PR for the
year
%
126,700
248,450
60,000
120,000
15,000
570,150
35,800
15,000
-
-
-
50,800
(90,900)
(22,800)
(60,000)
(173,700)
20%
7%
The remuneration of key management personnel is linked to the development of the Group’s intangible assets, the continued progress towards developing the TESS technology and progress on the
Aurora site at Port Augusta.
1414 DEGREES LIMITED
ACN 138 803 620
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2021
Page 9
Other transactions with key management personnel and their related parties
Nil
This concludes the audited remuneration report.
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Group held during the financial year by each director and other members of key management personnel of the Group, including their personally related parties, is set
out below:
2020
Ordinary shares
Robert Shepherd*
Dana Larson
Ian Little
Kevin Moriarty
Penelope Bettison**
Richard Willson
Jordan Parham
Marie Pavlik***
Balance at
the start of
the year
Received
as part of
remuneration
Additions
Disposals/
other
7,107,594
250,000
-
12,403,000
1,000,000
-
-
-
20,760,594
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
150,000
-
150,000
(7,107,594)
-
-
-
(1,000,000)
-
-
5,564
(8,102,030)
Disposals/other' is to recognise resignation on 7 November 2019 and hence removal of shareholding from disclosure at the date of this report.
Disposals/other' is to recognise resignation from KMP on 28 August 2020 and hence removal of shareholding from disclosure at the date of this report.
Appointed 14 January 2020. 'Disposals/Other' denotes balance held prior to joining the group.
Balance at
the date of
this report
-
250,000
-
12,403,000
-
-
150,000
5,564
12,808,564
Balance at
the date of
this report
-
-
250,000
12,653,000
-
-
150,000
-
255,564
13,308,564
Balance at
the start of
the year
Received
as part of
remuneration
Additions
Disposals/
other
-
-
250,000
12,403,000
-
-
150,000
-
5,564
12,808,564
-
-
-
-
-
-
-
-
-
-
-
-
-
250,000
-
-
100,000
-
250,000
600,000
-
-
-
-
-
-
(100,000)
-
-
(100,000)
*
**
***
2021
Ordinary shares
Tony Sacre
Peter Gan
Dana Larson
Kevin Moriarty
Penelope Bettison
Richard Willson
Jordan Parham
Matthew Squire
Marie Pavlik
Performance Rights holding
The number of PR over ordinary shares in the Group held during the financial year by each director and other members of key management personnel of the Group, including their personally
related parties, is set out below:
2020
PR over ordinary shares
Penelope Bettison
Richard Willson
Jordan Parham
2021
PR over ordinary shares
Richard Willson
Kevin Moriarty
Marie Pavlik
Dana Larson
Jordan Parham
Balance at
the start of
the year
750,000
50,000
200,000
1,000,000
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the date of
this report
-
-
-
-
-
-
(150,000)
(150,000)
(750,000)
(25,000)
(50,000)
(825,000)
-
25,000
-
25,000
Granted
Exercised
Expired/
forfeited/
other
Balance at
the date of
this report
25,000
-
-
-
-
25,000
400,000
800,000
950,000
100,000
1,450,000
3,700,000
-
-
(250,000)
-
(100,000)
(350,000)
(425,000)
-
(700,000)
-
(200,000)
(1,325,000)
-
800,000
-
100,000
1,150,000
2,050,000
None of the performance rights in the table above are currently vested and therefore cannot be exercised.
1414 DEGREES LIMITED
ACN 138 803 620
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2021
Page 10
INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORS
No indemnities have been given or insurance premiums paid, during or since the end of the financial year, for any person who is or has been an auditor of 1414 Degrees Limited.
The Group has indemnified the Directors and executives of the Group for costs incurred, in their capacity as a Director or executive, for which they may be held personally liable, except where
there is a lack of good faith.
During the financial year, the Group paid a premium in respect of a contract to insure the Directors and executives of the Group against a liability to the extent permitted by the Corporations Act
2001 . The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
PROCEEDINGS ON BEHALF OF THE GROUP
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Group, or to intervene in any proceedings to which the Group is a
party for the purpose of taking responsibility on behalf of the Group for all or part of those proceedings.
NON-AUDIT SERVICES
Details of the amounts paid or payable to the auditor for non-audit services provided by the auditor are outlined in note 7 to the financial statements. The amount is nil during the financial year
as no non-audit services were provided (2020: $nil).
OFFICERS OF THE GROUP WHO ARE FORMER PARTNERS OF ACCOUNTING FIRM BDO
There are no officers of the Group who are former partners of Accounting Firm BDO Audit (SA) Pty Ltd.
AUDITOR'S INDEPENDENCE DECLARATION
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors' report.
