ALEXIUM INTERNATIONAL GROUP LIMITED
ABN 91 064 820 408
FINANCIAL REPORT
FOR THE YEAR ENDED
30 JUNE 2015
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 Profit or Loss and Other 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 Nicholas Clark
Mr Craig Metz
Brigadier General Stephen Cheney
Ms Kim Lucraft
Level 18 Central Park
152-158 St Georges Tce
Perth WA 6000
Telephone:
Facsimile:
+61 8 9384 3160
+61 8 6314 1623
Grant Thornton Audit Pty Ltd
Level 1, 10 Kings Park Rd
West Perth WA 6005
Computershare Investor Services Pty Ltd
Level 11
172 St Georges Terrace
PERTH WA 6000
Telephone: 1300787575
Facsimile: (08) 9323 2033
Macquarie Bank
235 St Georges 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)
OTCQX : Ticker Code AXXIY
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DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
30 September 2015
Dear Shareholders
I am pleased to present your Company’s annual report for 2015. Alexium has successfully moved into
commercialisation of our award winning and environmentally friendly fire retardant (FR) and specialty
chemical technologies as demonstrated by growing revenues and increasing number of commercial
partners launching products into the market with our FR treatments.
Important catalysts for this step change have been the growing public and legislature awareness in the
United States regarding the effects of bromine and halogenated fire retardants on both humans and the
environment as well the US Defense Department’s “green initiatives”. However, Alexium’s place in
these growing trends were cemented by our CEO, Nicholas Clark, moving to Washington to regularly
showcase our FR product strengths to defense and consumer protection agencies of the US
Government and ensuring both Congress and the Senate were aware of the environmental, cost and
performance benefits of our FR technologies.
These initiatives were bolstered by the visit of US Senator Lindsey Graham as well as Congressman
Trey Gowdy’s to our Greer operational headquarters has also demonstrated the interest in our potential
to provide safe and cost effective products to US Government Agencies whilst adding to the South
Carolina economy and we continue to remain grateful to the SCRA for their recognition and support.
This growing awareness is enhanced by our key FR treatments being marketed under the Alexiflam TM
brand which is gaining recognition in the US market and through our partner iTextiles, in Europe.
Further, we have commercial partners working on co-branding strategies with Alexiflam TM and other
partners applying our FR treatments in their production facilities in the US, Mexico, Asia and Europe. In
addition to new customers in the transport, outdoor tenting, soft furnishings and bedding market we also
recently commenced sales to Murdoch Webbing, a major supplier of FR stretch and rigid webbing in the
US commercial and defense markets.
Alexium has also made solid progress in the area of FR additives for polymers and plastics for industrial
use including building materials, electronics sector and bromine FR replacement opportunities. These
are next generation products to enable Alexium to expand into these large and valuable markets where
bromine and halogens have been used as the main FR additive. We will also be moving to
commercialisation opportunities for our Reactive Surface Technology (RST) which has applications in
specialty treatments for chemical and biological protection and heat sensitive materials in 2016.
In addition to the tireless efforts of Nick Clark, your Company’s success is a reflection of the
commitment of all our staff and in particular our leadership team in South Carolina comprising Dirk Van
Hyning (President), Dr Bob Brookins (VP R&D) and Steve Gravlee (VP Sales). Our staff remuneration
continues to be highly performance based as the major contributor relative to the market and the fact
that our staff are willing to have their remuneration strongly performance based is an endorsement of
the quality and ability of your Company’s staff and an endorsement of your Company’s products.
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DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
Your Board thanks you for your continued support. We aim to continue to grow shareholder returns in
2016 following a very strong year of shareholder return this year.
Yours Faithfully
Gavin Rezos
Chairman
Alexium International Group Limited
Highlights for the Year include:
July 2014
Alexium completes production trials at Euroflam on European customer fabrics;
August 2014
Alexium awarded grant by the South Carolina/Israel Collaborative Industry R&D Program for
collaboration with ICL, Inc, one of Israel’s largest companies.;
Production trials to be undertaken by a major supplier of vehicle upholstery to the North American
car manufacturers market;
September 2014
US Representative, Congressman Trey Gowdy visits Alexium facilities;
October 2014
Alexium and iTextiles agree to co-brand;
Alexium expands into wool markets;
US Senator Lindsey Graham visits Alexium facilities;
November 2014
Alexium expands commercialization in transportation markets;
Alexium partners with New York based EAS Advisors;
Alexium CEO meets key legislators in support of Eco-Friendly Flame Retardants;
Craig Metz joins Alexium Board as Independent Non-Executive Director;
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DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
December 2014
Alexium invited to participated in funded program to deliver improved FR Army Combat Uniforms
(FRACU) to the US DoD;
President Obama signs 2015 National Defense Authorization Act which includes provisions in
relation to fire retardants;
January 2015
Independent Market Analysis of Global Flame Retardant Chemistry Market Validates Potential of
Alexium;
Alexium commences first significant commercial sector account;
February 2015
Alexium lands second commercial sector account in the cotton and wool sector;
Alexium completes and delivers on stage one- Environmentally-Friendly FR Nylon-Cotton (NyCo)
Fabric to Natick for downselect testing for FR Army Combat Uniform;
March 2015
President Obama announces Institute for Manufacturing innovation in revolutionary fibers and
textiles;
Alexium completes exclusive negotiations on new account;
Alexium releases Fosters Stockbroking report;
April 2015
Alexium increases key staff positions to meet marketplace demand for Alexium FR Chemistry;
US Brigadier General Stephen Cheney USMC (ret) joins Alexium Board as Non-Executive Director;
Alexium CEO Meets with Key Officials on US Capitol Hill;
Natick (US Army Solider Systems Center) selects Alexium to proceed to second stage of
development of non-inherent FR 50/50 NyCo FR Army Combat Uniforms;
May 2015
Alexium expands Outdoor Market into Asia;
Alexium receives Purchase Order and commences work with new client in the home furnishings
market;
Alexium increases global customer base at Techtextil Show in Frankfurt;
New Defense sector customer for advanced textiles comprising exotic materials for specific
defense sector applications;
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DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
June 2015
New European Client in Transportation market commences work;
Co-branding and licensing agreement; US-Based Large Commission finishing customer in Home
Furnishings Sector;
New Purchase Order/Client Advances progress in the Defense Sector;
July 2015
iTextiles and Alexium formally commence sales and distribution partnership;
Work commences on outdoor industrial fabric market with customer Purchase Order;
Alexium appoints Grant Thornton as Auditors;
August 2015
Purchase Order received for second military scale up;
Alexium invited to present as emerging technology at Jefferies Industrial Conference in NY;
Major Bedding customer increases orders with Alexium;
Alexium expands staff in key roles;
Alexium receives further purchase orders from Major Bedding customer;
Alexium invited as cutting edge innovators to attend key US military conference- Defense
Innovation Days;
September 2015
Key staff added for 2016 growth strategy;
Murdock Webbing announces Alexium as new provider of FR Chemistry;
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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 2015:
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 and was a Non-Executive Director of Rowing Australia, the peak Olympic sports body for
rowing in Australia from 2009 until 2014. He is currently a Non-Executive Director of Iluka Resources
Limited and a Principal of Viaticus Capital LLC.
