ALEXIUM INTERNATIONAL GROUP LIMITED
ABN 91 064 820 408
FINANCIAL REPORT
FOR THE YEAR ENDED
30 JUNE 2011
For personal use only
CONTENTS
ALEXIUM INTERNATIONAL GROUP LIMITED
Company Directory
Chairman’s Report
Directors’ Report
Corporate Governance Statement
Auditor’s Independence Declaration
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report
Additional Information
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COMPANY DIRECTORY
ALEXIUM INTERNATIONAL GROUP LIMITED
DIRECTORS:
COMPANY
SECRETARY:
REGISTERED AND
PRINCIPAL OFFICE:
AUDITORS:
SHARE REGISTRY:
BANKERS:
SOLICITORS:
Mr Gavin Rezos
Mr Craig Smith-Gander
Mr Stefan Susta
Mr Nicholas Clark
Level 28, AMP Tower
140 St George’s Terrace
Perth WA 6000
Telephone:
Facsimile:
+61 8 6467 0100
+61 8 6467 0105
Stantons International
Level 1, 1 Havelock Street
West Perth WA 6005
Computershare Investor Services Pty Ltd
Level 2
Reserve Bank Building
45 St Georges Terrace
PERTH WA 6000
Telephone: 1300787575
Facsimile: (08) 9323 2033
Macquarie Bank
235 St George’s Terrace
Perth WA 6000
Steinepreis Paganin
Level 4, The Read Buildings
16 Milligan Street
Perth WA 6000
ABN:
91 064 820 408
DOMICILE AND COUNTRY
OF INCORPORATION:
Australia
LEGAL FORM OF ENTITY:
Listed Public Company
SECURITY EXCHANGE:
Australian Securities Exchange (Perth) Limited
ASX Code: AJX
Frankfurt Stock Exchange
(ISIN: AU000000AJX6) (WKN A1CTT8) (E7T)
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CHAIRMAN’S REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
28 September 2011
Dear Shareholders
I am pleased to present your company’s annual report for 2011 and highlight progress on our award
winning Reactive Surface Treatment (RST) technology.
This year your company grew its production and testing capability in technical textiles at our Greer,
South Carolina plant, by installing two new RST microwave units in series as part of a higher speed
textile line. We have also been supporting our US Department of Defense (DoD) friends in applications
of the RST technology, part of which falls under the Cooperative Research and Development
Agreement between Alexium and the US Air Force.
In May 2011 we lodged a US$129m invited tender with the DoD, in conjunction with established US
Defense contractor Tennier Industries and Stedfast Inc of Canada, a leading supplier of coating and
laminating technologies. The tender is for chem bio protection suits for use by the DoD.
Your company has also listed on the Frankfurt and Xetra stock exchanges in Europe and as well as
welcomed large US institutional investors to our share register. Alexium also gave a number of invited
presentations at world leading industry conferences during the year.
January 2011
First sales & revenues received from DoD
Listing on the Frankfurt Stock Exchange and Xetra Trading Platform
Hong Kong, China SAR, Patent granted for smart surface technology.
US Special Forces order for advanced protective textiles
Highlights include:
July 2010
July 2010
Sept 2010
Sept 2010
November 2010 Option and Facilities Agreement with SSM Industries. Supplier to NASCAR
Expanded Production Capacity at Greer, SC, Facility
February 2011 Teaming Agreement with Stedfast Inc of Canada
March 2010
March 2011
April 2011
April 2011
June 2011
June 2011
September 2011 Merriman appointed for an OTCQX listing of AJX securities
September 2011 Alexium receives purchase order from US DoD.
USD$8m Equity Facility Agreement with Roswell Capital in Georgia, USA
Collaboration Agreement with Bruck Industries, Australia
Supply Agreement with International Textile Group (ITG) USA
USD$129m tender bid to US DoD with Tennier Industries and Stedfast Inc.
USD1.3m placement to US and European Institutions
RST Patent granted in Singapore
I’m also pleased to welcome Halis Alkis as our new CEO this year. Halis is a textile industry veteran
with over 40 years US and international experience in textiles manufacturing, marketing and
management. Halis’s experience is invaluable as we commercialize the technology in textiles, our initial
area of application.
Your Board thanks you for your support. We recognize the need to deliver strong revenues and we are
focussed both on the defense sector as well as the commercial sector to achieve recurring revenue
streams from product sales, licencing and royalties.
Yours faithfully
Gavin Rezos
Chairman
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DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
Your directors submit their report together with the financial report of Alexium International Group
Limited (“the Company”) for the year ended 30 June 2011:
DIRECTORS
The names and details of the Company’s directors in office during the financial year and until the date of
this report are as follows. Directors were in office for this entire year unless otherwise stated.
Mr Gavin Rezos B.Juris, LLB, BA, Executive Chairman
Mr Rezos has extensive Australian and international investment banking experience and is a former
Investment Banking Director of HSBC Group with regional roles during his HSBC career based in
London, Sydney and Dubai. Mr Rezos has held Chief Executive Officer positions and executive
directorships of companies in the technology sector in Australia, the United Kingdom, the US and
Singapore. He is currently a non-executive Director of Iluka Resources Limited and DSF International
Holdings Limited and Principal of Viaticus Capital Pty Ltd.
Mr Stefan Susta MBA, BSc BA, Executive Director
Mr Susta has spent over 10 years working with the US Department of Defence on Technology Insertion,
Technology Transfer and Commercialisation. He leads Alexium's US office business operations and
Department of Defence business development efforts. Mr Susta received his BSc from Virginia Tech
University in Chemical Engineering and Chemistry in 1996 and an MBA from Wright State University in
2001.
Mr Craig Smith-Gander BA (Military), M.Com, Non-executive Director
Mr Smith-Gander is a graduate of the Royal Military College Duntroon and served as an officer in the
Australian Regular Army. He worked in the Offshore Group at Clough Engineering Group and was
appointed as the Group’s first Risk Manager. He has extensive investment banking and corporate
finance experience and is a former Director, Investment Banking at CIBC World Markets. Mr Smith-
Gander is now the owner and Managing Director of Kwik Transport and Crane Hire Pty Ltd.
Directors who resigned during the period were:
Mr Stephen Ribich
Resigned 7 March 2011
Directorships of other listed companies during the last 3 years
Name
Company
Commenced
Ceased
Mr Gavin Rezos
Iluka Resources Ltd
Niuminco Group Limited
(formerly DSF International
Holdings Limited)
Mr Stefan Susta
None
Mr Craig Smith-Gander None
20 June 2006
10 November 2008
-
30 August 2011
-
-
-
-
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DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
Interests in the shares and options of the Company
As at the date of this report, the interests of the directors in the shares and options of Alexium
International Group Limited were:
Name
Mr Gavin Rezos
Mr Craig Smith-Gander
Mr Stefan Susta
COMPANY SECRETARY
Number of
ordinary shares
Number of
Performance shares
12,785,957
114,286
-
2,500,000
-
-
Number of
options over
ordinary shares
7,400,000
1,000,000
1,500,000
The following person held the position of company secretary at the end of the financial year:
Mr Nicholas Clark BEc, LLB, F FIN AFAIM
Mr Clark was appointed company secretary on 30 November 2010, following the resignation of Mrs
Nadine Donovan.
PRINCIPAL ACTIVITY
The principal activities of the entities in the group during the year were developing and licensing its
intellectual property known as Reactive Surface Treatment (RST) technology.
RESULTS AND REVIEW OF OPERATIONS
The Group’s net loss attributable to members of the Company for the financial year ended 30 June 2011
was $2,929,364 (2010: $5,776,704). The higher loss in 2010 was a result of a share-based payment
expense of $746,195 and a deferred tax liability of $3,465,442 arising from the business combination of
the Alexium Limited acquisition which was impaired as required under accounting standards.
As at 30 June 2011 the cash position was $1,972,737 (2010: $3,303,043) and the Company had
123,458,402 ordinary shares on issue (2010: 107,871,688).
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the Group during the financial year other than
as stated below.
Contributed equity increased by $1,318,512 (from $17,197,558 to $18,516,070) as the result of the
share placement raising $1,350,000 less cost of $31,488.
As announced on 24 March 2011, Alexium signed a term sheet for an US$8 million, 3 year equity line
funding facility with Centurion Private Equity, LLCC, an institutional investor managed by Roswell
Capital Partners, LCC based in Georgia, USA.
DIVIDENDS
The directors recommend that no amount be paid by way of dividend. No dividend has been paid or
declared since the start of the financial year.
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DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
UNISSUED SHARES UNDER OPTION
Unissued shares
As at the date of this report there were 42,790,000 unissued ordinary shares under option (2010:
28,000,000). Details of these options are as follows:
Date Options Granted
Expiry Date
19 June 2008
26 February 2010
26 February 2010
26 February 2010
30 July 2010
09 March 2011
09 March 2011
21 March 2011
21 March 2011
22 June 2011
16 September 2011
31 December 2012
26 February 2012
26 February 2012
26 February 2014
31 December 2014
31 December 2015
31 December 2015
31 December 2015
31 December 2015
21 June 2016
31 December 2015
Exercise price
of shares
$0.10
$0.30
$0.40
$0.50
$0.30
$0.15
$0.20
$0.15
$0.25
$0.10
$0.15
Number under
option
7,000,000
16,000,000
1,250,000
1,250,000
2,500,000
750,000
750,000
6,750,000
1,000,000
540,000
5,000,000
Option holders do not have any right, by virtue of the option, to participate in any share issue of the
Company. No options were exercised during the financial year or subsequent to year end. 2.5 million
options lapsed during the year.
In addition to the above, there are 52,500,000 performance shares on issue (2010: 52,500,000). The
performance shares were granted on 26 February 2010 and are subject to ASX approved performance
criteria. The terms of the performance shares are disclosed in note 14(c).
AFTER BALANCE DATE EVENTS
No matters or circumstances have arisen since the end of the financial year which significantly affects
the operations of the consolidated group, the results of those operations, or the state of affairs of the
consolidated group in future financial years other than stated below.
Five million unlisted options exercisable at 15 cents were issued to directors as approved by
shareholders on 16 September 2011. The options are subject to vesting conditions and expire 31
December 2015.
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
The Group's efforts have focused on developing the RST technology for a broad range of military and
commercial applications. A critical part of developing these is demonstrating the desired performance
on both laboratory as well as production level product. The Group's research facility in Greer, South
Carolina has been equipped with two microwave units in tandem for treating full width fabrics at near
production speeds. With this infrastructure, the Group can demonstrate the RST process at a
manufacturing scale, a fundamental step in transitioning the RST technology to final product.
In the Defense sector, the Group has responded to various requests to supply RST treated textiles to
the Department of Defense in support of current tenders and technology demonstration projects. This
work will continue with an expectation that the pending UIPE tender will reach fruition and ramp up in
the coming year, and be followed with additional opportunities, understanding that each award is made
on a competitive basis and subject to transition periods.
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DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
Among the potential commercial opportunities, the Group has focused on specific applications where
the unique properties of the RST process afford clearly value-added products. This work may generally
be categorized as applications in flame retardant fabrics, water and oil repellent surfaces, composites
and filtration. In each of these areas, the Group has identified and partnered with a market leader in
order to gain market insight as well as to validate and transition the final product.
The Group's research and development efforts into additional areas using the RST technology will
continue through the Cooperative Research and Development Agreement with the US Air Force,
through its own additional development work at its Greer facility to support new commercial applications
and through the resources provide by commercial partners.
As it has been the case in the past, it is expected that this additional work will generate new patent
applications and improvements of the RST technology over time, thereby extending patent protection.
ENVIRONMENTAL ISSUES
The Group’s operations are not regulated by any significant environmental regulation under a law of the
Commonwealth or of a State or Territory. The directors have considered compliance with the National
Greenhouse and Energy Reporting Act 2007 which requires entities to report annual greenhouse gas
emissions and energy use. For the period 1 July 2010 to 30 June 2011 the directors have asserted that
there are no current reporting requirements, but may be required to do so in the future.
REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in place for directors and executives of Alexium
International Group Limited.
Director and executive details
The directors of Alexium International Group Limited during the year were:
Mr Gavin Rezos
Mr Craig Smith-Gander
Mr Stefan Susta
Mr Stephen Ribich (resigned 7 March 2011)
Other non-director Company executives, during the year were:
Mr Halis Alkis – Interim Chief Executive Officer (appointed 7 March 2011)
Mr John Almond – Business Development Manager Europe
Dr Bob Brookins – Chief Technology Officer
Mr Nicholas Clark – Chief Financial Officer and Company Secretary (appointed 30 November
2010)
Remuneration Policy
The Board recognises that Alexium International Group Limited (“Alexium” or “Company”) and its
subsidiaries (“Group”) operates in a global environment. To prosper, the Company must be able to
attract, motivate and retain internationally mobile executives.
The key principles that underpin the Group’s remuneration policy are:
That rewards reflect the competitive global market in which the Group operates.
That demanding key performance indicators apply to delivering results across the Group and
to a significant portion of the total reward.
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DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
That rewards to executives be linked to the creation of value to shareholders.
That executives be rewarded for both financial and non-financial performance.
That remuneration arrangements ensure equity between executives and facilitate the
deployment of human resources.
Alexium’s reward structure combines base salary and short-term and long-term incentive plans. The
cost and value of components of the remuneration package are considered as a whole and are
fixed and variable performance-related
designed
components, linked to short-term and long-term objectives and to reflect market competitiveness.
Details of the policy applied in each component are outlined below.
to ensure an appropriate balance between
Base Salary
Base salaries are quantified by reference to the scope and nature of an individual’s role, performance
and experience. The remuneration committee actively seeks market data to benchmark salary levels.
Particular consideration is given to competitive global remuneration levels.
Salary levels are reviewed on a minimum annual basis and increased according to employee
performance and market levels.
Incentive Plans
An employee share option plan (ESOP) has been established where eligible persons are issued with
options over the ordinary shares of Alexium. The object of the plan is to assist in the recruitment,
reward, retention and motivation of employees of the Company.
Other incentive plans including partly paid shares, share purchase loans or other schemes may be
utilised to provide longer-term incentives and rewards to executives and directors. Shareholder
approval will be obtained in each case as required by law.
Executives are paid according to market and experience. Executive Officers are those directly
accountable for the operational management and strategic direction of the Company.
Non-Executives
In view of the significant contribution of the non-executive directors and advancing the interest in the
Company by international networking, Alexium considers that the non-executives may continue to be
rewarded with options. It is not considered that this will significantly affect their independence in light of
their international reputation. The non-executive remuneration limit is $250,000, being the initial fee
allowed under clause 13.8 of the constitution approved by shareholders on 27 May 2008. Non-
executive directors do not receive any other retirement benefits other than a superannuation guarantee
contribution required by government regulation, which is currently 9% of their fees.