AUDITOR
Accounting Firm BDO Audit (SA) Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
Tony Sacre
Chairman and Non-Executive Director
Dated this 30th day of September 2021
1414 DEGREES LIMITED
ACN 138 803 620
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
Other Income
Research and Development Expenses
Administration and Professional Expenses
Occupancy Expenses
Marketing Expenses
Depreciation and Amortisation
Asset Impairment
Employee Benefits Expense
Share Based Payments (Equity-settled)
Directors Fees
Other Expenses
Finance Costs
(Loss) before income tax
Income tax benefit / (expense)
(Loss) for the year
Other comprehensive income for the year
Items that will be reclassified subsequently to profit or
loss:
Total comprehensive (loss) for the year
Basic loss per share
Diluted loss per share
Note
5
6
8
16
16
Page 11
2021
AUD$
2020
AUD$
486,553
411,054
6,553
1,319,515
73,739
50,851
136,772
2,933,040
1,285,226
252,949
83,561
214,276
104,249
(5,974,178)
-
(5,974,178)
-
906,889
37,042
76,521
300,221
-
1,451,631
93,932
71,935
253,098
85,743
(2,865,958)
-
(2,865,958)
-
-
-
-
-
-
(5,974,178)
(2,865,958)
(3.11) cents
(3.11) cents
(1.66) cents
(1.66) cents
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
1414 DEGREES LIMITED
ACN 138 803 620
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
Note
9
10
11
12
13
14
15
17
Page 12
2021
AUD$
2020
AUD$
5,704,957
544,370
131,721
6,381,048
4,395,479
1,436,805
142,882
5,975,166
173,434
5,661,300
1,601,502
7,436,236
13,817,284
204,155
8,359,688
1,126,136
9,689,979
15,665,145
608,819
78,825
315,000
1,002,644
31,072
1,255,232
-
1,286,304
2,288,948
355,139
90,628
129,938
575,705
14,906
975,485
-
990,391
1,566,096
11,528,336
14,099,049
32,486,429
196,904
(21,154,997)
11,528,336
29,197,369
116,968
(15,215,288)
14,099,049
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible Assets
Right-of-use assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Provision for employee benefits
Lease liabilities
Total current liabilities
Non-current liabilities
Provision for employee benefits
Lease liabilities (NC)
Convertible notes
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Share Based Payments Reserve
Accumulated losses
Total equity
1414 DEGREES LIMITED
ACN 138 803 620
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
Cash flows from operating activities
Cash received from customers
Cash paid to suppliers and employees
Government grants
Interest received
Interest paid
Interest paid on lease liabilities
Net cash inflow/(outflow) from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of entities
Payments for product development activities
Government grant received and used for intangible asset
Research and development tax offset received and used for intangible asset
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Transaction costs related to issues of shares or options
Proceeds from exercise of share options
Proceeds from the issue of shares
Net cash inflow/(outflow) from financing activities
Net increase/(decrease) in cash and cash equivalents
Net foreign exchange differences
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Note
18
9
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Page 13
2021
AUD$
2020
AUD$
50,975
(2,912,441)
492,250
18,398
-
(42,637)
(2,393,455)
(7,548)
-
(1,376,133)
16,000
1,954,840
587,159
-
-
-
(59,492)
-
3,175,540
3,116,048
1,309,752
(274)
4,395,479
5,704,957
24,991
(2,981,431)
233,636
148,623
(9,500)
(23,533)
(2,607,214)
(36,263)
(2,000,000)
(3,278,550)
236,000
2,743,782
(2,335,031)
-
-
(398,868)
-
-
-
(398,868)
(5,341,113)
15,400
9,721,192
4,395,479
1414 DEGREES LIMITED
ACN 138 803 620
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
Page 14
Contributed
equity
$
Share Based
Payments
Reserve
$
Accumulated
Losses
$
Total equity
$
29,097,294
123,111
29,097,294
123,111
(12,314,612)
(34,718)
(12,349,330)
-
-
-
-
-
-
(2,865,958)
-
(2,865,958)
16,905,793
(34,718)
16,871,075
(2,865,958)
-
(2,865,958)
-
100,075
-
100,075
93,932
(100,075)
-
(6,143)
29,197,369
116,968
-
-
-
-
-
-
-
-
-
-
93,932
-
-
93,932
(15,215,288)
34,471
(5,974,178)
-
(5,974,178)
14,099,049
34,471
(5,974,178)
-
(5,974,178)
-
173,013
3,116,047
3,289,060
252,949
(173,013)
-
79,936
-
-
-
-
252,949
-
3,116,047
3,368,996
32,486,429
196,904
(21,154,997)
11,528,336
At 30 June 2019
Adjustment for change in accounting policy (note 1)
Balance at 1 July 2019 - Restated
Loss for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners
Employee Share Scheme - Performance Rights Valuation
Employee Share Scheme - Conversion of Performance Rights
Contributions of equity net of transaction costs
At 30 June 2020
Adjustment for prior period restatement of leased asset (note 27)
Loss for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners
Employee Share Scheme - Performance Rights Valuation
Employee Share Scheme - Conversion of Performance Rights
Contributions of equity net of transaction costs
At 30 June 2021
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
1414 DEGREES LIMITED
ACN 138 803 620
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Page 15
NOTE 1
CORPORATE INFORMATION
The financial statements of 1414 Degrees Limited for the year ended 30 June 2021 were authorised for issue in accordance with a resolution of the directors on 30 September 2021 and cover the
group as required by Australian Accounting Standards.
The financial statements are presented in the Australian currency.
1414 Degrees Limited is a group limited by shares incorporated and domiciled in Australia.
The address of the group's registered office and principal place of business is 136 Daws Rd, Melrose Park SA 5039
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Preparation
These financial statements are general purpose financial statements prepared in accordance with Australian Accounting Standards, Australian Interpretations and other authoritative
pronouncements of the Australian Accounting Standards Board. The group is a for-profit group for financial reporting purposes under Australian Accounting Standards.
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.
The financial statements have been prepared on an accruals basis and are based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial
liabilities for which the fair value basis of accounting has been applied. Amounts have been rounded to whole dollars.
The following significant accounting policies have been adopted in the preparation and presentation of the financial statements.
The accounting policies have been consistently applied, unless otherwise stated.
(b) Other Income Recognition
All revenue is stated net of the amount of goods and services tax (GST).
Grant
Grants from the government are recognised at their fair value where there is reasonable assurance that the grant will be received and the group will comply with all the attached conditions.
Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate. Government grants
relating to intangible assets are deducted from the cost of the asset.
Interest
Interest is recognised as interest accrues using the effective interest method. The effective interest method uses the effective interest rate which is the rate that exactly discounts the estimated
future cash receipts over the expected life of the financial asset.
(c) Goods and Services Tax (GST)
Revenues and expenses are recognised net of GST except where GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is
recognised as part of the cost of acquisition of the asset or as part of the expense item.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables
in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable
to, the taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
1414 DEGREES LIMITED
ACN 138 803 620
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Page 16
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Income Tax
The income tax expense for the period is the tax payable on the current period's taxable income based on the national income tax rate adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences between the tax base of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for all temporary differences, between carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases, at
the tax rates expected to apply when the assets are recovered or liabilities settled. Exceptions are made for certain temporary differences arising on initial recognition of an asset or a liability if
they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit.
Deferred tax assets are only recognised for deductible temporary differences and unused tax losses if it is probable that future taxable amounts will be available to utilise those temporary
differences and losses.
Current and deferred tax balances relating to amounts recognised directly in other comprehensive income are also recognised in other comprehensive income.
(e) Impairment of Assets
At the end of each reporting period, the group assesses whether there is any indication that individual assets are impaired. Where impairment indicators exist, recoverable amount is determined
and impairment losses are recognised in profit or loss where the asset's carrying value exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs to sell
and value in use. For the purpose of assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. Goodwill on business acquisition and the intangible asset that is not yet ready for use is tested for impairment annually,
or more frequently if events or changes in circumstances indicated that they might be impaired.
Where it is not possible to estimate recoverable amount for an individual asset, recoverable amount is determined for the cash-generating unit to which the asset belongs.