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.
Mr Nicholas Clark BEc, LLB, MBA, CPA, F FIN, Executive Director and CEO
Mr Clark was appointed to the board on March 18 2013. Mr Clark originally commenced with Alexium
International as the Group’s CFO and Company Secretary until March 2013. Mr Clark has extensive
experience in executive management, mergers and acquisitions globally. He has held roles such as
Deputy Head, Mergers and Acquisitions, Head of Foreign Investments, and Head of Commercial and
Contract Services, in particular with CITIC, one of China’s largest resource groups.
Mr Craig Metz D.Jur., Non-executive Director
Mr Metz is a partner at Nelson, Mullins, Riley and Scarborough LLP with over 20 years experience in
legislative and regulatory affairs. He served as Chief of Staff to the late Congressman Floyd Spence (R-
SC). He held staff positions in the United States Senate and House of Representatives. Mr Metz was
appointed to senior positions in the Executive Branch of the Federal Government. Mr Metz was
appointed to the board on December 1 2014
Brigadier General Stephen Cheney USMC (ret), Non-executive Director
General Cheney is the former Inspector General of the Marine Corps and Commanding General of
Parris Island Marine Base. He is also the former Deputy Executive Secretary to US Defense Secretary
Dick Cheney under President George H.W. Bush. He currently sits on Secretary of State John Kerry’s
Foreign Affairs Policy Board. General Cheney was appointed to the board on 13 April 2015.
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DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
Directorships of other listed companies during the last 3 years
Name
Company
Commenced
Ceased
Iluka Resources Ltd
Mr Gavin Rezos
Mr Craig Smith-Gander None
None
Mr Nicholas Clark
None
Mr Craig Metz
None
Brigadier General
Stephen Cheney
Interests in the shares and options of the Company
20 June 2006
-
-
-
-
-
As at the date of this report, the interests of the Directors in the shares and options of Alexium
International Group Limited were:
Name
Number of
ordinary shares
Number of
Performance shares
Mr Gavin Rezos
Mr Craig Smith-Gander
Mr Nicholas Clark
Mr Craig Metz
Brigadier General Stephen
Cheney
COMPANY SECRETARY
24,675,000
615,166
8,820,000
-
-
-
-
-
-
-
Number of
options over
ordinary shares
2,000,000
2,250,000
-
-
-
Ms Kim Lucraft was appointed company secretary on 5 February 2015.
PRINCIPAL ACTIVITY
The principal activities of the entities in the group during the year were conducting research and
development on new technology, licensing its intellectual property, and selling its specialized chemistry
to customers.
RESULTS AND REVIEW OF OPERATIONS
The Group’s net loss attributable to members of the Company for the financial year ended 30 June 2015
was $11,763,566 (2014 restated: $3,336,527).
As at 30 June 2015 the cash position was $11,621,603 (2014: $4,197,460) and the Company had
261,350,490 ordinary shares on issue (2014: 202,025,435).
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Contributed equity increased by $16,558,057 (from $24,805,339 restated to $41,363,396) as the result
of $5,099,593 of convertible notes being converted to shares, options converted to shares of
$1,822,000 and capital raisings of $10,100,000 less capital raising costs of $809,281. There was also
$345,745 of shares issued in lieu of salary.