Terms of Executive Service Agreements
The details of service agreements of the key management personnel and directors, as applicable, of
Alexium International Group Limited and the Group are as follows:
Mr Gavin Rezos, Executive Chairman
o Term: the initial term of the Service Agreement was 12 months from 29 March 2010.
o Salary: A salary of A $60,000 per year (inclusive of director’s fees). The Company may also
pay Mr Rezos additional remuneration in the form of a performance-based bonus over and
above the salary. On 16 September 2011, shareholders approved the issue of 2 million options
at an exercise price of 15 cents, expiring 31 December 2015, subject to vesting conditions;
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DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
o Termination: Mr Rezos may terminate the Service Agreement without cause upon giving 9
months written notice to the Company or 3 months notice should the Company so elect. The
Company may at its sole discretion terminate the employment without cause by giving 3
months written notice to Mr Rezos and making a payment of 9 months’ salary after the expiry
of the 3 months written notice period.
Mr Stefan Susta, Executive Director and Chief Operating Officer
o Term: the initial term of the Service Agreement is 12 months commencing on 1 August 2011
and thereafter on 6 months’ notice from either party;
o Place of Work: South Carolina, United States of America for the term of employment.
o Salary: A salary of US$155,000 per year (inclusive of director’s fees). The Company may also
pay Mr Susta additional remuneration in the form of a performance-based bonus over and
above the salary; On 16 September 2011, shareholders approved the issue of 2 million options
at an exercise price of 15 cents, expiring 31 December 2015, subject to vesting conditions.
o Termination: Mr Susta may terminate the Service Agreement without cause upon giving 6
months written notice to the Company. The Company may at its sole discretion terminate the
employment without cause by giving 6 months written notice to Mr Susta or make a payment of
6 months alary in lieu of notice.
Mr Halis Alkis, Interim Chief Executive Officer
o Term: the initial term of the Service Agreement is 12 months commencing 8 March 2011.The
services are provided through Mr Alkis’ consultancy company, The RHA Group LLC;
o Place of Work: South Carolina, United States of America for the term of employment.
o Salary: A consulting fee of US$120,000 per year and the issue of 750,000 options at an
exercise price of 15 cents and 750,000 options at an exercise price of 20 cents, expiring 31
December 2015 subject to vesting conditions. ;
o Termination: This is a fixed term contract. Renewal to be subject to negotiation.
Mr John Almond, Business Development Manager Europe
o Term: the initial term of the Service Agreement is 12 months commencing on 29 March 2010.
o Place of Work: United Kingdom for the term of employment.
o Salary: A salary of A $120,000 per year (inclusive of director’s fees). The Company may also
pay Mr Almond additional remuneration in the form of a performance-based bonus over and
above the salary;
o Termination: Mr Almond may terminate the Service Agreement without cause upon giving 9
months written notice to the Company or 3 months notice should the Company so elect. The
Company may at its sole discretion terminate the employment without cause by giving 3
months written notice to Mr Almond and making a payment of 9 months’ salary after the expiry
of the 3 months written notice period.
Mr Bob Brookins, Chief Technology Officer
o Term: the initial term of the Service Agreement is 1 August 2011 commencing on 1 August
2011 and thereafter on 6 months’ notice from either party;
o Place of Work: South Carolina, United States of America for the term of employment.
o Salary: A salary of US$120,000 per year. Agreed to the issue of 2,000,000 options of the
Company at an exercise price of 15 cents and 1,000,000 options at an exercise price of 25
cents, expiring 31 December 2015, subject to vesting conditions;
o Termination: Mr Brookins may terminate the Service Agreement without cause upon giving 6
months written notice to the Company. The Company may at its sole discretion terminate the
employment without cause by giving 6 months written notice to Mr Brookins or make a
payment of 6 months salary in lieu of notice.
The following table discloses the remuneration of the current directors and executives during the
financial year from the Company:
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DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
2011
Directors
Mr G Rezos(1)
Mr S Ribich(3)
Mr C Smith-Gander
Mr S Susta
Total Directors
Executives
Mr J Almond(2)
Dr B Brookins
Mr H Alkis
Mr N Clark
Total Executives
Total Directors and
Executives
Short-term benefits
Salary and
fees
$
Bonus
$
Other
benefits
$
Post-
employ-
ment
Super-
annuation
Termin-
ation
Benefits
Share-
based
payments
Total
Proportion
related to
performance(2)
Remuneration
consisting of
options
$
$
$
%
%
67,806
173,326
25,000
160,915
427,047
159,304
96,526
40,151
77,390
373,371
800,418
-
-
-
-
-
-
-
-
-
-
-
12,620
28,041
-
11,839
-
-
11,839
-
5,400
-
-
73,206
15,421
-
42,061
(1,810)
228,998
-
2,250
-
-
-
-
-
27,250
173,535
7,650
42,061
(1,810)
502,989
-
-
-
-
-
-
-
-
-
-
5,430
164,734
13,204
121,569
36,862
77,013
32,565
109,955
88,061
473,271
-
2
-
-
3
-
-
-
2
-
-
3
-
30
39,880
7,650
42,061
86,251
976,260
(1)
(2)
(3)
Viaticus Capital Pty Ltd, a related party of G Rezos, also received the following:
- $89,086 (2010: Nil) during the financial year for reimbursement of salary and wages in relation to administration and
bookkeeping personnel. In 2010 $38,500 was paid to Albion Capital Partners, a related party of G Rezos, for the
reimbursement of providing management, administration and accounting personnel.
- $45,000 (2010: $13,548) for investor relations services.
- 2.5 million options at a deemed value of $45,988 to compensate Viaticus for its part in assisting the Company to
achieve its successful listing of the Company on the Frankfurt Stock Exchange.
Share based payment to J Almond is calculated based on performance shares/options issued for services rendered
under the successful completion of the Alexium Limited acquisition and expensed in 2011 financial year.
Remuneration received up to date of resignation. S Ribich's resignation resulted in the forfeiture of his options. Any
share based payment expense previously recognised under AASB 2 in respect of the options has been reversed.
Since resigning as a director, S Ribich received $5,000 in consulting fees and further $10,000 is owing for services
incurred to 30 June 2011.
There were no other executives of the company which require disclosure.
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DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
2010
Directors
Mr G Rezos(1)(2)(5)
Mr S Ribich(3)
Mr C Smith-Gander
Mr S Susta(3)
Mr J Mann
Mr A Finlay
Mrs N Donovan(2)
Total Directors
Executives
Mr J Almond(3)
Mrs N Donovan(2)
Dr B Brookins(3)
Total Executives
Total Directors and
Executives
Short-term benefits
Salary and
fees
$
Bonus
$
Other
benefits
$
Post-
employ-
ment
Super-
annuation
$
Share-based
payments
Total
Proportion
related to
performance(4)
Remuneration
consisting of
options
$
$
%
%
28,368)
82,876
15,972
37,227
806
6,800
46,664
218,713
60,707
37,017
15,229
112,953
331,666
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,509
-
-
-
-
-
3,509
-
-
-
-
2,293
-
1,437
-
-
-
810
4,540
-
-
-
-
19,442
34,213
12,961
19,442
-
-
-
86,058
34,213
-
-
50,103
120,598
30,370
56,669
806
6,800
47,474
312,820
94,920
37,017
15,229
34,213
147,166
3,509
4,540
120,271
459,986
-
28.37
-
-
-
-
-
38.80
28.37
42.68
34.31
-
-
-
36.04
36.04
-
-
-
-
(1)
(2)
(3)
(4)
(5)
Albion Capital Partners, a related party of G Rezos, was also paid $38,500 (2009: $92,500) during the financial year in
relation to providing management, administration and accounting personnel prior to the Alexium Limited acquisition.
Viaticus Capital Pty Ltd, a related party of G Rezos, also received the following:
- $13,548 (2010: Nil) for investor relations services.
- $50,000 (2010: Nil) for the successful completion of the Alexium Limited acquisition.
- 2.5 million shares, 2.5 million performance shares and 750,000 options with a total deemed value at $609,721 under
the Alexium Limited acquisition agreement.
Remuneration for N Donovan includes company secretarial and financial accounting fees paid indirectly through
Albion Capital Partners totalling $38,664 up to the date of resignation as a director. Since resigning as a director N
Donovan continued to receive company secretarial and financial accounting fees up to 30 June 2010 totalling $37,017,
paid to Blackwood Pty Ltd.
Remuneration paid from date of acquisition of Alexium Limited being 26 February 2010.
Calculation based on performance shares/options issued for services rendered under the successful completion of the
Alexium Limited acquisition.
In the 2010 annual report the salary and fees disclosed for G Rezos included consultation fees of $63,548 and share-
based payments was $609,721 which were issued to Viaticus Capital Pty Ltd, or its nominee, and related specifically
to services provided by Viaticus Pty Ltd for the Alexium acquisition and investor relations services. Viaticus Pty Ltd is a
related party of G. Rezos and it is therefore considered appropriate to remove the amounts from his personal
remuneration disclosed in the table and disclose as a note to the table.
Value of shares and options issued to directors and executives
The directors and executives of the Company were issued with the following share-based remuneration
during the year:
-
6.5 million ESOP Options (2010: nil) with a value of $82,631 (2010: nil);
Options and rights over equity instruments granted as compensation - audited
Details on options over ordinary shares in the Company that were granted as compensation to each key
management person during the reporting period and details on options that vested during the reporting
period are as follows:
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DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
Name
Executives
Mr H Alkis
Mr B Brookins
Mr N Clark
Number of
options
granted
during 2011
Grant date
Vesting
date
Fair value per
option at grant
date ($)
Exercise price
per option ($)
Expiry date Number of
options vested
during 2011
750,000
750,000
09/03/11
09/03/11
1,000,000
1,000,000
1,000,000
21/03/11
21/03/11
21/03/11
1,000,000
1,000,000
21/03/11
21/03/11
09/03/11
09/03/11
21/03/12
21/03/13
21/03/14
24/06/11
21/03/13
0.028779
0.020370
0.028611
0.028611
0.014719
0.028611
0.028611
0.15
0.20
0.15
0.15
0.25
0.15
0.15
31/12/15
31/12/15
31/12/15
31/12/15
31/12/15
750,000
750,000
-
-
-
31/12/15
31/12/15
1,000,000
-
Since the end of the financial year, 5 million unlisted options exercisable at 15 cents were issued to
directors as approved by shareholders on 16 September 2011. The options are subject to vesting
conditions and expire 31 December 2015.
The options were provided at no cost to the recipients.
Analysis of options and rights over equity instruments granted as compensation - audited
Details of vesting profiles of the options granted as remuneration to each key management person of
the Group and each of the five named Company executives and Group executives are detailed below.
Name
Directors
Mr S Ribich #
Executives
Mr J Almond
Mr H Alkis
Mr B Brookins
Mr N Clark
Number
Grant date
% vested in
year
% forfeited
in year
Financial years in
which grant vests
2,500,000
26/02/10
2,500,000
26/02/10
0
0
1,500,000
09/03/11
100
1,000,000
1,000,000
1,000,000
21/03/11
21/03/11
21/03/11
1,000,000
1,000,000
21/03/11
21/03/11
0
0
0
100
0
100
-
0
0
0
0
0
0
0
(1)
2011
2012
2013
2014
2011
2013
#
Balance at date of resignation
(1)
The exercise of the 1.25m 40 cent options and 1.25m 50 cent options is conditional on the Group
achieving certain performance hurdles. Details of the performance criteria are included in the
long-term incentives details in note 14.
13
For personal use only
DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
Analysis of movements in options - audited
The movement during the reporting period, by value, of options over ordinary shares in the Company
held by each key management person and each of the five named Company executives and relevant
Group executives is detailed below.
Name
Directors
Mr S Ribich
Executives
Mr H Alkis
Mr B Brookins
Mr N Clark
Granted in year
$ (A)
Value of options
exercised in year
$ (B)
Lapsed in year
$(c)
-
36,862
71,941
57,222
-
-
-
-
937
-
-
-
(A)
(B)
(C)
The value of options granted in the year is the fair value of the options calculated at grant date using the Black Scholes
option-pricing model. The total value of the options granted is included in the table above. This amount is allocated to
remuneration over the vesting period.
The value of options exercised during the year is calculated as the market price of shares of the Company as at close of
trading on the date the options were exercised after deducting the price paid to exercise the option.
The value of the options that lapsed during the year represents the benefit forgone and is calculated at the date the option
lapsed using the Black Scholes option-pricing model assuming the performance criteria had been achieved.
Equity instrument disclosures relating to key management personnel
(i)
Option holdings
The number of options over ordinary shares in the Company held during the financial year by
each director and executive of Alexium International Group Limited, including their personally
related parties, are set out below.
2011
Name
Directors
Mr G Rezos
Mr S Ribich #
Mr C Smith-Gander
Mr S Susta
Total Directors
Executives
Mr H Alkis *
Mr J Almond
Dr B Brookins
Mr N Clark *
Total Executives
Total Directors and
Executives
*
#
Balance at
start of year
Number
Granted
during year as
remuneration
Number
Exercised
during
year
Number
Other
changes
during year
Number
Balance at
end of year
Number
Options Vested and
exercisable at end
of year
Number
4,900,000
5,000,000
1,000,000
1,500,000
12,400,000
-
5,000,000
-
-
5,000,000
-
-
-
-
-
-
-
-
-
-
-
2,500,000
(5,000,000)
-
-
2,500,000
-
-
-
-
-
7,400,000
-
1,000,000
1,500,000
14,900,000
1,500,000
5,000,000
3,000,000
2,000,000
11,500,000
7,400,000
-
1,000,000
1,500,000
12,400,000
1,500,000
2,500,000
-
1,000,000
5,000,000
2,500,000
26,400,000
17,400,000
-
-
-
-
-
1,500,000
-
3,000,000
2,000,000
6,500,000
6,500,000
14
17,400,000
Balance at date of appointment
Balance at date of resignation
For personal use only
DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
2010
Name
Directors
Mr G Rezos *
Mr S Ribich **
Mr C Smith-Gander *
Mr S Susta **
Mr J Mann # +
Mr A Finlay #
Mrs N Donovan #
Total Directors
Executives
Mr J Almond**
Dr B Brookins
Total Executives
Total Directors and
Executives
*
#
+
3,775,000
Balance at date of appointment
Balance at date of resignation
Post consolidation (1:10)
Balance at
start of year
Number
2,600,000
-
-
-
1,175,000
-
-
3,775,000
-
-
-
Granted
during year as
remuneration
Number
Exercised
during
year
Number
Other
changes
during year
Number
Balance at
end of year
Number
Options Vested and
exercisable at end
of year
Number
1,500,000
5,000,000
1,000,000
1,500,000
-
-
-
9,000,000
5,000,000
-
5,000,000
-
-
-
-
-
-
-
-
-
-
-
800,000
-
-
-
-
-
-
800,000
-
-
-
4,900,000
5,000,000
1,000,000
1,500,000
1,175,000
-
-
13,575,000
5,000,000
-
5,000,000
14,000,000
-
** Balance at date of Alexium Limited acquisition
800,000
18,575,000
4,900,000
2,500,000
1,000,000
1,500,000
1,175,000
-
-
11,075,000
2,500,000
-
2,500,000
13,575,000
(ii)
Share holdings
The number of shares in the Company held during the financial year by each director and
executive of Alexium International Group Limited, including their personally related parties, is set
out below. There were no shares granted during the reporting year as compensation.