(f) Cash and Cash Equivalents
For the purposes of the Statement of Cash Flows, cash and cash equivalents includes cash on hand and at bank, deposits held at call with financial institutions, other short term, highly liquid
investments, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value and bank overdrafts.
(g) Property, Plant and Equipment
Plant and equipment is stated at historical cost, including costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner
intended by management, less depreciation and any impairments.
The carrying amount of plant and equipment is reviewed annually by the directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on
the basis of the expected net cash flows that will be received from the assets' employment and subsequent disposal. The expected net cash flows have been discounted to their present values in
determining recoverable amounts.
The depreciable amount of all fixed assets is depreciated on a straight line or diminishing value basis over the asset’s useful life to the group commencing from the time the asset is held ready for
use. The following estimated useful lives will be used in the calculation of depreciation:
- Plant and equipment
2 - 15 years
The assets' residual values and useful lives are reviewed and adjusted, if appropriate, at the end of each reporting period.
Gains and losses on disposals are calculated as the difference between the net disposal proceeds and the asset's carrying amount and are included in profit or loss in the year that the item is
derecognised.
(h) Intangible Assets
Product Development
Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies identify that the project
will deliver future economic benefits and these benefits can be measured reliably. Expenditure capitalised comprises costs of materials and services. The carrying value of development costs is
reviewed annually when the asset is not yet available for use, or when events or circumstances indicate that the carrying value may be impaired. As the asset is not yet available for use, the
useful life has not yet been determined.
The R&D refund is recognised on an accrual basis, calculated using actual costs incurred on eligible activities and is subject to potential review by Government for up to 5 years.
Goodwill
Goodwill is calculated as the excess of the:
●
●
●
over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the
difference is recognised directly in profit or loss as a bargain purchase.
consideration transferred,
amount of any non-controlling interests in the acquired entity, and
acquisition-date fair value of any previous equity interest in the acquired entity
1414 DEGREES LIMITED
ACN 138 803 620
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Page 17
NOTE 2
(h) Intangible Assets (Continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised but it is tested for impairment annually, or more frequently if events or changes in circumstances
indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the
entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to
benefit from the business combination in which the goodwill arose. The units or groups of units are identified at
the lowest level at which goodwill is monitored for internal management purposes.
(i) Leases
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 Group 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 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 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 Group'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.
(j) Trade and Other Payables
Trade and other payables represent liabilities for goods and services provided to the group prior to the year end and which are unpaid. These amounts are unsecured and are usually paid within 30
days of recognition.
All trade and other payables are non interest bearing.
(k) Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the
amounts expected to be paid when the liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made
in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of
employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on corporate bonds with terms to maturity and currency that
match, as closely as possible, the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the American or Black-Scholes option pricing model that takes
into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and
the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the employees
to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on
the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for
the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market
condition has been met, provided all other conditions are satisfied.
1414 DEGREES LIMITED
ACN 138 803 620
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Page 18
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for
any modification that increases the total fair value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of
the consolidated entity or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is
forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted
for the cancelled award, the cancelled and new award is treated as if they were a modification.
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(l) Contributed Equity
Ordinary shares are classified as equity.
Costs directly attributable to the issue of new shares or options are shown as a deduction from the equity proceeds, net of any income tax benefit.
(m) 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. Such assets
are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held
and the contractual cash flow characteristics of the financial asset unless, an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the entity has transferred substantially all the risks and rewards of ownership.
When there is no reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Typically, such financial
assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii) designated as such upon
initial recognition where permitted. Fair value movements are recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the entity intends to hold for the foreseeable future and has irrevocably elected to classify
them as such upon initial recognition.
Impairment of financial assets
The entity recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The
measurement of the loss allowance depends upon the entity's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since
initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's
lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that
credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the
probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance is
recognised in profit or loss.
(n) Principles of Consolidation
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity where the group 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 group. They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the group.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence
of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss, statement of comprehensive income, statement of changes in
equity and balance sheet respectively.
(o) Business Combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the
acquisition of a subsidiary comprises the:
- fair values of the assets transferred
- liabilities incurred to the former owners of the acquired business
- equity interests issued by the group
- fair value of any asset or liability resulting from a contingent consideration arrangement, and
- fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date.
The group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the
acquired entity’s net identifiable assets.
1414 DEGREES LIMITED
ACN 138 803 620
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Page 19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
NOTE 2
(o) Business Combinations (continued)
The excess of the:
- consideration transferred,
- amount of any non-controlling interest in the acquired entity, and
- acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than
the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the
entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value
recognised in profit or loss.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition
date. Any gains or losses arising from such remeasurement are recognised in profit or loss.
(p) Accounting Standards Issued But Not Yet Effective
There are no accounting standards that have not been early adopted for the year ended 30 June 2021 but will be applicable to the group in future reporting periods which are expected to have a
material impact on the financial statements.
(q) Application of new and revised Accounting Standards
The group 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.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the group.
1414 DEGREES LIMITED
ACN 138 803 620
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Page 20
NOTE 3
ACCOUNTING ESTIMATES AND JUDGEMENTS
The directors evaluate estimates and judgments incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable
expectation of future events and are based on current trends and economic data, obtained both externally and within the group.
Key Estimates - Impairment
The group assesses impairment at the end of each reporting period by evaluating conditions and events specific to the group that may be indicative of impairment triggers. Recoverable amounts of
relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions.
With respect to cash flow projections for intangible assets and those with a finite useful life but not yet considered ready for use, relevant inputs have been factored into valuation models on the
basis of management’s expectations regarding the growth of the market and the group’s ability to capture market share. Pre-tax discount rates of 11% have been used in all models.
With respect to cash flow projections for the goodwill on business acquisition, the calculations use cash flow projections based on the most readily available modelling work performed for/by the
entity. Relevant inputs have been factored into models on the basis of management’s expectations regarding potential revenues and the group’s ability to capture market share. Pre-tax discount
rates of 11% have been used in all models.
The goodwill on business acquisition and intangible asset is tested for impairment annually at the end of the reporting period.