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 29,825,000 unissued ordinary shares under option (2014:
19,415,000). Details of these options are as follows:
Date Options Granted
Expiry Date
Exercise price
of shares
Number under
option
30 November 2012
21 March 2011
21 March 2011
22 June 2011
16 September 2011
1 September 2014
10 November 2014
10 November 2014
13 May 2015
13 May 2015
20 May 2015
6 May 2015
31 December 2016
31 December 2015
31 December 2015
21 June 2016
31 December 2015
31 August 2017
9 November 2016
9 November 2017
31 December 2017
31 December 2017
31 August 2017
7 May 2018
$0.074
$0.15
$0.25
$0.10
$0.15
$0.18
$0.25
$0.198
$0.70
$0.80
$0.13
$0.75
2,500,000
4,355,000
1,000,000
540,000
5,000,000
450,000
3,930,000
750,000
1,000,000
1,000,000
1,500,000
7,800,000
29,825,000
Option holders do not have any right, by virtue of the option, to participate in any share issue of the
Company. 2,770,000 options were exercised at $0.15 (2014: 375,000), 2,500,000 options exercised at
$0.30 (2014: Nil), 750,000 options exercised at $0.08 (2014: Nil), 1,570,000 options exercised at $0.25
(2014: Nil), 300,000 options exercised at $0.18 (2014: Nil) and 750,000 options exercised at $0.20
(2014: Nil). 750,000 options were forfeited during the year (2014: 1.5 million) and Nil options expired
during the year (2014: 4,436,663). During the year 18,300,000 options were issued (2014: Nil).
The group has 8,500,000 performance rights on issue. The performance rights were granted on 10
November 2014 and were subject to ASX approved performance criteria. The terms and conditions of
the performance rights are detailed in Note 16(c).
AFTER BALANCE DATE EVENTS
Since 30 June 2015 4,575,000 $0.15 options, 130,000 $0.25 options, 275,000 $0.18 options, 250,000
$0.70 options and 473,760 $0.75 options have been converted.
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
The Group's efforts have focused on specialty chemical solutions for a broad range of military and
commercial applications. In addition to enhancements to its patented Reactive Surface Treatment
(RST), major developments have been made in Stand-alone specialty chemical solutions for flame
retardant applications which provide an environmentally friendly technology that satisfies significant
market gaps.
The Group has focused on specific applications where its specialty chemicals solutions can clearly
enable new value-added products. The commercial roll-out of existing FR treatments and developing
other environmentally-friendly FR solutions represent the largest commercial opportunity for the Group.
In this area, the Group has three proprietary commercial chemistries (Alexiflam FR, Alexiflam SYN,
Alexiflam NF) which it formulates with other textile chemistries from its Alexiflam C product line to FR
treat virtually any textile substrate (i.e. nylon, nylon/cotton, polyester, polycottons, acrylics and natural
fibers). Therefore, near-term, the Group is focused on extending these existing technologies to quickly
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ALEXIUM INTERNATIONAL GROUP LIMITED
address market needs and generate revenues. To this end the Company has made a dedicated
approach in the commercial sector in four key textile areas: home furnishings (including bedding),
transportation (automotive and public transit), outdoor (tenting, awnings, outdoor furniture) and work
wear.
In addition to our commercial sector efforts, the Group has a robust strategy for the military sector, both
domestically and worldwide. Military textile programs worldwide are largely based on either 50/50
nylon-cotton (predominantly for uniforms) or 100% nylon (for protective covers, tenting, etc), and the
Group has developed durable, cost-effective solutions for both. Alexium is working with a combination
of government entities (such as the U.S. Army Natick Soldier Systems Center), prime contractors to the
military and private suppliers to various Departments of Defense worldwide to gain a wide range of
programs. This work will be in addition to our continuing work on Reactive Surface Treatments in the
areas of chem-bio, understanding that each award is made on a competitive basis and subject to
transition periods.
To demonstrate the desired performance on both laboratory as well as production level product, the
Group has maintained an operation in Greer, South Carolina. With this infrastructure and by teaming
with development partners, the Group has focused on creating production ready technologies. Via
commercial development and license agreements, the Group continued to validate and transition the
technology to product manufacturers. Alexium is beginning to grow revenues by entering into
collaborative agreements with companies such as iTextiles who have a global presence in the
European and Middle East markets.
As has been the case in the past, it is expected that the additional development work and extensions
and improvements to the existing technology will generate new patent applications, thereby extending
patent protection. This near-term focus is balanced and guided by long-term innovation and business
strategies that will address future trends and create future commercial opportunities. The Group’s
strategy is to expand the development of environmentally-friendly FR alternatives, as topical finishes or
polymer additives, and to continue to offer the capability to apply smart surface treatments using
organic-inorganic hybrid nano-composite coatings, and low temperature curing solutions.
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 2014 to 30 June 2015 the Directors have asserted that
there are no current reporting requirements, but may be required to do so in the future.
REMUNERATION REPORT
This report outlines the remuneration arrangements in place for Directors and Executives who are Key
Management Personnel of Alexium International Group Limited.
Director and executive details
The Directors of Alexium International Group Limited during the year were:
Mr Gavin Rezos - Executive Chairman
Mr Craig Smith - Gander – Non Executive Director
Mr Nicholas Clark - Executive Director and CEO
Mr Craig Metz – Non Executive Director - Appointed 1 December 2014
Brigadier General Stephen Cheney – Non Executive Director - Appointed 13 April 2015
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ALEXIUM INTERNATIONAL GROUP LIMITED
Other Non-Director Company Executives, during the year were:
Dr Bob Brookins – Head of Research and Development
Mr Stefan Susta – VP Sales and Marketing
Dr Dirk Van Hyning – Head of Product Development and Commercial Transition
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.
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
designed
fixed and variable performance-related
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
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ALEXIUM INTERNATIONAL GROUP LIMITED
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 Australian government regulation, which is currently 9.5% 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 US $150,000 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 10 November 2014, shareholders approved the issue of 2.5 million
Performance Rights, subject to vesting conditions.
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 Nicholas Clark, Executive Director and CEO
o Place of Work: Washington DC, United States of America.
o Salary: A salary of US$250,000 per year (inclusive of director’s fees) plus reasonable
relocation costs. On 10 November 2014, shareholders approved the issue of 3 million
Performance Rights, subject to vesting conditions.
o Termination: Mr Clark 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 Clark or make a payment of
6 months salary in lieu of notice.