2011
Name
Directors
Mr G Rezos
Mr S Ribich #
Mr C Smith-Gander
Mr S Susta
Total Directors
Executives
Mr H Alkis
Mr J Almond *
Dr B Brookins
Mr N Clarke *
Total Executives
Total Directors and
Executives
Balance at
start of year
ORDINARY
SHARES
Balance at
start of year
PERFORMANCE
SHARES
Number
Number
Received
during
year on
exercise
of options
Number
Other
changes
during year
ORDINARY
SHARES
Other
changes
during year
PERFORMANCE
SHARES
Balance at
end of year
ORDINARY
SHARES
Balance at
end of year
PERFORMANCE
SHARES
Number
Number
Number
Number
11,461,147
18,344,143
114,286
-
29,919,576
-
14,513,000
-
-
14,513,000
2,500,000
27,915,000
-
-
30,415,000
-
22,085,000
-
-
22,085,000
44,432,576
52,500,000
-
-
-
-
-
-
-
-
-
-
-
1,324,810
-
-
-
1,324,810
-
-
-
-
-
1,324,810
-
-
-
-
-
-
-
-
-
-
-
12,785,957
18,344,143
114,286
-
31,244,386
-
14,513,000
-
-
14,513,000
2,500,000
27,915,000
-
-
30,415,000
-
22,085,000
-
-
22,085,000
45,757,386
52,500,000
*
#
+
Balance at date of appointment
Balance at date of resignation
Post consolidation (1:10)
15
For personal use only
DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
2010
Name
Directors
Mr G Rezos *
Mr S Ribich *
Mr C Smith-Gander *
Mr S Susta *
Mr J Mann * # +
Mr A Finlay * # +
Mr N Donovan * # +
Total Directors
Executives
Mr J Almond *
Dr B Brookins
Total Executives
Total Directors and
Executives
Balance at
start of year
ORDINARY
SHARES
Balance at
start of year
PERFORMANCE
SHARES
Number
Number
5,496,695
18,344,143
-
-
1,600,000
220,000
200,000
25,860,838
-
27,915,000
-
-
-
-
-
27,915,000
14,513,000
-
14,513,000
22,085,000
-
22,085,000
40,373,838
50,000,000
*
#
+
Balance at date of appointment
Balance at date of resignation
Post consolidation (1:10)
Received
during
year on
exercise
of options
Number
Other
changes
during year
ORDINARY
SHARES
Other
changes
during year
PERFORMANCE
SHARES
Balance at
end of year
ORDINARY
SHARES
Balance at
end of year
PERFORMANCE
SHARES
Number
Number
Number
Number
-
-
-
-
-
-
-
-
-
-
-
-
5,964,452
-
114,286
-
-
-
-
6,078,738
-
-
-
2,500,000
-
-
-
-
-
-
2,500,000
11,461,147
18,344,143
114,286
-
1,600,000
220,000
200,000
31,939,576
2,500,000
27,915,000
-
-
-
-
-
30,415,000
-
-
-
14,513,000
-
14,513,000
22,085,000
-
22,085,000
6,078,738
2,500,000
46,452,576
52,500,000
(iii)
Performance Shares
On 26 February 2010 a total of 52,500,000 performance shares were granted (26,250,000 Class
A Performance Shares and 26,250,000 Class B Performance Shares) and are subject to ASX
approved performance criteria.
The terms and conditions attached to each class of performance shares are detailed in note 14.
DIRECTORS' MEETINGS
The number of directors’ meetings held and number of meetings attended by each of the directors of the
Company during the financial year were as follows:
The following tables set information in relation to Board meetings held during the financial year.
Board Member
Gavin Rezos
Stephen Ribich
Craig Smith-Gander
Stefan Susta
Board Meetings
held while
Director
10
6
10
10
Attended
10
6
10
10
Circular
Resolutions
Passed
5
4
5
5
Total
15
10
15
15
16
For personal use only
DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
Dates of Board Meetings and Circulating Resolutions
Circular Resolutions
15 September 2010
30 September 2010
7 December 2010
9 February 2011
22 March 2011
Board Meetings
20 July 2010
7 September 2010
13 October 2010
10 November 2010
7 December 2010
9 February 2011
8 March 2011
5 April 2011
3 May 2011
7 June 2011
INSURANCE OF OFFICERS
The Company paid a premium during the year in respect of a director and officer liability insurance
policy, insuring the directors of the Company, the company secretary, and all executive officers of the
Company against a liability incurred as such a director, secretary or executive officer to the extent
permitted by the Corporations Act 2001. The directors have not included details of the nature of the
liabilities covered or the amount of the premium paid in respect of the directors’ and officers’ liability and
legal expenses’ insurance contracts, as such disclosure is prohibited under the terms of the contract.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave
to bring proceedings on behalf of the economic entity , or to intervene in any proceedings to which the
entity is a party, for the purpose of taking responsibility on behalf of the entity for all or part of those
proceedings.
No proceedings have been brought or intervened in or on behalf of the entity with leave of the Court
under section 237 of the Corporations Act 2001.
ROUNDING OFF OF AMOUNTS
Amounts in the financial statements and directors’ report are presented in Australian dollars and all
values are rounded to the nearest dollar, unless otherwise stated.
NON-AUDIT SERVICES
During the year no non-audit services were provided by the Company’s auditor, Stantons International.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is included on page 22 of the financial report.
Dated this 28th day of September 2011.
Signed in accordance with a resolution of the directors.
Gavin Rezos
Executive Chairman
17
For personal use only
CORPORATE GOVERNANCE STATEMENT
ALEXIUM INTERNATIONAL GROUP LIMITED
Alexium International Group Limited is committed to best practice corporate governance, and has
reviewed all practices in line with ASX Corporate Governance Council’s principles of good corporate
governance and best practice recommendations.
Under ASX Listing Rule 4.10.3, listed companies must disclose the extent to which they have followed
the ASX Principles, and if any of the recommendations have not been followed then the Company must
explain why not.
The Company is considered a ‘micro cap’ listing, and accordingly some of the principles and
recommendations are unable to be achieved in a cost effective or practical manner, having regard for
the resources available. These issues are still considered important in our corporate governance
system, and alternate but less formal policies exist to ensure integrity in these areas. The Council
recognises that the same efficiencies experienced by larger entities may not be apparent for smaller
companies by adopting certain principles or recommendations.
Notwithstanding this, the board has made every effort to address each principle and effect suitable
policies or strategies where possible. Corporate governance information, policies and charters are
publicly available via the company’s web site.
Detailed below are comments made in relation to the company’s policies for each ASX Corporate
Governance Council principle.
Principle 1 – Lay solid foundations for management and oversight
Alexium International Group Limited supports a clear segregation of duties between management and
the board of directors.
The board has a formal charter detailing its functions, structure and responsibilities, which is available
on the company’s website. The board delegates responsibility for the day-to-day operations and
administration of the Company to the Managing Director.
The board monitors the performance of senior management, including measuring actual performance
against planned performance.
Principle 2 – Structure the board to add value
The objective of this principle is to have a board of an effective composition, size and commitment to
adequately discharge its responsibilities and duties. As a smaller company, our aim is to achieve an
appropriate balance between the level of independence, and maintaining sufficient experience and
competence for the board to fulfil its objectives.
The board currently consists of the following directors, whose experience and expertise are detailed in
the directors’ report:
Mr G Rezos Executive Chairman
Mr Stefan Susta Executive Director
Mr Craig Smith-Gander Non-Executive Director
independent due
Not
to being a
substantial shareholder and employed in
an executive capacity.
Not independent as a member and
management involved on a day to day
basis.
Meets all criteria of independent director.
Currently only one Board member is considered to be independent.
Due to Mr Rezos not meeting the independent status, the Company is unable to meet recommendation
2.2 of the ASX Corporate Governance Council that states the chair should be an independent director.
18
For personal use only
CORPORATE GOVERNANCE STATEMENT
ALEXIUM INTERNATIONAL GROUP LIMITED
The board does not believe that restructuring the board to achieve a majority of independent directors or
for the chair to be independent would be in the best interests of shareholders, given the size and
resources of the company at this time.
The board has not established a nomination committee as yet given its size. The board as a whole will
serve as a nomination committee in the Company’s formative period.
Principle 3 – Promote ethical and responsible decision-making
The board has established a code of conduct to promote a continued ethical and responsible decision
making process for directors and key executives. The code of conduct is publicly available via the
company’s website.
The Company has also developed and communicated a formal policy to officers and employees for
trading in the company’s shares, to complement the existing statutory restrictions such as the
Corporations Act ‘insider trading’ provisions.
Directors must advise the Company of any dealings in the Company’s shares, and the Company is
required to advise the ASX of these transactions within 5 business days.
Securities Trading by Directors and Employees
The Company adopted a Share Trading Policy on 23 December 2010. The policy summarises the law
relating to insider trading and sets out the policy of the Company on Directors, officers, employees and
consultants dealing in securities of the Company. This policy is provided to all Directors and employees
and compliance with it is reviewed on an ongoing basis in accordance with the Company’s risk
management systems.
Gender Diversity Policy
The Company does not currently have a Gender Diversity policy in place and is therefore not in
compliance with
the ASX Corporate Governance Principles and
Recommendations during the financial year. The Company does not consider it appropriate to have
such a policy at this stage of the Company’s development. The Board will continue to review the
development of the Company and will adopt a Gender Diversity Policy at the appropriate time.
recommendation 3.2 of
Principle 4 – Safeguard integrity in financial reporting
The Company does not have an audit committee, as it is considered that efficiencies would be
outweighed by the costs of its formation, given the size and resources of the company. However, the
board reviews all external audit reports to ensure appropriate action is taken by management regarding
any areas which are identified as a weakness in internal control, reviews the existing external audit
arrangements, and oversees the financial reporting process.
The Board of Directors of the Company is directly responsible for the following primary functions of an
audit committee:
(a)
(b)
(c)
(d)
(e)
ensuring appropriate Group accounting policies and procedures are defined, adopted and
maintained;
ensuring that Group operating and management reporting procedures, and the system of
internal control, are of a sufficiently high standard to provide timely, accurate and relevant
information as a sound basis for management of the Group’s business;
reviewing the Group Financial Statements and approval thereof;
reviewing the scope of work including approval of strategic and annual audit plans and
effectiveness of both the external and internal audit functions across the Group;
monitoring the proper operation of and issues raised;
19
For personal use only
CORPORATE GOVERNANCE STATEMENT
ALEXIUM INTERNATIONAL GROUP LIMITED
(f)
(g)
(h)
(i)
(j)
ensuring that appropriate processes are in place to ensure compliance with all legal
requirements affecting the Group;
ensuring that all internal and industry codes of conduct and standards of corporate behaviour
are being complied with;
appointment of a person(s) responsible for Internal Audit functions as specified from time to
time;
responsible for making recommendations to the board of directors on the appointment,
reappointment or replacement (subject, if applicable, to shareholder ratification), monitoring of
effectiveness, and independence of the external auditors.
actioning any other business processes or functions which may be referred to it by the Board of
Directors.
The board is also responsible for nomination of the external auditor and reviewing the adequacy of the
scope and quality of the annual statutory audit and half year statutory audit or review. External audit
engagement partners are rotated every 5 years.
Principle 5 – Make timely and balanced disclosure
Alexium International Group Limited is committed to ASX continuous disclosure provisions, and ensures
that all relevant information concerning the Company is made available to investors on an equal and
timely basis. Continuous disclosure is included as a recurring agenda item at each board meeting held.
The Company has incorporated a policy on continuous disclosure into its code of conduct document,
which has been promoted to all officers and employees, and is available publicly on the Company’s
website.
Principle 6 – Respect the rights of shareholders
The Company promotes active and informed shareholding, and welcomes questions from shareholders
at any time. At the Company’s annual AGM, shareholders are given every opportunity to participate at
question time, and may submit written questions to the board or auditors prior to the meeting.
The external auditor is required to attend the AGM and is available to answer any shareholder questions
regarding the conduct of the audit, and the preparation and content of the auditor’s report.
Significant company announcements are posted immediately on the company’s website.
In addition, the board has created a specific section on the Company’s website for corporate
governance information.
Principle 7 – Recognise and manage risk
The board is responsible for overseeing and assessing the effectiveness of the risk management policy.
The Chief Executive Officer and/or Managing Director is responsible for implementing the policy and
regularly reporting to the board.
In addition, risk management is a recurring agenda item at board meetings to ensure risk is considered
and managed at all times.
The Company has prepared a formal risk management document to describe policy to profile, manage,
control and assess risk.
Principle 8 – Remunerate fairly and responsibly
The board has established a Remuneration Policy as part of its Corporate Governance Policy. The
board has decided at this time not to establish a separate remuneration committee due to the current
size of the entity and its operations. Therefore the board will be responsible for determining and
reviewing compensation arrangements for the directors themselves and the chief executive officer and
the executive team. The board will in due course establish a remuneration committee, comprising two
directors and operating under a board approved terms of reference.
20
For personal use only
CORPORATE GOVERNANCE STATEMENT
ALEXIUM INTERNATIONAL GROUP LIMITED
The Company has prepared a formal charter which sets out the role and responsibilities of the board
and has established a remuneration policy. Both the charter and remuneration policy are publicly
available via the Company’s website.
Non-executive directors are remunerated by way of fees, which is clearly distinguished from the
remuneration for executive directors and senior executive. The Company does not have any schemes
for retirement benefits, other than statutory superannuation.
21
For personal use only
Level 1, 1 Havelock St
West Perth WA 6005
Australia
PO Box 1908
West Perth WA 6872
Australia
t: +61 8 9481 3188
f: +61 8 9321 1204
w: www.stantons.com.au
e: info@stantons.com.au
Stantons International Audit and Consulting Pty Ltd
(ABN 84 144 581 519) trading as
Chartered Accountants and Consultants
28 September 2011
Board of Directors
Alexium International Group Limited
Level 28, AMP Tower,
140 St George’s Terrace,
PERTH WA 6000
Dear Directors
RE: ALEXIUM INTERNATIONAL GROUP LIMITED
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide
the following declaration of independence to the directors of Alexium International Group
Limited.