Key Judgements - Product Development
Included within intangible assets at the end of the reporting period is Product Development with a net carrying value of $3,789,832 (2020: $6,488,220 ) being the carrying value of the Product
Development intangible asset of $9,801,097 (2020: $16,296,263) less the associated Government Grant funding of $1,000,000 (2020: $2,568,000) and the R&D refundable tax offsets applied of
$5,011,265 (2020: $7,240,043). The directors believe that while the development and commercialisation of the technology remains in-progress and the asset is not yet generating economic
benefits (beyond customer trials), it is not considered ready for use. A reliable estimate for the useful life of the asset will only be capable of being determined once the asset is assessed as ready
for use, after which point, amortisation will commence. The directors are satisfied that it is probable that the intangible asset will generate future economic benefits based on internal financial
models and potential project scenario analysis, excluding the GASS TESS asset at the SA Water (Glenelg) site, for which an impairment was recorded this financial year ($2,933,040).
NOTE 4
SEGMENT REPORTING
There is only one segment which is the entire business, which operates entirely within Australia.
1414 DEGREES LIMITED
ACN 138 803 620
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
OTHER INCOME
NOTE 5
Interest Received
Rent & Office Recoveries
Claim Settlement
Provision of services
Government grants
NOTE 6
Profit(loss) before income tax includes the following specific expenses:
EXPENSES
Defined contribution superannuation expense
Right of Use Assets - Depreciation expense
Right of Use Assets - Interest expense
NOTE 7
Audit services
AUDITORS' REMUNERATION
Amounts paid/payable to BDO for audit/review of the financial statements of the group
Amounts paid/payable to a related practice of the auditor for corporate finance services
NOTE 8
INCOME TAX EXPENSE
Income Tax expense/(benefit) comprises:
Current tax expense
Current tax expense/(benefit)
Adjustments for previous years
Total current income tax expense
Deferred tax expense
Origination and reversal of temporary differences
Total income tax expense/(benefit) in profit or loss
The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the income tax
expense/(benefit) in the financial statements as follows:
Profit/(Loss) from operations before tax
Income tax calculated at 26.0%
Tax effect of amounts which are not deductible (taxable) in calculating taxable income
Non-deductible expenses
Assessable income not included in profit/loss
Other reconciling items
Timing differences on deferred tax assets not recognised
Tax losses not recognised
Tax expense
NOTE 9
CASH AND CASH EQUIVALENTS
Cash at bank
Cash term deposits
An amount of $295,113 included as cash has been set aside to support a bank guarantee issued to the landlord of the rented premises.
NOTE 10
TRADE AND OTHER RECEIVABLES
Trade receivables
R&D refundable tax offset
Other receivables
Page 21
2021
AUD$
2020
AUD$
18,828
4,257
46,718
-
416,750
486,553
107,841
103,539
104,249
315,629
31,225
-
31,225
-
-
-
-
-
-
79,198
22,720
-
309,136
411,054
123,987
252,415
85,743
462,145
37,000
-
37,000
-
-
-
-
-
-
(5,974,178)
(2,865,958)
(1,553,286)
(788,138)
1,553,286
81,795
4,160
(49,319)
503
1,516,147
-
788,138
29,862
64,900
(48,893)
(34,226)
776,495
-
5,704,957
4,395,479
-
-
5,704,957
4,395,479
696
538,577
5,097
544,370
63,000
1,367,937
5,868
1,436,805
1414 DEGREES LIMITED
ACN 138 803 620
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
INTANGIBLE ASSETS
NOTE 11
Product Development
Product Development - Intellectual Property
Intangible assets under development - at cost
Government Grants applied
R&D Refundable Tax Offset applied
Reconciliation of Product Development - Intellectual Property
Balance at the beginning of the year
Additions
Government Grants applied
R&D Refundable Tax Offset applied
GAS TESS Impairment
Closing carrying value
Page 22
2021
AUD$
2020
AUD$
9,801,097
(1,000,000)
(5,011,265)
3,789,832
6,488,220
1,376,133
(16,000)
(1,125,481)
(2,933,040)
3,789,832
16,296,263
(2,568,000)
(7,240,043)
6,488,220
5,109,045
3,278,550
(236,000)
(1,663,375)
-
6,488,220
Intellectual property consists of TESS (thermal energy storage system) development of bulk energy storage solutions.
No amortisation has been recognised as the intellectual property is not available for use as at 30 June 2021. The intangible asset is tested for impairment annually. The government grant relates
to accelerating the commercialisation of the group's intellectual property.
The recoverable amount of the group's Product Development intangible asset has been determined by a value-in-use calculation using a discounted cash flow model, based on an 8 year projection
period approved by management.
The following key assumptions were used in the discounted cash flow model:
● 11% pre-tax discount rate;
● No revenue earned until 2024;
● Major project deliverables in 2024, 2027, and 2030.
The discount rate of 11% pre-tax reflects management’s estimate of the time value of money and the consolidated entity’s weighted average cost of capital, the risk free rate and the volatility of
the share price relative to market movements.
Management believes the revenue presented in the model is justified, based on the potential indicated in the market.
There were no other key assumptions.
Goodwill on business acquisition
Goodwill on business acquisition
(Note 19)
Reconciliation of goodwill on business acquisition
Balance at the beginning of the year
Purchase of SiliconAurora Pty Ltd
Closing carrying value
Goodwill is tested for impairment annually.
1,871,468
1,871,468
1,871,468
-
1,871,468
1,871,468
1,871,468
-
1,871,468
1,871,468
The recoverable amount of the group's goodwill intangible asset has been determined by a value-in-use calculation using a discounted cash flow model, based on an 11 year projection period
approved by management.
The following key assumptions were used in the discounted cash flow model:
● 11% pre-tax discount rate;
● Consistent revenue beginning in FY2023
● Revenue and CAPEX based on modelling recently performed for the Group;
● Financing mix unknown, however model based on 100% debt in order to consider impacts of interest and debt repayments
The discount rate of 11% pre-tax reflects management’s estimate of the time value of money and the consolidated entity’s weighted average cost of capital, the risk free rate and the volatility of
the share price relative to market movements.
Management believes the revenue presented in the model is justified, based on modelling work referred to above.
There were no other key assumptions.