Mr Craig Smith-Gander, Non Executive Director
o Mr Smith-Gander has a letter of appointment.
o Place of Work: Perth, Western Australia.
o Salary: A salary of AU$31,000 per year (inclusive of director’s fees) On 10 November 2014,
shareholders approved the issue of 750,000 options exercisable at $0.198 and expiring 9
November 2017. Termination: Mr Smith-Gander may terminate the Service Agreement without
cause.
Mr Craig Metz, Non Executive Director
o Mr Metz has a letter of appointment.
o Place of Work:.Washington DC, United States of America.
o Salary: A salary of US$27,000 per year (inclusive of director’s fees)
o Termination: Mr Metz may terminate the Service Agreement without cause.
Brigadier General Stephen Cheney, Non Executive Director
o General Cheney has a letter of appointment.
o Place of Work:.Washington DC, United States of America.
o Salary: A salary of US$27,000 per year (inclusive of director’s fees)
o Termination: General Cheney may terminate the Service Agreement without cause.
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Mr Stefan Susta, VP Sales and Marketing
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$165,000 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.
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 salary in lieu of notice. Mr Susta resigned 31 July 2014.
Dr Bob Brookins, Vice President of Research and Development
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$140,000 per year.
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.
Dr Dirk Van Hyning, President
o Term: the initial term of the Service Agreement is 12 months commencing on 26 April 2013
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$150,000 per year.
o Termination: Mr Van Hyning 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 Van Hyning or make a
payment of 6 months salary in lieu of notice.
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The following table discloses the remuneration of the Key Management Personnel being the Directors
and Executives during the financial year:
2015
Short-term benefits
Salary and
fees
Bonus
Medical
benefits
Auto and
housing
benefits
$
$
$
Post-
employ-
ment
Super-
annuation
Share-
based
payments
Shares
Share-based
payments
Options
Share-based
payments
Performance
rights
Total
$
$
$
Directors
Mr G Rezos(1)
Mr C Smith-Gander
Mr N Clark
Mr C Metz
Brig. Gen. S
Cheney
Total Directors
Executives
Dr Dirk Van Hyning
Mr S Susta(2)
Dr B Brookins
Total Executives
Total Directors and
Executives
129,753
27,653
247,048
19,097
7,068
430,619
151,619
40,782
161,667
354,068
784,687
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19,665
122,372
-
-
-
-
-
100,000
-
77,619
2,627
-
93,904
-
-
-
100,000
-
-
-
-
-
-
93,143
-
-
307,372
124,184
582,228
19,097
7,068
19,665
122,372
2,627
200,000
93,904
170,762
1,039,949
20,580
3,072
18,652
42,304
-
-
-
-
-
-
-
-
-
-
-
-
-
16,787
(6,774)
-
(6,774)
-
16,445
33,232
188,986
37,080
196,764
422,830
61,969
122,372
2,627
200,000
87,130
203,994
1,462,779
(1)
Viaticus Capital Pty Ltd, a related party of G Rezos, also received the following:
- $Nil (2014:$11,153) during the financial year for reimbursement of salary and wages in relation to administration
and bookkeeping personnel provided to Alexium by Viaticus of which Mr Rezos is a Director.
- $226,831(2014:$133,401) to reimburse sums paid by Viaticus on behalf of Alexium for travel and relocation
expenses, administration services and equipment purchase.
- $Nil(2014:$36,384) for office rent.
Stefan Susta resigned 31 July 2014
(2)
There were no other Executives of the Company which require disclosure.
15
For personal use only
DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
2014
Short-term benefits
Salary
and fees
$
Bonus
$
Other
benefits
$
Post-
employ-
ment
Super-
annuation
Termin-
ation
Benefits
Share-
based
payments
Shares
Share-
based
payments
Options
Share-based
payments
Performance
rights
Total
Proportion
related to
performance
$
$
$
%
Directors
Mr G Rezos(1)
Mr C Smith-Gander
Mr N Clark
Total Directors
Executives
Dr Dirk Van
Hyning(2)
Mr S Susta
Dr B Brookins
Total Executives
Total Directors and
Executives
131,887
28,125
221,226
381,238
112,796
161,162
132,600
406,558
787,796
-
-
-
-
-
-
-
-
-
-
-
65,661
65,661
14,623
19,015
16,986
50,624
925
2,602
-
3,527
-
-
-
-
116,285
3,527
-
-
-
-
-
-
-
-
-
100,000
-
-
11,299
3,023
-
100,000
14,322
31,096
-
37,315
68,411
4,975
9,951
7,463
275,207
33,750
324,202
633,159
132,394
198,801
160,554
491,749
-
-
-
-
-
-
8,673
3,505
-
-
-
-
12,178
22,389
100,000
26,500
90,800
1,124,908
(1)
Viaticus Capital Pty Ltd, a related party of G Rezos, also received the following:
- $11,153 (2013:$129,669) during the financial year for reimbursement of salary and wages in relation to
administration and bookkeeping personnel provided to Alexium by Viaticus of which Mr Rezos is a Director.
(2)
Dr Dirk Van Hyning was appointed on 26 April 2013.
There were no other Executives of the Company which require disclosure.
Value of shares, options and performance rights issued to Directors and Executives
The Directors and Executives of the Company were issued with the following share-based remuneration
during the year:- 750,000 ESOP Options (2014: Nil) with a value of $93,904 (2014: Nil) and 1,329,788
shares (2014:778,210) with a value of $345,745 in lieu of salary (2014: $128,405). 6,600,000
Performance Rights were issued (2014: 7,300,000) with a value of $360,360 (2014: 168,630).