As Audit Director for the audit of the financial statements of Alexium International Group
Limited for the year ended 30 June 2011, I declare that to the best of my knowledge and
belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
Yours faithfully
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LIMITED
(Trading as Stantons International)
(An Authorised Audit Company)
J P Van Dieren
Director
Liability limited by a scheme approved under
Professional Standards Legislation
22
For personal use only
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
Consolidated Group
2010
$
2011
$
Note
3
4
15
11
3
6
Revenue from continuing operations
Cost of goods sold
Employee benefits expense
Depreciation and amortisation
Share-based payments
Impairment
Other expenses
Net trading profit/(loss)
Finance income
Loss before income tax
Income tax (expense)/benefit
Loss for the year
Other comprehensive income, net of
income tax
Exchange differences on translation
of foreign operations
Total comprehensive loss for the
year
Loss for the year attributable to
members of the group
Total comprehensive loss for the
year attributable to members of the
group
72,034
(212,075)
(1,313,919)
(794,273)
(154,696)
(24,694)
(855,398)
(3,283,021)
50,923
(173,822)
(433,862)
(239,652)
(746,195)
(3,465,442)
(810,803)
(5,818,853)
79,277
42,149
(3,203,744)
(5,776,704)
274,380
-
(2,929,364)
(5,776,704)
(201,471)
(33,000)
(3,130,835)
(5,809,704)
(2,929,364)
(5,776,704)
(3,130,835)
(5,809,704)
Basic loss per share (cents)
Diluted loss per share (cents)
7
7
(2.37)
(2.37)
(9.92)
(9.92)
This statement of comprehensive income should be read in conjunction with the accompanying
notes to the financial statements.
23
For personal use only
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
Current Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total Current Assets
Non-Current Assets
Other financial assets
Property, plant and equipment
Intangible assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Provisions
Other - deferred income
Total Current Liabilities
Non-Current Liabilities
Deferred tax liability
Other - deferred income
Total Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Accumulated losses
Total Equity
Note
18(a)
8
9
10
11
12
13
6
13
14
16
17
Consolidated Group
2011
$
2010
$
1,972,737
19,268
37,083
2,029,088
3,868
343,237
11,100,972
11,448,077
3,303,043
65,443
53,641
3,422,127
4,786
140,322
11,782,498
11,927,606
13,477,165
15,349,733
177,831
10,690
62,865
251,387
240,618
4,132
13,850
258,600
3,191,062
62,865
3,253,927
3,465,442
27,700
3,493,142
3,505,313
3,751,742
9,971,852
11,597,991
18,516,070
163,414
(8,707,632)
9,971,852
17,197,558
178,701
(5,778,268)
11,597,991
This statement of financial position should be read in conjunction with the accompanying notes
to the financial statements.
24
For personal use only
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
Balance at 1 July 2010
Loss for the year
Foreign currency translation
Total comprehensive loss for the
year
Transactions with owners in their
capacity as owners:
Shares issued
Share issue costs
Share-based payment
Share-based payment-capital
raising costs
Balance at 30 June 2011
Balance at 1 July 2009
Loss for the year
Foreign currency translation
Total comprehensive loss for the
year
Transactions with owners in their
capacity as owners:
Pre-consolidation
Capital reduction
Shares issued
Post-Consolidation
Shares issued
Share issue costs
Share buy back, net of costs
Share-based payment
Balance at 30 June 2010
Contributed equity
Reserves
$
17,197,558
$
178,701
Accumulated
losses
$
(5,778,268)
Total
$
11,597,991
(2,929,364)
(201,471)
-
(201,471)
(2,929,364)
-
-
-
-
(201,471)
(2,929,364)
(3,130,835)
1,530,000
(211,488)
-
-
18,516,070
-
-
154,696
31,488
163,414
-
-
-
-
(8,707,632)
1,530,000
(211,488)
154,696
31,488
9,971,852
Contributed equity
Reserves
$
65,222,622
$
Accumulated
losses
$
Total
$
700
(64,620,189)
603,133
-
-
-
-
(33,000)
(5,776,704)
-
(5,776,704)
(33,000)
(33,000)
(5,776,704)
(5,809,704)
(64,618,625)
3,000,000
14,100,000
(371,479)
(134,960)
-
17,197,558
-
-
-
-
-
211,001
178,701
64,618,625
-
-
-
-
-
(5,778,268)
-
3,000,000
14,100,000
(371,479)
(134,960)
211,001
11,597,991
This statement of changes in equity should be read in conjunction with the accompanying notes
to the financial statements.
25
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CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
Notes
Consolidated Group
2011
$
2010
$
Cash flow from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Goods & services tax (paid)/received from ATO
50,329
(2,515,011)
79,277
49,195
-
(1,375,174)
42,149
64,904
Net cash flows used in operating activities
18(b)
(2,336,210)
(1,268,121)
Cash flows from investing activities
Increase in intangibles
Purchase of property, plant and equipment
Website development
Due from other entities (deposit)
Loan to related entities
Cash acquired on acquisition of Alexium
(51,317)
(158,995)
(22,760)
-
-
-
(37,992)
(17,837)
-
(995)
(363,445)
370,917
Net cash flows used in investing activities
(233,072)
(49,352)
Cash flows from financing activities
Proceeds from issue of ordinary shares
Payment of share issue costs
Payment for unmarketable parcel share buy-back
Net cash flows from/(used in) financing
activities
Net increase/(decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of year
Effect of exchange rate changes on cash and cash
equivalents
1,350,000
-
-
4,500,000
(398,123)
(108,315)
1,350,000
3,993,562
(1,219,282)
2,676,089
3,303,043
628,164
(111,024)
(1,210)
Cash and cash equivalents at end of year
18(a)
1,972,737
3,303,043
This statement of cash flows should be read in conjunction with the accompanying notes to the
financial statements.
26
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
1.
CORPORATE INFORMATION
Alexium International Group Limited (“the Company”) is a company limited by shares
incorporated and domiciled in Australia, whose shares are publicly traded on the Australian
Securities Exchange and Frankfurt Stock Exchange. These financial statements include the
consolidated financial statements and notes of Alexium International Group Limited and
controlled entities (‘Group’) and are presented in Australian dollars.
The financial report was authorised for issue by the directors on 28 September 2011 in
accordance with a resolution of the directors.
The nature of the operations and principal activities of the Group are described in the Directors’
Report.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of preparation
These financial statements are general purpose financial statements that have been prepared in
accordance with Accounting Standards, Australian Accounting Interpretations, other authoritative
pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.
Australian Accounting Standards set out accounting policies that the AASB has concluded would
result in financial statements containing relevant and reliable information about transactions,
events and conditions to which they apply. Compliance with Australian Accounting Standards
ensures that the financial statements and notes also comply with International Financial
Reporting Standards as issued by the International Accounting Standards Board. Material
accounting policies adopted in the preparation of the financial statements are presented below.
They have been consistently applied unless otherwise stated.
The financial statements have been prepared on an accruals basis and are based on historical
costs modified, where applicable by the measurement at fair value of selected non-current
assets, financial assets and financial liabilities. The presentation and functional currency is
Australian Dollars.
Separate financial statements for the Company as an individual entity are no longer presented as
the consequence of a change to the Corporations Act 2001, however, required financial
information for the Company as an individual entity is included in note 24.
(b) Changes in accounting policy
New Accounting Standards and Interpretations
The following new standards and amendments to standards are mandatory for the financial year
beginning 1 July 2010:
(i)
(ii)
(iii)
AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the
Annual Improvements Project (AASB 5, 8, 101, 107, 117, 118, 136 and 139);
AASB 2010-3 Amendments to Australian Accounting Standards arising from the Annual
Improvements Project (AASB 3, 7, 121, 128, 131, 132 and 139);
AASB Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments and
AASB 2009-13 Amendments
from
Interpretation 19.
to Australian Accounting Standards arising
27
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
The adoption of these standards did not have any impact in the current period or any prior period
and is unlikely to affect future periods.
New Accounting Standards and Interpretations that are not yet mandatory
Certain new accounting standards and interpretations have been published that are not
mandatory for 30 June 2011 reporting periods. The Group’s assessment of the impact of these
new standards and interpretations is set out below.
(i)
AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting
Standards arising from AASB 9 and AASB 2010-7 Amendments to Australian
Accounting Standards arising from AASB 9 (December 2010) (effective from 1 January
2013).
Instruments addresses
the classification, measurement and
AASB 9 Financial
derecognition of financial assets and financial liabilities. The standard is not applicable
until 1 January 2013 but is available for early adoption. When adopted, the standard is
not expected to impact on the Group’s accounting for financial assets as it does not
have any available for sale assets other than equity investments. There will be no
impact on the group’s accounting for financial liabilities, as the new requirements only
affect the accounting for financial liabilities that are designated at fair value through
profit or loss and the group does not have any such liabilities. The Group has decided
not to early adopt AASB 9.
(ii)
Revised AASB 124 Related Party Disclosures and AASB 2009-12 Amendments to
Australian Accounting Standards (effective from 1 January 2011)
In December 2009 the AASB issued a revised AASB 124 Related Party Disclosures. It
is effective for accounting periods beginning on or after 1 January 2011 and must be
applied retrospectively. The amendment clarifies and simplifies the definition of a
related party. The Group will apply the amended standard from 1 July 2011. When the
amendments are applied, the Group will need to disclose any transactions between its
subsidiaries and it associates. However, there will be no impact on any of the amounts
recognised in the financial statements.
(c) Basis of consolidation
A controlled entity is any entity Alexium International Group Limited has the power to govern the
financial and operating policies so as to obtain benefits from its activities. In assessing the power
to govern, the existence and effect of holdings of actual and potential voting rights are
considered.
A list of controlled entities is contained in note 21 to the financial statements.
As at reporting date, the assets and liabilities of all controlled entities have been incorporated into
the consolidated financial statements as well as their results for the year then ended.
All inter-group balances and transactions between entities in the consolidated group, including
any unrealised profits have been eliminated on consolidation. Unrealised losses are eliminated
unless costs cannot be recovered.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency
with those adopted by the parent entity.
28
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
Subsidiaries are consolidated from the date on which control is transferred to the group and
cease to be consolidated from the date on which control is transferred out of the Group.
Where there is loss of control of a subsidiary, the consolidated financial statements include the
results for the part of the reporting year during which Alexium International Group Limited has
control.
Minority interests not held by the Group are allocated their share of net profit after tax in the
income statement and are presented within equity in the consolidated statement of financial
position, separately from parent shareholders’ equity.
(d)
Foreign currency translation
Both the functional and presentation currency of Alexium International Group Limited and its
Australian subsidiaries is Australian dollars ($AUD). The functional currencies of its overseas
subsidiaries are the Pound Sterling and the United States Dollar.
Transactions in foreign currencies are initially recorded in the functional currency at the exchange
rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign
currencies are retranslated at the rate of exchange ruling at the balance sheet date.
All differences in the consolidated financial report are taken to the statement of comprehensive
income. These are taken directly to equity until the disposal of the net investment, at which time
they are recognised in the statement of comprehensive income.
Tax charges and credits attributable to exchange differences on those borrowings are also
recognised in equity.
Non-monetary items that are measured in terms of historical cost in a foreign currency are
translated using the exchange rates as at the date of the initial transaction.
Non-monetary items measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value was determined.
As at the reporting date the assets and liabilities of these overseas subsidiaries are translated
into the presentation currency of Alexium International Group Limited at the rate of exchange
ruling at the balance sheet date and the statements of comprehensive income are translated at
the weighted average exchange rates for the year.
The exchange differences arising on the retranslation are taken directly to a separate component
of equity.
On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to
that particular foreign operation is recognised in the statement of comprehensive income.
(e) Property, plant and equipment
(i) Owned assets
Items of property, plant and equipment are stated at cost or deemed cost less accumulated
depreciation (see below) and impairment losses (see accounting policy (g)).
Where parts of an item of property, plant and equipment have different useful lives, they are
accounted for as separate items of property, plant and equipment.
29
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
(ii) Leased assets
Leases in terms of which the consolidated entity assumes substantially all the risks and rewards of
ownership are classified as finance leases. These finance leases are stated at an amount equal to
the lower of its fair value and the present value of the minimum lease payments at inception of the
lease. Lease payments are accounted for as described in accounting policy (l).
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the
consolidated entity are classified as operating leases (note 10). Payments made under operating
leases are charged to the profit and loss on a straight-line basis over the period of the lease.
(iii) Subsequent costs
The consolidated entity recognises in the carrying amount of an item of property, plant and
equipment the cost of replacing part of such an item when that cost is incurred if it is probable
that the future economic benefits embodied within the item will flow to the consolidated entity and
the cost of the item can be measured reliably. All other costs are recognised in the statement of
comprehensive income as an expense as incurred.
(iv) Depreciation
Depreciation is charged to the statement of comprehensive income on a straight-line basis over
the estimated useful lives of each part of an item of property, plant and equipment.
The estimated useful lives in the current and comparative years are as follows:
Plant and equipment
Leased plant and equipment
over 3 to 50 years
over 3 to 50 years
The residual value, the useful life and the depreciation method applied to an asset are
reassessed at least annually.
(f)
Intangible assets
(i) Goodwill
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to
cash-generating units and is no longer amortised but is tested annually for impairment.
(ii) Acquired both separately and from a business combination
Intangible assets acquired separately are capitalised at cost and from a business combination
are capitalised at fair value as at the date of acquisition. Following initial recognition, the cost
model is applied to the class of intangible assets.
The useful lives of these intangible assets are assessed to be either finite or indefinite. Where
amortisation is charged on assets with finite lives, this expense is taken to the income statement.
Intangible assets, excluding development costs, created within the business are not capitalised
and expenditure is charged against the income statement in the year in which the expenditure is
incurred.
Intangible assets are tested for impairment where an indicator of impairment exists, and in the
case of indefinite life intangibles annually, either individually or at the cash generating unit level
(see accounting policy (g)). Useful lives are also examined on an annual basis and adjustments,
where applicable, are made on a prospective basis.
30
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
(iii) Other intangible assets
Other intangible assets that are acquired by the consolidated entity are stated at cost less
accumulated amortisation (see below) and impairment losses (see accounting policy (g)).
Expenditure on internally generated goodwill and brands is recognised in the statement of
comprehensive income as an expense as incurred.
(iv) Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the
future economic benefits embodied in the specific asset to which it relates. All other expenditure
is expensed as incurred.
(v) Amortisation
A summary of the policies applied to the consolidated entity's intangible assets is as follows:
Goodwill and intangible assets with an indefinite life are systematically tested for impairment at
each balance sheet date. Capitalised development costs and patents and trademarks with a
finite life are amortised as follows:
-
Patents and Trademarks:
Lesser of 17 years or average remaining life of patents
and trademarks
- Capitalised development costs: Over future periods on a basis related to expected future
benefits
Amortisation methods, useful lives and residual values are reviewed at each financial year-end
and adjusted as appropriate.
Gains or losses arising from derecognition of an intangible asset are measured as the difference
between the net disposal proceeds and the carrying amount of the asset and are recognised in
the statement of comprehensive income when the asset is derecognised.