NON-CURRENT ASSETS - RIGHT-OF-USE ASSETS
NOTE 12
Land and buildings - right-of-use
Less: Accumulated depreciation
Additions to the right-of-use assets during the year were $570,436
TRADE AND OTHER PAYABLES
NOTE 13
Trade and other payables
Other payables and accruals
1,766,174
(164,672)
1,601,502
2,256,668
(1,130,532)
1,126,136
395,133
213,686
608,819
297,339
57,800
355,139
1414 DEGREES LIMITED
ACN 138 803 620
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 14
Lease liabilities
NON-CURRENT LIABILITIES - LEASE LIABILITIES
Lease Type
Term
Tripartite Agreement - Pastoral Lease
Office Space
40 years
2 years & 2 months, 1 year right of renewal
Rate Applied to
Lease Liability
6.23%
4.98%
Page 23
2021
AUD$
2020
AUD$
1,255,232
975,485
965,089
290,143
1,255,232
975,485
-
975,485
NOTE 15
CONTRIBUTED EQUITY
Share capital
Ordinary shares - authorised, issued and fully paid opening balance
Employee Share Scheme - Conversion of Performance Rights
Share Purchase Plan
Costs of issue
Ordinary shares - authorised, issued and fully paid closing balance
2021
No. of Shares
2021
AUD$
2020
No. of Shares
2020
AUD$
172,904,923
29,197,369
172,389,923
29,097,294
942,500
173,013
515,000
100,075
26,463,035
3,175,540
-
(59,493)
-
-
-
-
200,310,458
32,486,429
172,904,923
29,197,369
Ordinary shareholders are entitled to participate in dividends and the proceeds on winding up of the group in proportion to the number of and amounts paid on the shares held. Every ordinary
shareholder present at a meeting in person or by proxy is entitled to one vote on a show of hands or by poll.
Ordinary shares have no par value.
Capital Management
Management controls the capital of the group in order to ensure that the group can fund its operations and continue as a going concern.
The group's capital includes ordinary share capital and financial liabilities, supported by financial assets. There are no externally imposed capital requirements.
Management effectively manages the group’s capital by assessing the group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. There have
been no changes in the strategy adopted by management to control the capital of the group since the prior year and the objectives for managing capital have been met.
NOTE 16
EARNINGS PER SHARE
Earnings per share for profit (loss)
Profit (loss) after income tax
Profit (loss) after income tax attributable to the owners of 1414 Degrees Ltd
2021
AUD$
2020
AUD$
(5,974,178)
(2,865,958)
(5,974,178)
(2,865,958)
Profit (loss) after income tax attributable to the owners of 1414 Degrees Ltd used in calculating diluted earnings per share
(5,974,178)
(2,865,958)
Basic earnings per share
Diluted earnings per share
Weighted average number of ordinary shares
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
Options over ordinary shares if dilutive
Convertible notes
Cents
Cents
(3.11)
(3.11)
(1.66)
(1.66)
Number
Number
191,870,410
172,612,635
-
-
-
-
-
-
Weighted average number of ordinary shares used in calculating diluted earnings per share
191,870,410
172,612,635
The 4,625,000 performance rights have not been taken into account when calculating diluted earnings per share as they are anti dilutive.
1414 DEGREES LIMITED
ACN 138 803 620
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Page 24
NOTE 17
SHARE BASED PAYMENTS
350,000 shares were issued to key management personnel in this financial year as part of the group's Performance Rights plan. In the year ended 30 June 2020 150,000 shares were issued to key
management personnel during the financial year.
A Performance Rights plan was established by the group in the 2019 financial year, whereby the group may, at the discretion of the board, grant Performance Rights (PR) over ordinary shares in
the group to certain employees of the group. The PR are issued for nil consideration and are granted in accordance with performance guidelines established by the board.
Set out below are summaries of PR's outstanding at the end of the financial year:
2021
2020
Grant date
Expiry date
Exercise
price
2/04/2019
2/04/2019
2/04/2019
2/04/2019
23/07/2020
23/07/2020
23/07/2020
23/07/2020
23/07/2020
23/07/2020
30/11/2020
30/11/2020
9/04/2021
9/04/2021
9/04/2021
9/04/2021
9/04/2021
9/04/2021
9/04/2021
1/07/2020
15/01/2021
15/01/2022
15/01/2023
31/07/2020
1/07/2021
15/01/2021
15/01/2022
1/07/2022
15/01/2023
30/11/2021
30/11/2022
15/07/2021
31/07/2021
1/09/2021
15/01/2022
15/01/2023
15/01/2024
31/12/2021
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
Balance at
the start of
the year
250,000
775,000
875,000
750,000
-
-
-
-
-
-
-
-
-
-
-
-
2,650,000
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
-
742,500
250,000
600,000
400,000
100,000
1,000,000
700,000
600,000
250,000
100,000
100,000
325,000
100,000
500,000
500,000
6,267,500
(75,000)
(125,000)
-
-
(542,500)
-
(200,000)
-
-
-
-
-
-
-
-
-
-
-
-
(942,500)
(175,000)
(650,000)
(875,000)
(250,000)
(200,000)
(400,000)
(400,000)
(200,000)
(200,000)
(3,350,000)
-
-
-
500,000
-
250,000
-
100,000
1,000,000
500,000
400,000
250,000
100,000
100,000
325,000
100,000
500,000
500,000
4,625,000
Weighted average exercise price
$0.00
$0.00
$0.00
$0.00
$0.00
Grant date
Expiry date
2/04/2019
2/04/2019
2/04/2019
2/04/2019
2/04/2019
2/04/2019
2/04/2019
1/07/2019
14/01/2020
15/01/2020
1/07/2020
15/01/2021
15/01/2022
15/01/2023
Exercise
price
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
Balance at
the start of
the year
75,000
200,000
725,000
350,000
925,000
975,000
1,100,000
4,350,000
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
-
-
-
-
-
(70,000)
(150,000)
(295,000)
-
-
-
-
(515,000)
(5,000)
(50,000)
(430,000)
(100,000)
(150,000)
(100,000)
(350,000)
-
-
-
250,000
775,000
875,000
750,000
(1,185,000)
2,650,000
Weighted average exercise price
$0.00
$0.00
$0.00
$0.00
$0.00
There are no Performance Rights exercisable at the end of the financial year.
The weighted average remaining contractual life of Performance Rights outstanding at the end of the financial year was 0.94 years (2020: 1.12).
During the year the expense recognised in relation to the valuation of these Performance Rights was $253k.