Options over equity instruments granted as compensation during the year
Details on options over ordinary shares in the Company that were granted as compensation to each
Key Management Personnel during the reporting period and details on options that vested during the
reporting period are as follows:
16
For personal use only
DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
2015
Name
Directors
Mr G Rezos
Mr Craig Metz
Mr C Smith-
Gander
Mr Nicholas Clark
Brigadier General
Stephen Cheney
Executives
Mr D Van Hyning
Mr B Brookins
Mr S Susta
Number of
options
granted
during 2015
Grant date
Vesting
date
Fair value per
option at
grant date ($)
Exercise
price per
option ($)
Expiry
date
Number of
options vested
during 2015
-
-
-
-
-
-
-
-
-
-
-
-
-
-
750,000
-
10/11/14
-
10/11/14
-
$0.1244
-
$0.198
-
9/11/17
-
750,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The 750,000 options to C Smith-Gander vested immediately with no service or performance conditions.
The primary purpose of the grant of the option is to provide a performance linked incentive component
in the remuneration package to motivate and rewards the performance of C Smith-Gander in his role as
the director. The grant of the options is a reasonable and appropriate method to provide cost effective
remuneration as the non-cash form of this benefit will allow the Company to spend a greater proportion
of its cash reserves on its operations than it would if alternative cash forms of remuneration were given
to C Smith-Gander.
No options were issued in 2014.
17
For personal use only
DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
Analysis of options over equity instruments granted as compensation
Details of vesting profiles of the options granted as remuneration to each Key Management Personnel
of the Group and each of the three named Company executives and Group executives are detailed
below.
Name
Number
Grant date
Exercise
Price
% vested in
year
% forfeited
in year
Financial years
in which grant
vests
Directors
Mr G Rezos
Mr N Clark
Mr C Smith-Gander
Mr Craig Metz
Brigadier General
Stephen Cheney
Executives
Mr D Van Hyning
Mr B Brookins
Mr S Susta
2,500,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
500,000
500,000
250,000
250,000
750,000
-
-
-
1,000,000
1,000,000
1,000,000
1000,000
1,000,000
750,000
750,000
30/7/10
16/9/11
16/9/11
30/11/12
30/11/12
21/3/11
21/3/11
16/9/11
16/9/11
30/11/12
30/11/12
10/11/14
-
-
-
21/3/11
21/3/11
21/3/11
16/9/11
16/9/11
30/11/12
30/11/12
$0.30
$0.15
$0.15
$0.074
$0.074
$0.15
$0.15
$0.15
$0.15
$0.074
$0.074
$0.198
-
-
-
$0.15
$0.15
$0.25
$0.15
$0.15
$0.074
$0.074
-
-
-
-
100%
-
-
-
-
-
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100%
2011
2012
2014
2014
2015
2011
2013
2013
2014
2014
2015
2015
-
-
-
2012
2013
2014
2013
2014
2014
2015
18
For personal use only
DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
Analysis of movements in options
The movement during the reporting period, by value, of options over ordinary shares in the Company
held by each Key Management Personnel is detailed below.
Name
Granted in year
$ (A)
Value of options
exercised in year
$ (B)
Lapsed in year
$(c)
Directors
Mr G Rezos
Mr N Clark
Mr C Smith-Gander
Mr Craig Metz
Brigadier General Stephen
Cheney
Executives
Mr D Van Hyning
Mr B Brookins
Mr S Susta
-
-
93,305
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(A)
(B)
(C)
The value of options granted in the year is the fair value of the options calculated at grant date using the Black Scholes
option-pricing model. The total value of the options granted is included in the table above. This amount is allocated to
remuneration over the vesting period.
The value of options exercised during the year is calculated as the market price of shares of the Company as at close of
trading on the date the options were exercised after deducting the price paid to exercise the option.
The value of the options that lapsed during the year represents the benefit forgone and is calculated at the date the option
lapsed using the Black Scholes option-pricing model assuming the performance criteria had been achieved.
Performance rights over equity instruments granted as compensation during the year
Details on performance rights over ordinary shares in the Company that were granted as compensation
to each Key Management Personnel during the reporting period and details on performance rights that
vested during the reporting period are as follows:
2015
Name
Directors
Mr G Rezos
Mr C Smith-
Gander
Mr Nicholas Clark
Mr Craig Metz
Brigadier General
Stephen Cheney
Executives
Mr D Van Hyning
Mr B Brookins
Mr S Susta
Grant date
Vesting
date(1)
Number of
performance
rights
granted
during 2015
Fair value per
performance
right at grant
date ($)
Price payable
on vesting
per
performance
right ($)
Expiry
date(2)
Number of
performance
rights vested
during 2015
2,500,000
10/11/14
30/6/16
-
10/11/14
-
-
30/6/16
-
-
3,000,000
-
-
-
-
-
$0.0546
-
$0.0546
-
600,000
500,000
-
10/11/14
10/11/14
-
30/6/16
30/6/16
-
$0.0546
$0.0546
-
Nil
30/6/16
2,500,000
-
Nil
-
-
Nil
Nil
-
-
30/6/16
-
-
30/6/16
30/6/16
-
-
3,000,000
-
-
400,000
600,000
-
(1) Vesting date assumed by Directors.
(2) Expiry date if vesting conditions not met
19
For personal use only
DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
Analysis of performance rights over equity instruments granted as compensation
Details of vesting profiles of the performance rights granted as remuneration to each Key Management
Personnel of the Group and each of the three named Company executives and Group executives are
detailed below.