(g)
Impairment of assets
At each reporting date, the Group assesses whether there is any indication that an asset may be
impaired. Where an indicator of impairment exists, the Group makes a formal estimate of
recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the
assets is considered impaired and is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is
determined for an individual asset, unless the asset’s value in use cannot be estimated to be
close to its fair value less cost to sell and it does not generate cash inflows that are largely
independent of those from other assets or groups of assets, in which case, the recoverable
amount is determined for the cash-generating unit to which the asset belongs.
In 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.
(h) Trade and other receivables
Trade receivables, which generally have 30-120 day terms, are recognised and carried at original
invoice amount less an allowance for any uncollectible amounts.
31
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
An estimate for doubtful debts is made when collection of the full amount is no longer probable.
Bad debts are written off when identified.
(i)
Determination and presentation of operating segments
The Company has applied AASB 8 Operating Segments from 1 July 2009. AASB 8 requires a
‘management approach’ under which segment information is presented on the same basis as
that used for internal reporting purposes.
An operating segment is a component of the Group that engages in business activities from
which it may earn revenues and incur expenses, including revenues and expenses that relate to
transactions with any of the Group’s other components. An operating segment’s operating results
are reviewed regularly by the Board to make decisions about resources to be allocated to the
segment and assess its performance, and for which discrete financial information is available.
The Board considers the business from both a product and a geographical perspective and takes
the view that the Company operates under one operating segment.
(j)
Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-
term deposits with an original maturity of three months or less.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and
cash equivalents as defined above, net of outstanding bank overdrafts.
(k) Trade and other receivables
Trade receivables, which generally have 30-90 day terms, are recognised and carried at original
invoice amount less an allowance for any uncollectible amounts.
An estimate for doubtful debts is made when collection of the full amount is no longer probable.
Bad debts are written off when identified.
(l) Leases
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to
ownership of the leased item, are capitalised at the inception of the lease at the fair value of the
leased property or, if lower, at the present value of the minimum lease payments. Lease
payments are apportioned between the finance charges and reduction of the lease liability so as
to achieve a constant rate of interest on the remaining balance of the liability. Finance charges
are charged directly against income. Capitalised leased assets are depreciated over the shorter
of the estimated useful life of the asset or the lease term. Leases where the lessor retains
substantially all the risks and benefits of ownership of the asset are classified as operating
leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying
amount of the leased asset and recognised over the lease term on the same bases as the lease
income. Operating lease payments are recognised as an expense in the income statement on a
straight-line basis over the lease term.
(m)
Investments
All investments are initially recognised at cost, being the fair value of the consideration given and
including acquisition charges associated with the investment. After initial recognition, investments
which are classified as held for trading and available-for-sale are measured at fair value. Gains
32
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
and losses on investments held for trading are recognised in the statement of comprehensive
income.
Gains or losses on available-for-sale investments are recognised as a separate component of
equity until the investment is sold, collected or otherwise disposed of, or until the investment is
determined to be impaired, at which time cumulative gain or loss previously reported in equity is
included in the statement of comprehensive income.
For investments that are actively traded in organised financial markets, fair value is determined
by reference to Stock Exchange quoted market bid prices as the close of business on the
statement of financial position date.
(n) Trade and other payables
Trade payables and other payables are carried at amortised cost. They represent liabilities for
goods and services provided to the Group prior to the end of the financial year that are unpaid
and arise when the Group becomes obliged to make future payments in respect of the purchase
of these goods and services. The amounts are unsecured and are usually paid within 60 days of
recognition.
(o) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a
result of a past event, it is probable that an outflow of resources embodying economic benefits
will be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation.
Where the Group expects some or all of a provision to be reimbursed, for example under an
insurance contract, the reimbursement is recognised as a separate asset but only when the
reimbursement is virtually certain. The expense relating to any provision is presented in the
statement of comprehensive income, net of any reimbursement.
If the effect of the time value of money is material, provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects current market assessments of the time
value of money and, where appropriate, the risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised
as a finance cost.
(p) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of
new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
(q) Revenue recognition
Revenue is recognised and measured at the fair value of the consideration received or receivable
to the extent it is probable that the economic benefits will flow to the Group and the revenue can
be reliably measured. The following specific recognition criteria must also be met before revenue
is recognised:
Sale of goods
Revenue is recognised when the significant risks and rewards of ownership of the goods have
passed to the buyer and the costs incurred or to be incurred in respect of the transaction can be
33
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
measured reliably. Risks and rewards of ownership are considered passed to the buyer at the
time of delivery of the goods to the customer.
Interest income
Revenue is recognised as interest accrues using the effective interest method. This is a method
of calculating the amortised cost of a financial asset and allocating the interest income over the
relevant year using the effective interest rate, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to the net carrying amount of
the financial asset.
(r)
Income tax and other taxes
Deferred income tax is provided on all temporary differences at the statement of financial position
date between the tax bases of assets and liabilities and their carrying amounts for the financial
reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
except where the deferred income tax liability arises from the initial recognition of an asset
or liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures, except where the timing of the reversal of the
temporary differences can be controlled and it is probable that the temporary differences
will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward
of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will
be available against which the deductible temporary differences, and the carry-forward of unused
tax assets and unused tax losses can be utilised:
except where the deferred income tax asset relating to the deductible temporary
differences arises from the initial recognition of an asset or liability in a transaction that is
not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
in respect of deductible temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures, deferred tax assets are only recognised to the
extent that it is probable that the temporary differences will reverse in the foreseeable
future and taxable profit will be available against which the temporary differences can be
utilised.
The carrying amount of deferred income tax assets is reviewed at each statement of financial
position date and reduced to the extent that it is no longer probable that sufficient taxable profit
will be available to allow all or part of the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to
apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax
laws) that have been enacted or substantively enacted at the statement of financial position date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in
the statement of comprehensive income.
34
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
where the 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 as applicable; and
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.
(s) Earnings per share
Basic earnings per share is calculated by dividing the net profit attributable to members of the
parent entity for the reporting year, after excluding any costs of servicing equity (other then
ordinary shares and converting preference shares classified as ordinary shares of EPS
calculation purposes), by weighted average number of ordinary shares of the Company, adjusted
for any bonus issue.
(t)
Business combinations
The acquisition method of accounting is used to account for all business combinations, including
business combinations involving entities or businesses under common control, 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, the liabilities
incurred and the equity interests issued by the group. The consideration transferred also includes
the fair value of any contingent consideration arrangement and the fair value of any pre-existing
equity interest in the subsidiary.
Acquisition-related costs are expensed as incurred. 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. On an acquisition-by-acquisition basis, the
group recognises any non-controlling interest in the acquiree either at fair value or at the non-
controlling interest’s proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the
acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over
the fair value of the group’s share 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 subsidiary
acquired and the measurement of all amounts has been reviewed, 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.
35
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
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.
(u)
Employee benefits
(i) Termination benefits
Termination benefits are recognised as an expense when the Group is committed
demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to either
terminate employment before the normal retirement date, or to provide termination benefits
as a result of an offer made to encourage voluntary redundancy. Termination benefits for
voluntary redundancies are recognised as an expense if the Group has made an offer of
voluntary redundancy, it is probable that the offer will be accepted, and the number of
acceptances can be estimated reliably. If benefits are payable more than 12 months after
the reporting date, then they are discounted to their present value.
(ii) Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are
expensed as the related service is provided. A liability is recognised for the amount expected
to be paid under short-term cash bonus or profit-sharing plans if the Group has a present
legal or constructive obligation to pay this amount as a result of past service provided by the
employee, and the obligation can be estimated reliably.
(iii) Share-based payment transactions
The grant-date fair value of share-based payment awards granted to employees is
recognised as an employee expense, with a corresponding increase in equity, over the
period that the employees unconditionally become entitled to the awards. The amount
recognised as an expense is adjusted to reflect the number of awards for which the related
service and non-market vesting conditions are expected to be met, such that the amount
ultimately recognised as an expense is based on the number of awards that meet the related
service and non-market performance conditions at the vesting date. For share-based
payment awards with non-vesting conditions, the grant date fair value of the share-based
payment is measured to reflect such conditions and there is no true-up for differences
between expected and actual outcomes.
(v)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to
the chief operating decision maker. The chief operating decision maker, who is responsible for
allocating resources and assessing performance of the operating segments, has been identified
as the strategic steering committee.
(w) Government Grants
Alexium Inc entered into a capital equipment lease from South Carolina Research Authority
(SCRA) in the form of a grant. The grant is recognised initially as deferred income at fair value
when there is reasonable assurance that they will be received and are then recognised in profit
or loss as other income on a systematic basis over the useful life of the asset.
36
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
3.
REVENUE
Sales
Other income
Consolidated Group
2011
$
5,019
67,015
72,034
2010
$
50,923
-
50,923
Interest received - other persons
79,277
42,149
4.
OTHER EXPENSES
Minimum lease payments relating to
operating leases
Foreign exchange loss
5.
AUDITORS’ REMUNERATION
35,812
861
14,049
5,388
-
-
During the year the following fees were paid or payable for services provided by the auditor of the
parent entity, its related practices and non-related audit firms:
Consolidated Group
2011
$
2010
$
-
12,564
40,624
-
20,000
33,043
12,547
-
53,171
65,607
(a) PKF Chartered Accountants and
Business Advisers
-
audit and review of financial reports
(b) Stantons International (Australia)
-
-
audit and review of financial reports
other accounting services relating
to the Alexium Limited Acquisition
(c) Williams, Benator & Libby (USA)
-
agreed upon procedures
37
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
6.
TAXATION
(a) Income tax recognised in profit and loss
Prima facie tax on operating loss before
income tax at 30%
Tax effect of permanent and temporary
differences
Tax loss/(gain) not brought to account
Income tax benefit attributable to operating
loss
(b) Deferred tax liabilities
Deferred tax liabilities at 30 June brought to
account:
(961,124)
(1,733,011)
700,449
(13,705)
(274,380)
1,345,802
387,209
-
Intangible assets
3,191,062
3,465,442
(c) Deferred tax assets
Deferred tax assets at 30 June not brought
to account:
Employee benefits
Other
Income tax losses
3,207
14,089
571,242
588,538
1,240
6,589
387,209
395,038
Deferred tax assets arising from unconfirmed tax losses and capital losses not brought to
account at balance date as realisation of the benefit is not probable.
No income tax is payable by the Group. The Directors have considered it prudent not to bring to
account the future income tax benefit of income tax losses until there is virtual certainty of
deriving assessable income of a nature and amount to enable such benefit to be realised.
The Group has estimated unrecouped income tax losses of $1,904,140 (2010: $1,290,695) which
may be available to offset against taxable income in future years.
The benefit of these losses and timing differences will only be obtained if there is sufficient
probability that taxable profits will be generated by the company/group in future periods.
7.
EARNINGS PER SHARE
Classification of securities as ordinary shares
The Company has only one category of ordinary shares included in basic earnings per share.
Classification of securities as potential ordinary shares
There are currently no securities to be classified as dilutive potential ordinary shares on issue.
38
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
Weighted average number of ordinary shares used
in the calculation of basic earnings per share
Basic loss
Consolidated
Consolidated
2011
Number
2010
Number
108,184,753
58,215,456
$
$
(2,929,364)
(5,776,704)
This calculation does not include instruments that could potentially dilute basic earnings per
share in the future as these instruments were anti-dilutive in the years presented. A summary of
such instruments is as follows:
Consolidated
2011
Number of
securities
Consolidated
2010
Number of
potential
ordinary shares
37,790,000
52,500,000
28,000,000
52,500,000
90,290,000
80,500,000
Consolidated Group
2011
$
9,838
9,430
19,268
2010
$
52,693
12,750
65,443
37,083
53,641
Equity securities
Options over ordinary
shares
Performance Shares
8.
TRADE AND OTHER RECEIVABLES
Current
Trade debtors
Other receivables
None of the trade and other receivables are past due or impaired.
9.
OTHER ASSETS
Current
Prepayments
39
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
10. PROPERTY, PLANT & EQUIPMENT
Consolidated Group
Furniture and Equipment
Cost
Accumulated depreciation
Net book value
Leased assets
Cost
Accumulated depreciation
Net book value
2011
$
243,725
(26,216)
217,509
188,730
(63,002)
125,728
2010
$
113,444
(14,671)
98,773
41,549
-
41,549
Total property, plant and equipment
343,237
140,322
Movements in carrying amounts
Movement in the carrying amounts for each class of property, plant and equipment between the
beginning and the end of the current financial year.
Consolidated Group
2011
$
98,773
141,434
(22,698)
217,509
41,549
147,181
(63,002)
125,728
2010
$
-
113,444
(14,671)
98,773
-
41,549
-
41,549
Furniture & equipment
Balance at the beginning of year
Additions at cost
Depreciation expense
Leased assets
Balance at the beginning of year
Additions at cost
Depreciation expense
40
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
11.
INTANGIBLE ASSETS
Consolidated Group
2011
$
2010
$
12,045,195
12,018,148
(944,223)
(235,650)
11,100,972
11,782,498
Patents and intellectual property
Cost
Accumulated amortisation
Net carrying value
Movements in carrying amounts
Movement in the carrying amounts of intangible assets between the beginning and the end of the
current financial year.
Balance at the beginning of year
Additions at cost (1)
Deferred tax liability arising from
business combination
Impairment
Amortisation expense
Consolidated Group
2011
$
11,782,498
2010
$
-
27,047
12,018,148
-
-
(708,573)
3,465,442
(3,465,442)
(235,650)
11,100,972
11,782,498
(1) Being the estimated fair values of patents, trademarks and intellectual property arising on the acquisition of
Alexium Limited.
Intangible assets have finite useful lives. The current amortisation charges for intangible assets
are included under depreciation and amortisation expense per the statement of comprehensive
income.
The ultimate recoupment of costs carried forward for intellectual property is dependent on the
successful development and commercial exploitation of the Group’s technology. In accordance
with Note 1 on significant accounting policies, amortisation will be calculated on a straight-line
basis over the average useful life of the patents being 17 years.
12.
TRADE AND OTHER PAYABLES
Consolidated Group
2011
$
133,968
43,863
177,831
2010
$
210,426
30,192
240,618
Current
Trade creditors
Other creditors
41
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
Trade and other creditor amounts represent liabilities for goods and services provided to the
Group prior to the end of the financial year and which are unpaid. The amounts are unsecured
and are usually paid within 30 days or recognition.
13. OTHER LIABILITIES – DEFERRED INCOME
Current - deferred income
Consolidated Group
2011
$
62,865
2010
$
13,850
Non-current - deferred income
62,865
27,700
The deferred income is in respect of a grant from South Carolina Research Authority (refer note
24(a)(ii)).