1414 DEGREES LIMITED
ACN 138 803 620
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
NOTE 18
Reconciliation of profit after income tax to net cash flow from operating activities
CASH FLOW INFORMATION
Loss for the year
Non-cash flows in profit/(loss):
- Depreciation and Amortisation
- Share Based Payments
- Foreign exchange differences
- Asset Impairment
Change in operating assets and liabilities
- (increase)/decrease in trade and other receivables
- (increase)/decrease in other current assets
- increase/(decrease) in trade and other payables
- increase/(decrease) in employee benefits
Net cash flow from operating activities
NOTE
19
BUSINESS COMBINATION
Page 25
2021
AUD$
2020
AUD$
(5,974,178)
(2,865,958)
136,772
252,949
274
2,933,040
300,221
93,932
(15,400)
771
11,161
241,393
4,363
(2,393,455)
(5,851)
73,333
(73,990)
(113,502)
(2,607,214)
On 13 December 2019 1414 Degrees Ltd acquired 100% of the issued shares in SolarReserve II Pty Ltd (Renamed to SiliconAurora Pty Ltd). SiliconAurora owns the advanced Aurora Solar Energy
Project ("Aurora Project") near Port Augusta in South Australia. The group proposes to develop the Aurora Project, which has approval for 70MW of solar photovoltaic (PV) and 150MW of
concentrated solar thermal plant (CSP) systems, and intends to demonstrate its world leading TESS-GRID technology.
Details of the purchase consideration, the net assets acquired and goodwill are as follows:
Cash paid
Total purchase consideration
The assets and liabilities recognised as a result of the acquisition are as follows:
Cash
GST Receivable
Property, plant and equipment
Right-of-use assets
Lease liabilities - Current
Lease liabilities - Non-Current
Net identifiable assets acquired
Add: Goodwill (Note 11)
AUD$
2,000,000
2,000,000
Fair Value
AUD$
1,000
8,809
85,601
1,052,115
(110,000)
(908,993)
128,532
1,871,468
2,000,000
The goodwill is attributable to SiliconAurora's approval of 70MW of PV and 150MW of CSP systems, access to land resources and development activity to progress an expanded renewable energy
project and demonstrate the Group's TESS-GRID technology. Documentation and contracts were obtained as part of the purchase, however these do not qualify for separate recognition.
CONTINGENCIES
NOTE 20
Contingent Liabilities
At 30 June 2021 those charged with governance of the group note that there are no known contingent liabilities (2020: nil).
NOTE 21
(a)
RELATED PARTY
Related Party Transactions
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.
There were no transactions with related parties during the year ended 30 June 2021
1414 DEGREES LIMITED
ACN 138 803 620
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Page 26
RELATED PARTY (continued)
NOTE 21
(b)
Director and Director-related Interests in the group
Disclosures relating to director and director-related interests, as well as key management personnel are set out in Note 22 below and the remuneration report included in the director's report.
NOTE 22
The totals of remuneration paid to KMP of the group during the year are as follows:
KEY MANAGEMENT PERSONNEL COMPENSATION
Short-term employee benefits
Post-employment benefits
Other long term benefits
Share-based payments
Total KMP compensation
These amounts represent the group's employee benefits and shared-based-payments expense for the year.
NOTE 23
The group's financial instruments consist mainly of deposits with banks, accounts receivable and payable.
FINANCIAL RISK MANAGEMENT
2021
AUD$
2020
AUD$
823,291
67,339
13,112
50,800
831,690
70,641
8,911
19,817
954,542 931,060
The totals for each category of financial instruments, measured in accordance with AASB 9 as detailed in the accounting policies to these financial statements, are as follows:
Financial Assets
Financial Assets at amortised cost:
Cash and cash equivalents
Trade and other receivables - R&D tax refund
Total financial assets
Financial Liabilities
Financial Liabilities at amortised cost:
Trade and other payables
Total financial liabilities
Note
9
10
13
2021
AUD$
2020
AUD$
4,395,479
5,704,957
538,577 1,367,937
5,763,416
6,243,534
608,819
608,819
355,139
355,139
General objectives, policies and processes
In common with all other businesses, the group is exposed to risks that arise from its use of financial instruments. This note describes the group’s objectives, policies and processes for managing
those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the group’s exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them
from previous periods unless otherwise stated in this note.
Market Risk
The group’s activities have no material exposure to financial risks of changes in interest rates. The group analyses it’s risk by considering sensitivity on its interest rate exposures and determining
the potential impact on it’s effected expenses and revenue of movements in these rates. If the potential variance is material then management may seek to minimise this exposure but it does
not consider this to be the case at this time.
The group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity's functional currency. The
risk is measured using sensitivity analysis and cash flow forecasting.
Credit Risk
Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations.
The group does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the group, except for the Australian Taxation Office
which is the counterparty to the R&D refundable tax offset shown in note 10. Trade receivables represent the maximum exposure to credit risk, credit quality is considered good.
1414 DEGREES LIMITED
ACN 138 803 620
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Page 27
NOTE 23
FINANCIAL RISK MANAGEMENT (continued)
Liquidity Risk
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The directors manage liquidity risk by monitoring forecast cash flows and ensuring that the
group's operations are adequate to meet liabilities due.
Financial liability and financial asset maturity analysis
Within 1 year
1 to 5 years
Over 5 years
AUD$
2021
AU$
2020
AU$
2021
AU$
2020
AUD$
2021
AUD$
2020
Total
AUD$
2021
AUD$
2020
Financial liabilities due
for settlement
Trade and other payables
Lease Liabilities
Financial assets - cash
flows realisable
Cash at bank
Trade and other
receivables
Cash term deposits
Sensitivity Analysis
Interest rate risk
608,819
315,000
923,819
5,704,957
538,577
-
6,243,534
355,139
110,000
465,139
-
333,104
333,104
-
68,202
68,202
-
922,128
922,128
-
927,221
927,221
608,819
1,570,232
2,179,051
355,139
1,105,423
1,460,562
4,395,479
1,367,937
-
5,763,416
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,704,957
4,395,479
538,577
-
6,243,534
1,367,937
-
5,763,416
At 30th June 2021 investment in Cash, Fixed Interest and Floating Interest rate deposits amounted to $5,704,957. A +/-1% change in interest rates during the year ended 30th June 2021 will
result in a +/- change in net interest income of $57,050.
At 30th June 2020 investment in Cash, Fixed Interest and Floating Interest rate deposits amounted to $4,395,479. A +/-1% change in interest rates during the year ended 30th June 2020 will
result in a +/- change in net interest income of $43,955.
Management has considered that both a positive and negative 1% variance is sufficient to illustrate the potential variations in interest income.