2015
Name
Number
Grant date
% vested in
year
% forfeited
in year
Financial years
in which grant
vests(1)
Price payable
on vesting
per
performance
right ($)
Directors
Mr G Rezos
Mr N Clark
Mr C Smith-Gander
Mr Craig Metz
Brigadier General
Stephen Cheney
Executives
2,500,000
10/11/14
3,000,000
10/11/14
-
-
-
-
-
-
Mr D Van Hyning
600,000
10/11/14
Mr B Brookins
500,000
10/11/14
Mr S Susta
-
(1) Vesting date assumed by Directors
-
Nil
Nil
-
-
-
Nil
Nil
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2016
2016
-
-
-
2016
2016
-
The service and performance conditions of the performance rights include satisfying the performance
milestones as detailed in the Notice of Annual General Meeting approved by the shareholders on 10
November 2015. The performance milestones include share price appreciation and meeting business
targets set by the board including revenue and other business development objectives.
Analysis of movements in performance rights
The movement during the reporting period, by value, of performance rights over ordinary shares in the
Company held by each Key Management Personnel is detailed below.
2015
Name
Granted in year
$ (A)
Value of performance
rights vested in year
$ (B)
Lapsed/forfeited
in year
$ (C)
Directors
Mr G Rezos
Mr N Clark
Mr C Smith-Gander
Mr Craig Metz
Brigadier General Stephen
Cheney
Executives
Mr D Van Hyning
Mr B Brookins
Mr S Susta
57,750
69,300
-
-
-
9,240
13,860
-
-
-
-
-
-
-
-
(18,480)
136,500
163,800
-
-
-
32,760
27,300
-
20
For personal use only
DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
(A)
(B)
(C)
The value of performance rights granted in the year is based on the closing share price on 10 November 2014 $0.26 with a
probability discount of 70% and an unlisted status discount of 30% being applied.
The value of performance rights vested 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 vested.
The value of the performance rights that lapsed during the year represents the benefit forgone and is calculated at the date
the performance rights lapsed.
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.
2015
Name
Directors
Mr G Rezos
Mr C Smith-Gander
Mr N Clark
Mr Craig Metz
Brigadier General
Stephen Cheney
Total Directors
Executives
Mr S Susta(1)
Dr D Van Hyning
Dr B Brookins
Total Executives
Total Directors and
Executives
Balance at
start of
year
Granted during
year as
remuneration
Exercised
during
year
Number
Number
Number
-
750,000
-
-
-
750,000
-
-
-
-
-
-
6,500,000
1,500,000
2,000,000
-
-
10,00,000
3,500,000
-
3,000,000
6,500,000
Other
changes
during
year
Number
(2,500,000)
-
(2,000,000)
-
-
(4,500,000)
Balance at
end of year
Options Vested
and exercisable at
end of year
Number
Number
4,000,000
2,250,000
-
-
-
6,250,000
2,000,000
-
3,000,000
5,000,000
4,000,000
2,250,000
-
-
-
6,250,000
2,000,000
-
3,000,000
5,000,000
-
-
-
-
(750,000)
-
-
(750,000)
(750,000)
-
-
(750,000)
16,500,000
(1) Balance at date of resignation .
750,000
(750,000)
(5,250,000)
11,250,000
11,250,000
21
For personal use only
DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
(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.
2015
Name
Directors
Mr G Rezos
Mr C Smith-Gander
Mr N Clark
Mr Craig Metz
Brigadier General Stephen
Cheney
Total Directors
Executives
Mr S Susta(1)
Dr D Van Hyning
Dr B Brookins
Total Executives
Total Directors and Executives
Balance at start
of year
ORDINARY
SHARES
Number
18,654,866
585,166
2,099,900
-
Granted
During the
Year as
Remuneration
in lieu of
salary
Number
Received
during year
on conversion
of
performance
rights
Received
during
year on
exercise
of options
Other
changes
during year
ORDINARY
SHARES
Balance at
end of
year
ORDINARY
SHARES
Number
Number
Number
664,894(2)
-
664,894(2)
-
2,500,000
3,000,000
-
-
-
-
21,339,932
1,329,788
5,500,000
-
-
-
-
21,339,932
-
-
-
-
1,329,788
-
400,000
600,000
1,000,000
6,500,000
-
-
-
-
-
-
-
-
-
-
-
355,240
30,000
55,206
-
22,175,000
615,166
5,820,000
-
-
-
440,446
28,610,166
-
-
-
-
440,446
-
400,000
600,000
1,000,000
29,610,166
(1) Balance at date of resignation.
(2)
664,894 shares issued in lieu of $100,000 salary.
22
For personal use only
DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
(iii) Performance rights holdings
The number of performance rights 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. 8,500,000 performance rights were granted during the reporting year as
compensation (2014: 7,300,000).
2015
Name
Balance at start of
year
PERFORMANCE
RIGHTS
Granted During
the Year as
Remuneration
Vested and
Converted
to Shares
during year
Other changes
during year
PERFORMANCE
RIGHTS
Balance at
end of year
PERFORMANCE
RIGHTS
Number
Number
Number
Number
Directors
Mr G Rezos
Mr C Smith-Gander
Mr N Clark
Mr Craig Metz
Brigadier General Stephen
Cheney
Total Directors
Executives
Mr S Susta(1)
Dr B Brookins
Dr D Van Hyning
Total Executives
Total Directors and Executives
(1) At date of resignation
End of remuneration report.