14. CONTRIBUTED EQUITY
(a)
Issued capital
Consolidated Group
2011
$
2010
$
123,458,402 (2010: 107,871,688) Ordinary shares
fully paid
16,416,070
15,097,558
26,250,000 (2010: 26,250,000) Performance Shares A
1,312,500
26,250,000 (2010: 26,250,000) Performance Shares B
787,500
1,312,500
787,500
Total issued capital
18,516,070
17,197,558
(b) Movements in share capital
Balance of ordinary shares at
beginning of year
Reduction in capital
Shares issued
Pre-consolidation balance
1:10 Consolidation
Shares issued, net of costs
Shares issued – Prospectus
Unmarketable parcel share buy-
back, net of costs
Balance of ordinary shares at end
of year
Shares issued – Performance A*
Shares issued – Performance B*
2011
Number
2011
$
2010
Number
2010
$
107,871,688
-
-
-
15,586,714
-
15,097,558
-
-
-
-
1,318,512
-
313,826,457
-
171,428,571
485,255,028
65,222,622
(64,618,625)
3,000,000
3,603,997
48,528,072
52,500,000
7,500,000
3,603,997
10,128,521
1,500,000
-
-
(656,384)
(134,960)
123,458,402
26,250,000
26,250,000
16,416,070
1,312,500
787,500
18,516,070
107,871,688
26,250,000
26,250,000
15,097,558
1,312,500
787,500
17,197,558
* The performance shares were issued on 26 February 2010 and are subject to ASX approved
performance criteria
42
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
(c)
Terms and Conditions of Performance Shares
Performance Shares A
Rights attaching to the Class A Performance Shares
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(Class A Performance Shares) Each Class A Performance Share is a share in
the capital of the Company.
(General Meetings) The Class A Performance Shares shall confer on the holder
(Holder) the right to receive notices of general meetings and financial reports and
accounts of the Company that are circulated to shareholders. Holders have the
right to attend general meetings of shareholders of the Company.
(No Voting Rights) The Class A Performance Shares do not entitle the Holder to
vote on any resolutions proposed at a general meeting of shareholders of the
Company.
(No Dividend Rights) The Class A Performance Shares do not entitle the Holder
to any dividends.
(Rights on Winding Up) The Class A Performance Shares participate in the
surplus profits or assets of the Company upon winding up of the Company only to
the extent of $0.000001 per Class A Performance Share.
(Not Transferable) The Class A Performance Shares are not transferable.
(Reorganisation of Capital) If at any time the issued capital of the Company is
reconstructed, all rights of a Holder will be changed to the extent necessary to
comply with the applicable ASX Listing Rules at the time of reorganisation.
(Application to ASX) The Class A Performance Shares will not be quoted on
ASX. However, upon conversion of the Class A Performance Shares into fully
paid ordinary shares (Shares), the Company must within seven (7) days after the
conversion, apply for the official quotation of the Shares arising from the
conversion on ASX.
(Participation
Issues) Holders of Class A
Performance Shares will not be entitled to participate in new issues of capital
offered to holders of Shares such as bonus issues and entitlement issues.
(No Other Rights) The Class A Performance Shares give the Holders no rights
other than those expressly provided by these terms and those provided at law
where such rights at law cannot be excluded by these terms.
in Entitlements and Bonus
Conversion of the Class A Performance Shares
(a)
(Conversion on achievement of milestone) Each Class A Performance Share
will convert into one Share upon satisfaction of the following performance hurdles
to the reasonable satisfaction of the Company:
(i)
The Company achieving audited revenues in any financial year of not less
than $3,000,000; or
(ii) The execution by the Company of unconditional sales contracts for its
products in excess of $5,000,000 in aggregate;
(iii) The execution by
the Company of
two unconditional
joint venture
agreements for the development of the Company’s assets with either:
(A) significant internationally recognised companies; or
(B) companies recognised as leaders in their respective industry, in
each case with upfront licence fees and royalties payable to the
Company; or
(iv) The receipt of orders from the United States Department of Defence for the
Company’s products totalling in excess of $3,000,000 in aggregate,
within 3 years of the date of issue of the Class A Performance Shares
(Milestone).
43
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
(b)
(c)
(d)
(Redemption if Milestone not Achieved) If a Milestone is not achieved by the
required date, then each Class A Performance Share held by a Holder will be
automatically redeemed by the Company for the sum of $0.000001 within 10
Business Days of non satisfaction of the Milestone.
(Conversion Procedure) The Company will issue the Holder with a new holding
statement for the Shares as soon as practicable following the conversion of the
Class A Performance Shares into Shares.
(Ranking of Class A Performance Shares) The Shares into which the Class A
Performance Shares will convert will rank pari passu in all respects with existing
Shares.
Performance Shares B
Rights attaching to the Class B Performance Shares
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(Class B Performance Shares) Each Class B Performance Share is a share in
the capital of the Company.
(General Meetings) The Class B Performance Shares shall confer on the holder
(Holder) the right to receive notices of general meetings and financial reports and
accounts of the Company that are circulated to shareholders. Holders have the
right to attend general meetings of shareholders of the Company.
(No Voting Rights) The Class B Performance Shares do not entitle the Holder to
vote on any resolutions proposed at a general meeting of shareholders of the
Company.
(No Dividend Rights) The Class B Performance Shares do not entitle the Holder
to any dividends.
(Rights on Winding Up) The Class B Performance Shares participate in the
surplus profits or assets of the Company upon winding up of the Company only to
the extent of $0.000001 per Class B Performance Share.
(Not Transferable) The Class B Performance Shares are not transferable.
(Reorganisation of Capital) If at any time the issued capital of the Company is
reconstructed, all rights of a Holder will be changed to the extent necessary to
comply with the applicable ASX Listing Rules at the time of reorganisation.
(Application to ASX) The Class B Performance Shares will not be quoted on
ASX. However, upon conversion of the Class B Performance Shares into fully
paid ordinary shares (Shares), the Company must within seven (7) days after the
conversion, apply for the official quotation of the Shares arising from the
conversion on ASX.
(Participation
Issues) Holders of Class B
Performance Shares will not be entitled to participate in new issues of capital
offered to holders of Shares such as bonus issues and entitlement issues.
(No Other Rights) The Class B Performance Shares give the Holders no rights
other than those expressly provided by these terms and those provided at law
where such rights at law cannot be excluded by these terms.
in Entitlements and Bonus
Conversion of the Class B Performance Shares
(a)
(b)
(Conversion not to occur until Class A Performance Share milestones
achieved) No Class B Performance Share can be converted into a Share until
such time as all performance hurdles for the Class A Performance Shares have
been achieved.
(Class A Performance Share milestones not to be considered in measuring
Class B Performance Share milestones) In calculating any amounts for
determining the satisfaction of the Class B Performance Share milestones in
paragraph (c) below, all amounts used in determining the satisfaction of the Class
A Performance Share milestones shall be disregarded.
44
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
(c)
(Conversion on achievement of milestone) Each Class B Performance Share
will convert into one Share upon satisfaction of the following performance hurdles
to the reasonable satisfaction of the Company:
(i)
The Company achieving audited revenues in any financial year of not less
than $12,000,000; or
(ii) The execution by the Company of unconditional sales contracts for its
products in excess of $20,000,000 in aggregate;
(iii) The execution by the Company of an additional two unconditional joint
venture agreements for the development of the Company’s assets with
either:
(A) significant internationally recognised companies; or
(B) companies recognised as leaders in their respective industry, in
each case with upfront licence fees and royalties payable to
the Company; or
(iv) The receipt of orders from the United States Department of Defence for the
Company’s products totalling in excess of $12,000,000 in aggregate,
within 5 years of the date of issue of the Class B Performance Shares
(Milestone).
(Redemption if Milestone not Achieved) If a Milestone is not achieved by the
required date, then each Class B Performance Share held by a Holder will be
automatically redeemed by the Company for the sum of $0.000001 within 10
Business Days of non satisfaction of the Milestone.
(Conversion Procedure) The Company will issue the Holder with a new holding
statement for the Shares as soon as practicable following the conversion of the
Class B Performance Shares into Shares.
(Ranking of Class B Performance Shares) The Shares into which the Class B
Performance Shares will convert will rank pari passu in all respects with existing
Shares.
(d)
(e)
(f)
(d)
Share options issued
At the year end there were 7,540,000 free attaching options outstanding (2010: 7,000,000) and
30,250,000 share based payment options outstanding (2010: 21,000,000). Refer to note 15 for
details of the share based payment options outstanding.
45
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
(e) Movements in share options
Grant
date
Exercise
Price
Expiry
date
Balance at
beginning of
year *
Granted
during the
year
Exercised
during the
year
Number
Number
Number
Lapsed/
Expired
during the
year
Number
Balance at end of
year
Number
2011
year
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
2010
year
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
19/06/08
$0.10
31/12/12
7,000,000
26/02/10
$0.30
26/02/12
16,000,000
26/02/10
$0.40
26/02/12
2,500,000
26/02/10
$0.50
26/02/14
2,500,000
-
-
-
-
30/07/10
$0.30
31/12/14
09/03/11
$0.15
31/12/15
21/03/11
$0.15
31/12/15
09/03/11
$0.20
21/03/11
$0.25
21/03/11
$0.10
31/12/15
31/12/15
21/06/16
-
-
-
-
-
2,500,000
750,000
6,750,000
750,000
1,000,000
-
28,000,000
540,000
12,290,000
Grant
date
Exercise
Price
Expiry
date
Balance at
beginning of
year
Number
Granted
during the
year
Number
Exercised
during the
year
Number
19/06/08
$0.10
31/12/12
7,000,000
-
26/02/10
$0.30
26/02/12
26/02/10
$0.40
26/02/12
26/02/10
$0.50
26/02/14
-
-
16,000,000
2,500,000
-
7,000,000
2,500,000
21,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,000,000
16,000,000
(1,250,000)
2,500,000
(1,250,000)
2,500,000
-
-
-
-
-
-
(2,500,000)
2,500,000
750,000
6,750,000
750,000
1,000,000
540,000
37,790,000
Expired
during the
year
Number
Balance at end of
year
Number
-
-
-
-
-
7,000,000
16,000,000
2,500,000
2,500,000
28,000,000
No options expired during the periods covered by the above tables. 2.5 million options lapsed during
the year.
In the event of winding up of the Company, ordinary shareholders rank after all other
shareholders and creditors and are fully entitled to any proceeds of liquidation.
(f)
Terms and conditions of contributed equity
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are
entitled to one vote per share at shareholders’ meetings.
In the event of winding up of the Company, ordinary shareholders rank after all other
shareholders and creditors and are fully entitled to any proceeds of liquidation.
46
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
(g) Capital Management
The company’s objectives in managing capital are to safeguard the Group’s ability to continue as
a going concern, so that it can continue to provide returns to shareholders and benefits for the
stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
15. SHARE-BASED PAYMENTS
Shares
There were no share based payment shares issued in 2011.
2010
Number
2010
Value per
Share
$
2010
$
Share-based payments issued during the year for
services received
Share-based payments issued during the year for
Alexium Limited acquisition paid to vendors
2,500,000
0.20
500,000
50,000,000
0.20
10,000,000
The shares were issued in respect of the acquisition of Alexium Limited at a deemed value of 20
cents each.
Performance Shares
There were no share based payment performance shares issued in 2011.
Share-based payments issued during the year for:
- services received
- services received
Share-based payments issued during the year for:
- payment to vendors
- payment to vendors
2010
Number
2010
Value per
Share
$
2010
$
1,250,000
1,250,000
2,500,000
25,000,000
25,000,000
50,000,000
0.05
0.03
0.05
0.03
62,500
37,500
100,000
1,250,000
750,000
2,000,000
The performance shares were issued in respect of the acquisition of Alexium Limited based on a
deemed value of 20 cents discounted for the performance conditions of the performance shares.
47
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
Options
Share-based payments issued during the year for:
- services rendered
- services rendered
- services rendered
2011
Number
2,500,000
-
-
2,500,000
2011
Value per
option
$
0.018395
0.003928
0.009519
2011
$
45,988
1,228*
1,488*
48,704
* Issue 26 February 2010 in respect of the acquisition of Alexium Limited however pro-rata over period of
performance period.
Share-based payments issued during the year for:
- ESOP
- ESOP
- ESOP
- ESOP
* Pro-rata over vesting period.
Share-based payments issued during the year for:
- services rendered
- services rendered
- services rendered
* Pro-rata over period of performance period.
6,750,000
1,000,000
750,000
750,000
9,250,000
0.028611
0.014719
0.028779
0.020370
2010
Number
11,000,000
2,500,000
2,500,000
16,000,000
2010
Value per
option
$
0.012961
0.003928
0.009519
66,869*
1,356*
21,585
15,277
105,087
2010
$
142,574
1,637*
1,983*
146,194
Share-based payments issued during the year for:
- payment to vendors
5,000,000
0.012961
64,806
The options were issued in respect of the acquisition of Alexium Limited.
48
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
Share Based Payment Options Issued
Grant
date
Exercise
Price
Expiry
date
Balance at
beginning of
year
Granted
during the
year
Exercised
during the
year
Number
Number
Number
Other
changes
during the
year
Number
Balance at end of
year
Number
Vested and
exercisable
at the end of
period
Number
2011
year
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
26/02/10
$0.30
26/02/12
11,000,000
26/02/10
$0.40
26/02/12
2,500,000
26/02/10
$0.50
26/02/14
2,500,000
30/07/10
$0.30
31/12/14
21/03/11
$0.15
31/12/15
21/03/11
$0.20
31/12/15
21/03/11
$0.25
31/12/15
Weighted average exercise price ($)
-
-
-
-
16,000,000
0.33
-
-
-
2,500,000
7,500,000
750,000
1,000,000
11,750,000
0.22
-
-
-
-
-
-
-
-
-
11,000,000
11,000,000
(1,250,000)
1,250,000
(1,250,000)
1,250,000
-
-
-
-
-
-
(2,500,000)
2,500,000
2,500,000
7,500,000
2,000,000
750,000
750,000
1,000,000
25,250,000
-
16,250,000
0.30
0.29
Grant
date
Exercise
Price
Expiry
date
Balance at
beginning of
year
Granted
during the
year
Exercised
during the
year
Expired
during the
year
Balance at end of
year
Number
Number
Number
Number
Number
Vested and
exercisable
at the end of
period
Number
2010
year
Unlisted
options
Unlisted
options
Unlisted
options
26/02/10
$0.30
26/02/12
26/02/10
$0.40
26/02/12
26/02/10
$0.50
26/02/14
Weighted average exercise price ($)
-
-
-
-
11,000,000
2,500,000
2,500,000
16,000,000
0.33
-
-
-
-
-
-
-
-
11,000,000
11,000,000
2,500,000
-
2,500,000
16,000,000
-
11,000,000
0.33
0.30
The above tables are for share based payment options issued for services rendered.
No share based payment options expired during the periods covered by the above table.
No share based payment options were exercised during the current or prior period.
The weighted average remaining contractual life of share options outstanding at the end of the
financial years was 2.45 years (2010: 1.97 years), and the exercise prices range from 15 cents to
50 cents.