Foreign currency risk
Cash at bank held in or trade payables denominated in
US dollars
Euros
Assets
Liabilities
2021
AUD$
2020
AUD$
2021
AUD$
2020
AUD$
772
510
1,282
1,493
4,303
5,796
-
-
-
-
14,661
14,661
The group had net assets denominated in foreign currencies of $1,282 as at 30 June 2021 (2020: net liability of $8,865).
Based on this exposure, had the Australian dollar weakened by 10%/strengthened by 5% (2020: weakened by 10%/strengthened by 5%) against these foreign currencies with all other variables held
constant, the group's profit before tax for the year would have been $128 lower/$64 higher (2020: $887 higher/$443 lower) and equity would have been $128 lower/$64 higher (2020: $887
higher/$443 lower).
The percentage change is the expected overall volatility of the significant currencies, which is based on management’s assessment of reasonable possible fluctuations taking into consideration
movements over the last 6 months each year and the spot rate at each reporting date.
The actual foreign exchange loss for the year ended 30 June 2021 was $497 (2020: loss of $21,472).
1414 DEGREES LIMITED
ACN 138 803 620
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Page 28
NOTE 24
COMMITMENTS FOR EXPENDITURE
There are no capital commitments as at 30 June 2021 (2020: nil)
SUBSEQUENT EVENTS
NOTE 25
The company has new leadership at Management and Board level, with the appointment of Matthew Squire as Chief Executive Officer and Tony Sacre as Chair of the Board. These appointments
significantly enhance the commercial, strategic and governance capabilities of the Company.
NOTE 26
Set out below is the supplementary information about the parent entity.
PARENT ENTITY INFORMATION
Statement of Profit or Loss and Other Comprehensive Income
Loss after income tax
Total comprehensive income
Statement of Financial Position
Total Current Assets
Total Assets
Total Current Liabilities
Total Liabilities
Equity
Contributed equity
Share Based Payments Reserve
Accumulated losses
Total Equity/(Deficiency)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2021.
Contingent Liabilities
The parent entity had no contingent liabilities as at 30 June 2021.
Capital Commitments - Property, Plant and Equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2021.
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in Note 2.
NOTE 27
RESTATEMENT OF PRIOR PERIOD
2021
AUD$
2020
AUD$
(4,835,687)
(2,526,376)
(4,835,687) (2,526,376)
2021
AUD$
6,380,048
12,655,784
2020
AUD$
5,974,166
14,604,064
(528,977)
(207,763)
130,388
145,294
32,486,429
29,197,369
196,904 116,968
(19,691,254)
12,992,079
(14,855,567)
14,458,770
The group determined that an error was made in the initial accounting for the right of use asset and lease liability on acquisition of SiliconAurora Pty Ltd on 13 December 2019. A formula
calculation error had resulted in an overstatement of the right of use asset and lease liability which has been corrected in the comparative figures to this financial report. The impact on each of
the affected financial statement line items for the prior period is shown below.
30 June 2020
Right of use asset
Total assets
Lease liability
Total liabilities
Accumulated losses
Other equity
Total equity
Depreciation and amortisation expense
Finance costs
(Loss) before tax for the year
NOTE 28
INTERESTS IN SUBSIDIARIES
As previously
reported
Adjustment
As restated
2,674,765
17,213,774
(1,548,629)
(1,548,629)
1,126,136
15,665,145
2,619,581
3,080,254
(1,514,158)
(1,514,158)
1,105,423
1,566,096
(15,180,817)
29,314,337
14,133,520
(34,471)
-
(34,471)
(15,215,288)
29,314,337
14,099,049
342,076
29,555
(2,851,625)
(41,855)
56,188
14,333
300,221
85,743
(2,865,958)
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-owned subsidiaries in accordance with the accounting policy described in note 1:
Name
SiliconAurora Pty Ltd
Aurora FinCo Pty Ltd
Principal place of business /
Country of incorporation
Australia
Australia
Ownership Interest
2020
2021
100%
100%
100%
100%
1414 DEGREES LIMITED
ACN 138 803 620
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
Page 29
NOTE 29
DEFERRED TAXES
The balance comprises temporary differences attributable to:
Deferred tax assets attributable to:
Tax losses - Australia
Capital Raising Costs - 5yr write-off
Employee benefits
Superannuation accrual
Interest accrual
Lease liability
Set-off deferred tax liabilities pursuant to set-off provisions:
Deferred tax liabilities attributable to:
Intangible assets
Accrued interest revenue
Right of use asset
Net deferred tax asset/(liability) balance
The amount of gross tax losses relating to Australian operations that are carried forward is $14,171,581 (2020: $8,197,403).
2021
2020
689,660
290,552
27,395
10,858
15,571
313,808
1,347,844
1,210,045
420,749
26,384
11,385
-
622,411
2,290,974
(947,458) (1,622,055)
(10)
(400,376)
(1,347,844)
(228)
(668,691)
(2,290,974)
-
-
1414 DEGREES LIMITED
ACN 138 803 620
DIRECTORS' DECLARATION
Page 30
In accordance with a resolution of the directors of 1414 Degrees Limited, the directors of the group declare that:
1
2
3
4
The financial statements, comprising the statement of profit or loss and other comprehensive income, statement of financial position, statement of cash flows, statement of changes in
equity and accompanying notes are prepared in accordance with Australian Accounting Standards and present fairly the group's financial position as at 30 June 2021 and its performance for
the year ended on that date.
The group has included in the notes to the financial statements an explicit and unreserved statement of compliance with International Financial Reporting Standards.
In the directors' opinion there are reasonable grounds to believe that the group will be able to pay its debts as and when they become due and payable.
The directors have been given the declarations as required by s295A of the Corporations Act.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the directors by:
Tony Sacre
Chairman and Non-Executive Director
Sydney
Dated this 30th day of September 2021
Tel: +61 8 7324 6000
Fax: +61 8 7324 6111
www.bdo.com.au
BDO Centre
Level 7, 420 King William Street
Adelaide SA 5000
GPO Box 2018 Adelaide SA 5001
Australia
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF 1414 DEGREES LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of 1414 Degrees Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2021, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, 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 2021 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 Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
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 period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
BDO Audit (SA) Pty Ltd ABN 33 161 379 086 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (SA) Pty Ltd and BDO Australia Ltd are
members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent
member firms. Liability limited by a scheme approved under Professional Standards Legislation.