2,500,000
-
3,000,000
-
2,500,000
-
3,000,000
-
(2,500,000)
-
(3,000,000)
-
-
-
-
5,500,000
5,500,000
(5,500,000)
-
-
-
-
-
-
800,000
600,000
400,000
1,800,000
-
500,000
600,000
1,100,000
-
(600,000)
(400,000)
(1,000,000)
(800,000)
-
-
(800,000)
2,500,000
-
3,000,000
-
-
5,500,000
-
500,000
600,000
1,100,000
7,300,000
6,600,000
(6,500,000)
(800,000)
6,600,000
23
For personal use only
DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
DIRECTORS' MEETINGS
The number of formal Directors’ meetings held and number of such formal 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
Craig Smith-Gander
Nicholas Clark
Craig Metz
Brigadier General Stephen
Cheney
Board Meetings
held while
Director
9
9
9
6
2
Attended
9
9
9
6
2
Circular
Resolutions
Passed
1
1
1
1
1
Total
10
10
10
7
3
Dates of Formal Board Meetings and Circulating Resolutions.
Circular Resolutions
Board Meetings
12 June 2015
2 July 2014
4 August 2014
5 September 2014
16 December 2014
25 February 2015
1 April 2015
28 April 2015
2 June 2015
24 June 2015
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.
24
For personal use only
DIRECTORS’ REPORT
ALEXIUM INTERNATIONAL GROUP LIMITED
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.
INDEMNITY OF AUDITORS
Alexium International Group Limited has agreed to indemnify their auditors, Grant Thornton Audit Pty
Ltd, to the extent permitted by law, against any claim by a third party arising from Alexium International
Group Limited's breach of their agreement. The indemnity stipulates that Alexium International Group
Limited will meet the full amount of any such liabilities including a reasonable amount of legal costs.
NON-AUDIT SERVICES
During the year no non-audit services were provided by the Company’s auditor, Grant Thornton.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is included on page 28 of the financial report.
Dated this 30th day of September 2015.
Signed in accordance with a resolution of the directors.
Gavin Rezos
Executive Chairman
25
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 Gavin Rezos Executive Chairman
Mr Nicholas Clark Executive Director and CEO
Mr Craig Smith-Gander Non-Executive Director
Mr Craig Metz
Brigadier General Stephen Cheney
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.
Meets all criteria of independent director.
Meets all criteria of independent director.
Currently three Board members are considered to be independent.
26
For personal use only
CORPORATE GOVERNANCE STATEMENT
ALEXIUM INTERNATIONAL GROUP LIMITED
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.
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;
27
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; and
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.
28
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 Executives. The Company does not have any schemes
for retirement benefits, other than statutory superannuation.
29
For personal use only Auditor’s Independence Declaration
To the Directors of Alexium International Group Limited
Level 1
10 Kings Park Road
West Perth WA 6005
Correspondence to:
PO Box 570
West Perth WA 6872
T +61 8 9480 2000
F +61 8 9322 7787
E info.wa@au.gt.com
W www.grantthornton.com.au
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead
auditor for the audit of Alexium International Group Limited for the year ended 30 June
2015, I declare that, to the best of my knowledge and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
M J Hillgrove
Partner - Audit & Assurance
Perth, 30 September 2015
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current
scheme applies.
For personal use only CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015
ALEXIUM INTERNATIONAL GROUP LIMITED
Revenue
Cost of sales
Gross Profit
Other Income
Administrative expenses
Research and development costs
Impairment of intangible assets
Other expenses
Finance costs -
Gain / (loss) from embedded derivative
Interest and amortisation of cost of raising
convertible notes
Finance income
Loss before tax
Tax expense
Loss for the year from continuing
operations
Loss for the year after tax
Exchange differences on translation of
foreign operations
Total comprehensive loss for the year
Profit for the year attributable to:
Members of the group
Note
4
4
5
12
4
7
Consolidated Group
2015
$
59,190
(41,296)
17,894
326,446
(4,834,353)
(859,326)
(225,908)
(1,144,348)
2014
As restated
$
242,465
(77,924)
164,541
-
(2,454,800)
(713,537)
-
(310,861)
(4,674,520)
457,050
(399,263)
(497,962)
29,812
(11,763,566)
-
19,042
(3,336,527)
-
(11,763,566)
(3,336,527)
1,009,782
(124,552)
(11,763,566)
(3,336,527)
-
(11,763,566)
-
(3,336,527)
Total comprehensive loss for the year
(10,753,784)
(3,461,079)
Loss for the year attributable to members
of the group
Total comprehensive loss for the year
attributable to members of the group
(11,763,566)
(3,336,527)
(10,753,784)
(3,461,079)
Basic loss per share (cents)
8
(5.78)
(1.88)
Diluted loss per share (cents)
This consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes to the financial statements.
(5.78)
(1.88)
8
31
For personal use only CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2015
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
Leased assets
Intangible assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Provisions
Convertible notes
Derivative liability
Other - deferred income
Total Current Liabilities
Non-Current Liabilities
Convertible notes
Derivative liability
Total Non-Current Liabilities
Note
20(a)
9
10
11
11
12
13
15
14
15
2(n)
Consolidated Group
2015
$
2014
Restated
$
2013
Restated
$
11,621,603
119,277
170,430
11,911,310
7,834
366,366
148,253
184,847
707,300
4,197,460
70,975
103,660
4,372,095
5,402
303,074
40,068
361,544
710,088
1,163,231
22,566
96,404
1,282,201
4,483
293,111
-
327,739
625,333
12,618,610
5,082,183
1,907,534
638,484
56,613
-
-
116,676
811,773
189,680
18,749
598,828
96,450
63,564
967,271
128,228
32,986
-
-
-
161,214
-
-
-
748,726
321,440
1,070,166
1,208,325
888,220
2,096,545
Total Liabilities
811,773
2,037,437
2,257,759
Net Assets / Liabilities
11,806,837
3,044,746
(350,225)
Equity
Contributed equity
Reserves
Accumulated losses
Total Equity
16
18
19
41,363,396
4,417,082
(33,973,641)
11,806,837
24,805,339
449,482
(22,210,075)
3,044,746
18,082,770
440,553
(18,873,548)
(350,225)
This consolidated statement of financial position should be read in conjunction with the
accompanying notes to the financial statements.