The assessed fair values of the options were determined using a Black-Scholes option pricing
model, taking into account the exercise price, term of option, the share price at grant date and
expected price volatility of the underlying share, expected dividend yield and the risk-free interest
rate for the term of the option. The inputs to the model used were:
49
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
2011
Expiry date
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of options
(years)
Underlying share price ($)
Option exercise price ($)
Value of Option ($)
OPTION SERIES
31/12/14
31/12/15
31/12/15
31/12/15
31/12/15
-
30
4.8
4.42
0.16
0.30
-
40
5.17
4.78
0.10
0.15
-
40
5.17
4.78
0.10
0.25
-
40
5.17
4.82
0.10
0.15
-
40
5.17
4.82
0.10
0.20
0.018395
0.028611
0.014719
0.028779
0.020370
16. RESERVES
Option premium reserve
Foreign currency translation reserve
Balance at end of year
Consolidated Group
2011
$
397,885
(234,471)
163,414
2010
$
211,701
(33,000)
178,701
Option premium reserve
The option premium reserve is used to recognise the fair value of options issued.
Balance at beginning of year
Share-based payment expense
Share-based payment - capital raising cost
Consolidated Group
2011
$
211,701
154,696
31,488
2010
$
700
211,001
-
Balance at end of year
397,885
211,701
Foreign currency translation reserve
Exchange differences arising on translation of foreign controlled entities are taken to the foreign
currency translation reserve, as described in note 1 (d). The reserve is recognised in profit and
loss when the net investment is disposed of.
Balance at beginning of year
Foreign currency translation differences
arising during the year
Balance at end of year
50
Consolidated Group
2011
$
(33,000)
(201,471)
(234,471)
2010
$
-
(33,000)
(33,000)
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
17. ACCUMULATED LOSSES
Balance at beginning of year
Capital reduction
Net loss attributable for the year
Balance at end of year
Consolidated Group
2011
$
2010
$
(5,778,268)
(64,620,189)
-
64,618,625
(2,929,364)
(5,776,704)
(8,707,632)
(5,778,268)
18. NOTES TO THE STATEMENT OF CASH FLOWS
(a)
Cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash equivalents include cash on
hand and in banks and deposits at call, net of outstanding bank overdrafts.
Cash and cash equivalents at the end of the year as shown in the statement of cash flows are
reconciled to the related item in the statement of financial position as follows:
Cash on hand
Cash at bank attracts floating interest at current market rates.
Consolidated Group
2011
$
2010
$
1,972,737
3,303,043
(b) Reconciliation of operating loss after income tax to net cash used in operating activities
Operating profit/(loss) after income tax
(2,929,364)
(5,776,704)
Consolidated Group
2011
$
2010
$
Non-cash items
Depreciation of non-current assets
Amortisation of intangible assets
Impairment
Share-based payment
Unrealised foreign exchange loss
Grant Income
Income Tax Benefit
85,700
708,573
4,004
235,650
24,694
3,465,442
154,696
746,195
(137)
9,340
(67,015)
(274,380)
-
-
51
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
Changes in assets and liabilities net of effect
of purchase of subsidiaries
(Increase)/Decrease in receivables
(Increase)/Decrease in other current assets
Increase / (Decrease) in payables
Consolidated Group
2011
$
2010
$
40,275
4,646
(83,898)
(53,470)
(28,937)
130,359
Net cash (used in) operating activities
(2,336,210)
(1,268,121)
(c)
Non-cash Financing and Investing Activities
1) As announced on 24 March 2011, Alexium signed a term sheet for an US$8 million, 3 year
equity line funding facility with Centurion Private Equity, LLCC, an institutional investor
managed by Roswell Capital Partners, LCC based in Georgia, USA. At 30 June 2011, no
amounts had been drawn down. Refer note 22(c) for key terms of the facility.
2) During the 2010 financial year Alexium Inc entered into a capital equipment lease from
South Carolina Research Authority (SCRA) in the form of a grant. The value of the lease is
US$200,000 to lease equipment including forklift, lab equipment and computers of which
assets to the full value have been received by Alexium Inc at 30 June 2011. This amount is
being recognised as income over three years. The repayments are nil per month for 3 years
with a buyout option at the end of the period or return the equipment.
19. SEGMENT REPORTING
For management purposes, the Group is organised into one main operating segment which
involves the development of a patented technology known as “Reactive Surface Technology”
(RST). Alexium is the exclusive licensee of this particular patent and has applied for additional
patents in its own capacity around the world. All of the Group’s activities are interrelated and
discrete financial information is reported to the Board (Chief Operating Decision Maker) as a
single segment. Accordingly, all significant operating decisions are based upon analysis of the
Group as one segment. The financial results from this segment are equivalent to the financial
statements of the Group as a whole.
52
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
20.
INVESTMENTS IN CONTROLLED ENTITIES
Name of Entity
Parent Entity
Country of
Incorporation
Percentage Owned
(ordinary shares)
2010
2011
%
%
Alexium International Group Limited
Australia
Subsidiaries of Alexium International Group Limited
ETW Premium Pty Ltd
Alexium Limited
Alexium Marketing Services Limited
Alexium Inc
Australia
Cyprus
United Kingdom
United States of America
-
100
-
100
100
100
100
100
ETW Premium Pty Ltd was deregistered with effect from 6 October 2010 and is no longer
consolidated into the accounts.
Alexium Marketing Services Limited was deregistered with effect from 14 September 2010 and is
no longer consolidated into the accounts.
21. KEY MANAGEMENT PERSONNEL DISCLOSURES
(a)
Directors and other key management personnel
The directors of Alexium International Group Limited during the financial year were:
Mr Gavin Rezos
Mr Craig Smith-Gander (appointed 11 November 2009)
Mr Stefan Susta (appointed 1 March 2010)
Mr Stephen Ribich (resigned 7 March 2011)
Mr Nicholas Clark was appointed Company Secretary 30 November 2010 following the
resignation of Mrs Nadine Donovan.
Other key management personnel during the financial year were:
Mr Halis Alkis – Interim Chief Executive Officer (appointed 7 March 2011)
Mr John Almond – Business Development Manager Europe
Dr Bob Brookins – Chief Technology Office
Mr Nicholas Clark – Chief Financial Officer and Company Secretary (appointed 30 November
2010)
53
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
(b) Compensation of key management personnel
Detailed remuneration disclosures are provided in the Remuneration report on pages 8 to 16.
Short-term benefits
Post employment benefits
Termination benefits
Share-based payments
Consolidated Group
2011
$
2010
$
840,298
335,175
7,650
42,061
86,251
976,260
4,540
-
120,271
459,986
Value of options issued to directors and executives
The directors and executives of the Company were issued with the following share-based
remuneration during the year:
-
6.5 million ESOP Options (2010: nil) with a value of $82,631 (2010: nil);
(c)
Equity instrument disclosures relating to key management personnel
(i)
Option holdings
The number of options over ordinary shares in the Company held during the financial year by
each director and executive of Alexium International Group Limited, including their personally
related parties, are set out below.
2011
Name
Directors
Mr G Rezos
Mr S Ribich #
Mr C Smith-Gander
Mr S Susta
Total Directors
Executives
Mr H Alkis *
Mr J Almond
Dr B Brookins
Mr N Clark *
Total Executives
Total Directors and
Executives
*
#
Balance at
start of year
Number
Granted
during year as
remuneration
Number
Exercised
during
year
Number
Other
changes
during year
Number
Balance at
end of year
Number
Options Vested and
exercisable at end
of year
Number
4,900,000
5,000,000
1,000,000
1,500,000
12,400,000
-
5,000,000
-
-
5,000,000
-
-
-
-
-
-
-
-
-
-
-
2,500,000
(5,000,000)
-
-
2,500,000
-
-
-
-
-
7,400,000
-
1,000,000
1,500,000
14,900,000
1,500,000
5,000,000
3,000,000
2,000,000
11,500,000
7,400,000
-
1,000,000
1,500,000
12,400,000
1,500,000
2,500,000
-
1,000,000
5,000,000
2,500,000
26,400,000
17,400,000
-
-
-
-
-
1,500,000
-
3,000,000
2,000,000
6,500,000
6,500,000
54
17,400,000
Balance at date of appointment
Balance at date of resignation
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
2010
Name
Directors
Mr G Rezos *
Mr S Ribich **
Mr C Smith-Gander *
Mr S Susta **
Mr J Mann # +
Mr A Finlay #
Mrs N Donovan #
Total Directors
Executives
Mr J Almond**
Dr B Brookins
Total Executives
Total Directors and
Executives
*
#
+
3,775,000
Balance at date of appointment
Balance at date of resignation
Post consolidation (1:10)
Balance at
start of year
Number
2,600,000
-
-
-
1,175,000
-
-
3,775,000
-
-
-
Granted
during year as
remuneration
Number
Exercised
during
year
Number
Other
changes
during year
Number
Balance at
end of year
Number
Options Vested and
exercisable at end
of year
Number
1,500,000
5,000,000
1,000,000
1,500,000
-
-
-
9,000,000
5,000,000
-
5,000,000
-
-
-
-
-
-
-
-
-
-
-
800,000
-
-
-
-
-
-
800,000
-
-
-
4,900,000
5,000,000
1,000,000
1,500,000
1,175,000
-
-
13,575,000
5,000,000
-
5,000,000
14,000,000
-
** Balance at date of Alexium Limited acquisition
800,000
18,575,000
4,900,000
2,500,000
1,000,000
1,500,000
1,175,000
-
-
11,075,000
2,500,000
-
2,500,000
13,575,000
(ii)
Share holdings
The number of shares in the Company held during the financial year by each director and
executive of Alexium International Group Limited, including their personally related parties, is set
out below. There were no shares granted during the reporting year as compensation.
2011
Name
Directors
Mr G Rezos
Mr S Ribich #
Mr C Smith-Gander
Mr S Susta
Total Directors
Executives
Mr H Alkis
Mr J Almond *
Dr B Brookins
Mr N Clarke *
Total Executives
Total Directors and
Executives
Balance at
start of year
ORDINARY
SHARES
Balance at
start of year
PERFORMANCE
SHARES
Number
Number
Received
during
year on
exercise
of options
Number
Other
changes
during year
ORDINARY
SHARES
Other
changes
during year
PERFORMANCE
SHARES
Balance at
end of year
ORDINARY
SHARES
Balance at
end of year
PERFORMANCE
SHARES
Number
Number
Number
Number
11,461,147
18,344,143
114,286
-
29,919,576
-
14,513,000
-
-
14,513,000
2,500,000
27,915,000
-
-
30,415,000
-
22,085,000
-
-
22,085,000
44,432,576
52,500,000
-
-
-
-
-
-
-
-
-
-
-
1,324,810
-
-
-
1,324,810
-
-
-
-
2,500,000
12,785,957
18,344,143
114,286
-
31,244,386
-
-
-
-
-
-
-
-
-
-
-
14,513,000
-
-
14,513,000
2,500,000
27,915,000
-
-
30,415,000
-
22,085,000
-
-
22,085,000
1,324,810
Post consolidation (1:10)
2,500,000
45,757,386
52,500,000
*
#
Balance at date of appointment
Balance at date of resignation
+
55
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
2010
Name
Balance at
start of year
ORDINARY
SHARES
Balance at
start of year
PERFORMANCE
SHARES
Number
Number
Received
during
year on
exercise
of options
Number
Other
changes
during year
ORDINARY
SHARES
Other
changes
during year
PERFORMANCE
SHARES
Balance at
end of year
ORDINARY
SHARES
Balance at
end of year
PERFORMANCE
SHARES
Number
Number
Number
Number
Directors
Mr G Rezos *
Mr S Ribich *
Mr C Smith-Gander *
Mr S Susta *
Mr J Mann * # +
Mr A Finlay * # +
Mr N Donovan * # +
Total Directors
Executives
Mr J Almond *
Dr B Brookins
Total Executives
Total Directors and
Executives
5,496,695
18,344,143
-
-
1,600,000
220,000
200,000
25,860,838
14,513,000
-
14,513,000
-
27,915,000
-
-
-
-
-
27,915,000
22,085,000
-
22,085,000
40,373,838
50,000,000
*
#
+
Balance at date of appointment
Balance at date of resignation
Post consolidation (1:10)
-
-
-
-
-
-
-
-
-
-
-
-
5,964,452
-
114,286
-
-
-
-
6,078,738
-
-
-
2,500,000
-
-
-
-
-
-
2,500,000
11,461,147
18,344,143
114,286
-
1,600,000
220,000
200,000
31,939,576
2,500,000
27,915,000
-
-
-
-
-
30,415,000
-
-
-
14,513,000
-
14,513,000
22,085,000
-
22,085,000
6,078,738
2,500,000
46,452,576
52,500,000
(d) Other transactions with key management personnel
1)
During the period the following was paid or payable to Viaticus Capital Pty Ltd, a related
party of G Rezos:
(a) $89,086 (2010: Nil)
to
administration and bookkeeping personnel. In 2010 $38,500 was paid to Albion
Capital Partners, a related party of G Rezos, for the reimbursement of providing
management, administration and accounting personnel.
for reimbursement of salary and wages
in relation
(b) $100,626 (2010: $123,401) to reimburse sums paid by Viaticus on behalf of Alexium
for travel and relocation expenses, administration services and equipment purchase.
Of this, $6,269 in expense reimbursements remained unpaid to Viaticus as at 30 June
2011.
(b) $45,000 (2010: $13,548) for investor relations services.
2)
Options issued to Viaticus Capital Pty Ltd, a related party of G Rezos, (or its nominee) to
compensate Viaticus for its part in assisting the Company to achieve its successful listing
of the Company on the Frankfurt Stock Exchange. The options have a deemed value of
$45,988.
56
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
22.
FINANCIAL INSTRUMENTS
(a)
Interest rate risk exposures
The Group is exposed to interest rate risk through primary financial assets and liabilities. The
carrying amounts of financial assets and financial liabilities held at balance date approximate
their estimated net fair values and are given below. The net fair value of a financial asset or a
financial liability is the amount at which the asset could be exchanged, or liability settled in a
current transaction between willing parties after allowing for transaction costs.
The Group’s exposure to interest rate risk and the effective weighted average interest rate for
classes of financial assets and financial liabilities is set out below:
Cash at bank and in hand
Short-term deposit
Net exposure
Consolidated Group
2011
$
1,972,737
-
1,972,737
2010
$
2,296,226
1,006,817
3,303,043
The weighted average effective interest rate of financial instruments held at balance date was:
Cash & cash equivalents
(2010: 3.41%)
4.28%
Sensitivity risk
At 30 June 2011, if interest rates had increased by 1% from the year end variable rates with all
other variables held constant, post tax profit and equity for the Group would have been $19,727
higher (2010: changes of 1% $33,030 higher/$33,030 lower).
The 1% (2010: 1%) sensitivity is based on reasonably possible changes, over a financial year,
using an observed range of historical RBA movements over the last year.
Foreign currency risk
The Group currently conducts its operations across international borders.
A proportion of the Group’s revenues, cash inflows, other expenses, capital expenditure and
commitments are denominated in foreign currencies, namely with costs and income in US
dollars, GBP and Euro initially.