Intangible Asset – Product Development
Key audit matter
How the matter was addressed in our audit
The carrying value of the intangible asset
Our audit procedures included, but were not limited to:
product development – intellectual property as
set out in note 11 is a key audit matter due to:
Assessing the composition of development costs and the
capitalisation criteria against the requirements of AASB
The significance of the total balance.
138 – Intangible Assets.
The level of audit procedures undertaken
to evaluate management’s application of
Agreeing a sample of additions to supporting
documentation, and ensuring the amounts were
the recognition criteria for internally
appropriately capitalised.
generated intangible assets required by
AASB 138 Intangible Assets.
Obtaining an understanding of the key processes and
controls associated with the allocation of costs to the
The level of judgment applied by
product development category.
management and inherent subjectivity in
their assessment of the potential
impairment of the asset and compliance
with the requirements of AASB 136
Impairment of Assets.
Assessing the results of trials of the prototype product and
the potential market size for similar applications of the
technology.
Considering and evaluating assumptions contained within
management’s impairment assessment and assessing the
discount rate applied.
Performing a sensitivity analysis on the key financial
assumptions of the forecasted cash flows and discount rate
in the model and considering the likelihood of such
movements in these key assumptions.
Intangible Asset - Goodwill
Key audit matter
How the matter was addressed in our audit
The carrying value of the intangible asset
Our audit procedures included, but were not limited to:
goodwill on business acquisition as set out in
note 11 is a key audit matter due to:
Assessing the activities of the subsidiary in the period and
management plans for future development of the relevant
The significance of the total balance.
site.
The level of audit procedures undertaken
to evaluate management’s application of
the recognition criteria for goodwill
required by AASB 138 Intangible Assets.
Vouching the on-going third party support of the
development agreement.
Considering and evaluating assumptions contained within
management’s impairment assessment and assessing the
The level of judgment applied by
discount rate applied.
management and inherent subjectivity in
their assessment of the potential
impairment of the asset and compliance
with the requirements of AASB 136
Impairment of Assets.
Performing a sensitivity analysis on the key financial
assumptions of the forecasted cash flows and discount rate
in the model and considering the likelihood of such
movements in these key assumptions.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2021, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 5 to 9 of the directors’ report for the year
ended 30 June 2021.
In our opinion, the Remuneration Report of 1414 Degrees Limited, for the year ended 30 June 2021,
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.
BDO Audit (SA) Pty Ltd
Paul Gosnold
Director
Adelaide, 30 September 2021
Tel: +61 8 7324 6000
Fax: +61 8 7324 6111
www.bdo.com.au
Level 7, BDO Centre
420 King William Street
Adelaide SA 5000
GPO Box 2018, Adelaide SA 5001
AUSTRALIA
DECLARATION OF INDEPENDENCE
BY PAUL GOSNOLD
TO THE DIRECTORS OF 1414 DEGREES LIMITED
As lead auditor of 1414 Degrees Limited for the year ended 30 June 2021, I declare that, to the best of
my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of 1414 Degrees Limited and the entities it controlled during the period.
Paul Gosnold
Director
BDO Audit (SA) Pty Ltd
Adelaide, 30 September 2021
BDO Audit (SA) Pty Ltd ABN 33 161 379 086 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (SA) Pty Ltd and BDO (Australia) Ltd are members of BDO International
Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme
approved under Professional Standards Legislation.
ASX additional information
Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in
this report is as follows. The information is current as at 20 September 2021.
Share Capital
- 200,560,458 fully paid Ordinary Shares are held by 3,650 individual Shareholders.
- 3,375,000 Unlisted Performance Rights with various performance hurdles are held by 8 individual holders.
- All Ordinary Shares carry one vote per share.
- There is no current on-market buyback.
Distribution of Equity Securities
The number of shareholders, by size of holding, in each class are:
Range
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Unmarketable Parcels at 10.0 cents per share
Substantial Shareholders
(As disclosed in substantial holding notices given to the Company)
FOCEM PTY LTD
Twenty largest holders of Quoted Ordinary Shares
Rank
Name
Securities
16,088
2,435,376
6,879,071
53,977,551
137,252,372
200,560,458
%
0.01%
1.21%
3.43%
26.91%
68.43%
100.00%
No. of holders
50
777
918
1,638
267
3,650
736
%
1.37%
21.29%
25.15%
44.88%
7.32%
100.00%
20.16%
No. of Shares Held
%
12,653,000
6.31%
1 FOCEM PTY LTD
2 AMMJOHN PTY LTD
3 MR JOHN HENRY MOSS + MRS WENDY ELIZABETH MOSS
4 MR ROBERT JOHN KEITH SHEPHERD + MRS LYNETTE DOROTHY SHEPHERD
5 BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
6 MEWTWO GLOBAL INVESTMENTS LLC
7 MR HAROLD TOMBLIN + MRS JUDITH JOHNSTON
8 CITICORP NOMINEES PTY LIMITED
9 MR JOHN LANGLEY HANCOCK
10 MS SUSAN JOHNSON
11 BENGER SUPERANNUATION PTY LIMITED
12 MR JONATHAN WHALLEY + MRS MARTINE ANNE WHALLEY
13 LHO LA PTY LTD
13 RANAT INVESTMENTS PTY LTD
15 KNIGHTS VALLEY LTD
16 MR IAN ROSS BURDON + MS CATHERINE LOUISE TAYLOR
16 MR IAN ROSS BURDON + MS CATHERINE LOUISE TAYLOR
16 MR TREVOR WRIGHT + MRS OLIVE WRIGHT
19 MS MARETTA ALYSSA LAYTON
20 BNP PARIBAS NOMINEES PTY LTD
Total
Balance of register
Grand total
No. of Shares Held
12,653,000
5,439,868
5,249,188
5,150,470
4,689,600
4,333,333
4,206,976
3,449,791
2,778,333
2,657,448
2,300,000
2,180,708
2,000,000
2,000,000
1,666,500
1,500,000
1,500,000
1,500,000
1,257,000
1,254,006
67,766,221
132,794,237
200,560,458
%
6.31
2.71
2.62
2.57
2.34
2.16
2.10
1.72
1.39
1.33
1.15
1.09
1.00
1.00
0.83
0.75
0.75
0.75
0.63
0.63
33.79
66.21
100.00%
1414DEGREES.COM.AU
1414 DEGREES LTD
ADDRESS
PHONE
EMAIL
ABN 57 138 803 620
136 Daws Road,
Melrose Park SA 5039
+61 8 8357 8273
info@1414degreescom.au