To comply with Australian reporting requirements the income, expenditure and cash flows of the
Group will need to be accounted for in Australian dollars. This will result in the income,
expenditure and cash flows of the Company being exposed to the fluctuations and volatility of the
rate of exchange between other currencies and the Australian dollar, as determined in
international markets.
Exposure to foreign exchange risk may result in the fair value or future cash flows of a financial
instrument fluctuating due to movement in foreign exchange rates of currencies in which the
Group holds financial instruments which are other than the AUD functional currency of the parent
or USD functional currency of US Alexium Inc. or the UK pound sterling functional currency of
Alexium Ltd.
57
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
With instruments being held by overseas operations, fluctuations in the US dollar and UK pound
sterling may impact on the Group’s financial results.
The following table shows the foreign currency risk on the financial assets and liabilities of the
Group’s operations denominated in currencies other than the functional currency of the
operations.
2011
Consolidated Group
Functional currency of entity:
Australian dollar
US dollar
UK pound sterling
Statement of financial position
exposure
2010
Consolidated Group
Functional currency of entity:
Australian dollar
US dollar
UK pound sterling
Net Financial Assets/(Liabilities) in AUD
USD
AUD
GBP
Other
Total AUD
1,823,668
-
(18,346)
1,805,322
-
-
-
-
346,749
(990,310)
-
(643,561)
-
-
-
-
2,170,417
(990,310)
(18,346)
1,161,761
Net Financial Assets/(Liabilities) in AUD
USD
AUD
GBP
Other
Total AUD
980,017
-
-
-
-
-
-
403,480
(4,537)
1,378,960
(163,817)
-
-
-
(163,817)
-
239,663
(4,537)
1,215,143
Statement of financial position
exposure
980,017
Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash
equivalents. The Group's exposure to credit risk arises from potential default of the counter
party, with a maximum exposure equal to the carrying amount of these instruments.
The Group does not hold any credit derivatives to offset its credit exposure. The Group’s
exposure to credit risk is minimal.
As the Group does not currently have any significant debtors, lending, stock levels or any other
credit risk, a formal credit risk management policy is not maintained.
Liquidity risk
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and
ensuring sufficient cash and marketable securities are available to meet the current and future
commitments of the Group. Due to the nature of the Group’s activities, being development of a
patented technology known as “Reactive Surface Technology”, the Group does not have ready
access to credit facilities, with the primary source of funding being equity raisings. The Board of
Directors constantly monitor the state of equity markets in conjunction with the Group’s current
and future funding requirements, with a view to initiating appropriate capital raisings as required.
All financial assets and financial liabilities have a maturity date of less than one year.
58
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
(b) Net fair values of financial assets and liabilities
The net fair values of the financial assets and liabilities at balance date of Alexium International
Group Limited approximate the carrying amounts in the financial statements, except where
specifically stated.
(c)
Key terms of the equity line of credit
On the 22nd June 2011, the Company entered into an USD $8 million equity funding facility
agreement with Centurion Private Equity, LLC.
The key terms of the facility are:
The Company at its sole discretion will be entitled to issue a draw-down notice to
Centurion to subscribe for ordinary shares in the Company. The maximum of any draw-
down shall be two million dollars ($2,000,000), subject to the condition that the number of
subscription shares under that draw down, shall not exceed the lesser of:
o
o
the trading market limit,
the 9.9% Centurion share ownership limitation, from time to time, and the tranche
share volume limit,
o and the tranche share volume limit;
and provided that the maximum tranche draw-down shall not be greater than the
remaining portion of the commitment amount.
The purchase price of a draw-down and with respect to subscription shares purchased is a
price per share equal to the lesser of;
o 95% of the tranche market price or
o The tranche market price, minus $0.005, provided that the minimum purchase price
advised by the Company, can in no case be lower than the minimum price (i.e. no
lower than 50% of the VWAP for the five (5) trading days immediately preceding the
date of the applicable draw-down notice and no greater than 80% of the VWAP for the
five (5) trading days immediately preceding the date of the draw-down notice).
Term is thirty-six (36) months. The Company may, without the payment of any fee or
penalty, save for the settlement of any outstanding draw-down, terminate the facility at any
time upon five (5) trading days notice to Centurion.
Fees comprise:
o A commitment fee of 2% of the total facility value ($160,000) paid by issuing shares to
Centurion within 3 business days of signing the agreement;
o A due diligence fee of $20,000 payable on signing the agreement, satisfied by the
issuance of shares;
o Placement agent fees of 0.5% of the value of the adjusted tranche investment amount
paid by Centurion. The placement agent fee shall be paid in cash by the Company on
receipt of funds from a draw down.
The Company shall not submit a draw-down notice, and no draw-down shall be permitted,
if the VWAP for the five (5) trading days immediately preceding the proposed date of
delivery of the draw-down notice is less than $0.05.
To date there has been no draw-down on the facility.
59
For personal use only
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
23. PARENT ENTITY INFORMATION
The following details information related to the parent Entity, Alexium International Group Limited, at 30
June 2011. The information presented here has been prepared using consistent accounting policies as
presented in Note 2.
Current Assets
Non-current assets
Total Assets
Current liabilities
Non-current liabilities
Total Liabilities
Contributed equity
Accumulated losses
Reserves
Total equity
Loss for the year
Other comprehensive income net of tax for the
year
Total comprehensive income net of tax for the
year
Parent Entity
2011
$
2010
$
1,799,227
2,485,893
14,250,900
13,448,696
16,050,127
15,934,589
75,665
109,819
-
-
75,665
109,819
18,516,070
17,197,558
(2,939,493)
(1,584,489)
397,885
211,701
15,974,462
15,824,770
(1,355,004)
(1,584,489)
-
-
(1,355,004)
(1,584,489)
The Company’s commitments and contingencies are items 2 to 5 of note 24.
24. COMMITMENTS AND CONTINGENCIES
The Group has the following contingent liabilities and commitments.
1) Alexium has entered into and agreement with the United States Department of Defence
whereby Alexium owns exclusive rights for the RST Technology in the United States in
exchange for a 2.5% gross sales royalty to be paid to the US Government. Alexium has also
entered into an agreement with Dr Owens for exclusive rights to the rest of the world,
excluding the United States, in exchange for a 5% gross sales royalty to be paid to Dr
Owens.
2) The Group has current agreements in place with Mr Smith-Gander, non-executive director,
to pay annual director fees of $25,000 pa and a commitment to pay executive director fees
to Mr Rezos of $60,000 and Mr Susta of US$155,000 pa.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
3) The Group entered into an agreement with Thomson Reuters to provide corporate
communications services for A$983 per month. The agreement was for a 12 month term
commencing on 1 December 2010. The agreement will not be renewed when it expires in
December 2011.
4) The Group entered an agreement with Dr Reuter in Germany to provide investor relations
services for Euro 3,000 per month. The agreement was for an initial 6 month term effective
from 1 May 2010 with a renewal option of 12 months thereafter. The payments are currently
on a month by month basis.
5) On 1 July 2010 the Group entered into an agreement with Bank M as the Designated
Sponsor in relation to the Frankfurt Stock Exchange for EUR20,000 per annum. The
contract can be terminated by either party giving 2 months notice.
Based on discussions with the Directors and legal advisors, to our knowledge, the Group has no
other material commitments or contingent liabilities.
(a)
Commitments
Lease commitments
(i)
Operating leases
Alexium Inc leases offices in South Carolina under an operating lease which expires in 3 years.
The lease has various terms, escalation clauses and renewal rights.
Commitments for minimum lease payments in
relation to operating leases are payable as
follows:
Within one year
Later than one year but not later than 5 years
Later than 5 years
(ii)
Capital equipment lease
Consolidated Group
2011
$
46,365
35,904
-
2010
$
47,631
86,634
-
During the 2010 financial year Alexium Inc entered into a capital equipment lease from South
Carolina Research Authority (SCRA) in the form of a grant. The value of the lease is
US$200,000 to lease equipment including forklift, lab equipment and computers of which assets
to the full value have been received by Alexium Inc at 30 June 2011. This amount is being
recognised as income over three years. The repayments are nil per month for 3 years with a
buyout option at the end of the period or return the equipment.
The Group had no other commitments as at 30 June 2011.
(b) Contingencies
The Group has no contingent liabilities or commitments as at 30 June 2011.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
ALEXIUM INTERNATIONAL GROUP LIMITED
25. DIVIDENDS
No dividend has been declared or paid during the current financial year or the prior financial year.
The Group does not have any franking credits available for current or future years as it is not in a
tax paying position.
26. SUBSEQUENT EVENTS
No matters or circumstances have arisen since the end of the financial year which significantly
affects the operations of the consolidated group, the results of those operations, or the state of
affairs of the consolidated group in future financial years other than stated below.
Five million unlisted options exercisable at 15 cents were issued to directors as approved by
shareholders on 16 September 2011. The options are subject to vesting conditions and expire
31 December 2015.
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DIRECTORS’ DECLARATION
The directors of the Company declare that:
1.
the financial statements, comprising the statement of comprehensive income, the statement of financial
position, statement of cash flows, statement of changes in equity and accompanying notes, as set out on
pages 23 to 62 are in accordance with the Corporations Act 2001 and:
(a)
comply with Accounting Standards and the Corporations Regulations 2001; and
(b) give a true and fair view of the Group’s financial position as at 30 June 2011 and of its performance
for the year ended on that date;
2.
the Group has included in the notes to the financial statements an explicit and unreserved statement of
compliance with International Financial Reporting Standards
3.
the Chief Executive Officer has declared that:
(a)
the financial records of the Company for the financial year have been properly maintained in
accordance with section 286 of the Corporations Act 2001;
(b)
the financial statements and notes for the financial year comply with the Accounting Standards;
(c)
the financial statements and notes for the financial year give a true and fair view; and
(d)
the remuneration disclosures contained in the Remuneration Report comply with s300A of the
Corporations Act 2001.
4.
5.
the remuneration disclosed included on pages 8 to 16 of the directors’ report (as part of the audited
Remuneration Report) for the year ended 30 June 2011, comply with section 300A of the Corporations Act
2001.
in the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its
debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
Gavin Rezos
Executive Chairman
Perth, 28th September 2011
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Level 1, 1 Havelock St
West Perth WA 6005
Australia
PO Box 1908
West Perth WA 6872
Australia
t: +61 8 9481 3188
f: +61 8 9321 1204
w: www.stantons.com.au
e: info@stantons.com.au
Stantons International Audit and Consulting Pty Ltd
(ABN 84 144 581 519) trading as
Chartered Accountants and Consultants
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
ALEXIUM INTERNATIONAL GROUP LIMITED
Report on the Financial Report
We have audited the accompanying financial report of Alexium International Group
Limited, which comprises the consolidated statement of financial position as at 30 June
2011, the consolidated statement of comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then
ended, notes comprising a summary of significant accounting policies and other
explanatory
the consolidated entity
comprising the company and the entities it controlled at the year’s end or from time to time
during the financial year.
the directors’ declaration of
information and
Directors’ responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation 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 is
free from material misstatement, whether due to fraud or error. In note 2(a), the directors
also state, in accordance with Australian Accounting Standard AASB 101 Presentation of
Financial Statements, that the financial report, comprising the financial statements and
notes, complies with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. These Auditing
Standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether the
financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of
An audit also includes evaluating the appropriateness of
the entity’s internal control.
accounting policies used and the reasonableness of accounting estimates made by the
directors, as well as evaluating the overall presentation of the financial report.
Liability limited by a scheme approved under
Professional Standards Legislation
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Our audit did not involve an analysis of the prudence of business decisions made by
directors or management.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
Auditor’s opinion
In our opinion:
(a)
the financial report of Alexium International Group Limited is in accordance with the
Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the consolidated entity’s financial position as
at 30 June 2011 and of its performance for the year ended on that date;
and
complying with Australian Accounting Standards and the Corporations
Regulations 2001.
(b)
the consolidated financial report also complies with International Financial Reporting
Standards as disclosed in note 2(a).
Report on the Remuneration Report
We have audited the remuneration report included in pages 8 to 16 of the directors’ report
for the year ended 30 June 2011. 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
Auditor’s opinion
In our opinion the remuneration report of Alexium International Group Limited for the year
ended 30 June 2011 complies with section 300A of the Corporations Act 2001.
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(Trading as Stantons International)
(An Authorised Audit Company)
J P Van Dieren
Director
West Perth, Western Australia
28 September 2011
65
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ADDITIONAL INFORMATION
ALEXIUM INTERNATIONAL GROUP LIMITED
The distribution of members and their holdings at 21 September 2011 was as follows:-
NAME OF 20 LARGEST ORDINARY SHAREHOLDERS
Korcula (BVI) SA
HSBC Custody Nominees (Australia) Limited – A/C 3
Piper Buchanan Limited
HSBC Custody Nominees (Australia) Limited - A/C 2
JP Morgan Nominees Australia Limited
Aymon Pacific Pty Ltd
Rezos GJ & JE
Oaktone Nominees Pty Ltd
Peter Macskasy Barnes
Citicorp Nominees Pty Limited
Dilato Holdings Pty Ltd
Mr Nick Otty
Citicorp Nominees Pty Limited
Australian Global Capital Pty Ltd
National Nominees Limited
Rainwood Holdings Pty Ltd
Mr Nick Otty
MOD Resouces Limited
Mr Alan James George Parr
Kakaruk Pty Ltd
*
*
*
*
*
*
*
NUMBER OF
ORDINARY
FULLY PAID
SHARES HELD
18,344,143
17,142,857
14,513,000
12,006,500
8,072,935
8,045,960
4,320,185
3,535,000
2,600,000
2,086,714
1,250,000
1,165,000
1,082,000
870,408
607,013
606,600
600,000
550,000
500,000
441,600
98,339,915
% HELD OF
ISSUED
ORDINARY
CAPITAL
14.86
13.89
11.76
9.73
6.54
6.52
3.50
2.86
2.11
1.69
1.01
0.94
0.88
0.71
0.49
0.49
0.49
0.45
0.40
0.36
79.65
MARKETABLE PARCEL
SUBSTANTIAL SHAREHOLDERS
At 21 September 2011, 524 shareholders held less
than a marketable parcel.
Shares held by substantial shareholders listed in
the company's register at 21 September 2011 are
indicated by * above.
VOTING RIGHTS – ORDINARY SHARES
STOCK EXCHANGE LISTING
Each ordinary share is entitled to one vote when a
poll is called, otherwise each member present at a
meeting or by proxy has one vote on a show of
hands.
Quotation has been granted for all the ordinary
shares of the company on all Member Exchanges
of the Australian Stock Exchange Ltd.
DISTRIBUTION OF SHAREHOLDERS
1
1,001
5,001
10,001
- 1,000 shares
- 5,000 shares
- 10,000 shares
- 100,000 shares
100,001 and over
Total Ordinary Shareholders
Shareholders
410
93
83
342
80
1,008
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