32
For personal use only
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2015
ALEXIUM INTERNATIONAL GROUP LIMITED
Balance at 1 July 2014 (as
reported) correction of prior
period errors
Balance as reported
Adjustments on correction
Balance as restated
Loss for the year
Foreign currency translation
Total comprehensive loss for the
year
Transactions with owners in their
capacity as owners:
Issued capital
Capital raising costs
Options exercised
Share-based payment
Shares issued in lieu of salary
Balance at 30 June 2015
Balance at 1 July 2013 (as
reported) correction of prior
period errors
Balance as reported
Adjustments on correction
Balance as restated
Loss for the year as restated
Foreign currency translation
Total comprehensive loss for the
year
Transactions with owners in their
capacity as owners:
Issued capital
Capital raising costs
Share buy back of unmarketable
parcels
Options exercised
Share-based payment
Shares issued in lieu of salary as
restated
Balance at 30 June 2014 as
restated
Contributed equity
Reserves
Accumulated
losses
Total
$
24,773,640
31,699
24,805,339
$
523,678
(74,196)
449,482
$
(15,942,775)
(6,267,300)
(22,210,075)
$
9,354,543
(6,309,797)
3,044,746
-
-
-
-
1,009,782
(11,763,566)
-
(11,763,566)
1,009,782
1,009,782
(11,763,566)
(10,753,784)
15,199,593
(809,281)
1,822,000
-
345,745
41,363,396
1,640,317
-
2,000
1,315,501
-
4,417,082
-
-
-
-
-
(33,973,641)
16,839,910
(809,281)
1,824,000
1,315,501
345,745
11,806,837
Contributed equity
Reserves
Accumulated
losses
Total
$
6,677,374
(7,027,599)
(350,225)
(3,336,527)
(124,552)
$
18,092,756
(9,986)
18,082,770
$
514,749
(74,196)
440,553
$
(11,930,131)
(6,943,417)
(18,873,548)
-
-
-
6,883,755
(403,812)
(12,446)
126,667
-
128,405
-
(124,552)
(3,336,527)
-
(124,552)
(3,336,527)
(3,461,079)
-
-
-
-
133,481
-
-
-
-
-
-
-
6,883,755
(403,812)
(12,446)
126,667
133,481
128,405
24,805,339
449,482
(22,210,075)
3,044,746
This consolidated statement of changes in equity should be read in conjunction with the
accompanying notes to the financial statements.
33
For personal use only
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2015
ALEXIUM INTERNATIONAL GROUP LIMITED
Note
Cash flow from operating activities
Receipts from customers and other income
Payments to suppliers and employees
Interest received
Goods & services tax received from ATO
Consolidated Group
2015
$
2014
Restated
$
400,834
(4,634,757)
29,812
34,656
256,056
(3,223,846)
19,042
60,826
Net cash flows (used in) operating activities
20(b)
(4,169,455)
(2,887,922)
Cash flows from investing activities
Investments in intangibles
Purchase of property, plant and equipment
Deposits paid
(22,071)
(95,999)
(1,090)
(33,658)
(83,079)
(1,093)
Net cash flows (used in) investing activities
(119,160)
(117,830)
Cash flows provided by financing activities
Proceeds from issue of ordinary shares
Proceeds from exercise of options
Payment of capital raising costs
Interest paid
Payment for unmarketable parcel share buy back
Net cash flows from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of exchange rate changes on cash and cash
equivalents
10,100,000
1,822,000
(809,281)
(99,318)
-
11,013,401
6,724,786
6,719,975
126,667
(403,812)
(208,233)
(12,446)
6,222,151
3,216,399
4,197,460
1,163,231
699,357
(182,170)
Cash and cash equivalents at end of year
This consolidated statement of cash flows should be read in conjunction with the accompanying
notes to the financial statements.
11,621,603
20(a)
4,197,460
34
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
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. Alexium commenced trading on the OTC markets prestigious tier, OTCQX
International on January 13, 2012. 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 30 September 2015 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. The
Company is a for-profit entity for the purpose of preparing the financial statements.
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 25.
(b) New and amended standards adopted by the Group in this financial report
A number of new or amended standards became applicable for the current reporting period, however, the
Group did not have to change its accounting policies or make retrospective adjustments as a result of
adopting these standards. Information on these new standards which are relevant to the Group is
presented below.
AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and
Financial Liabilities
AASB 2012-3 adds application guidance to AASB 132 to address inconsistencies identified in applying
some of the offsetting criteria of AASB 132, including clarifying the meaning of “currently has a legally
enforceable right of set-off” and that some gross settlement systems may be considered equivalent to net
settlement.
AASB 2012-3 is applicable to annual reporting periods beginning on or after 1 January 2014 and has
been adopted in this financial report. The adoption of these amendments has not had a material impact
on the Group as the amendments merely clarify the existing requirements in AASB 132.
35
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets
These narrow-scope amendments address disclosure of information about the recoverable amount of
impaired assets if that amount is based on fair value less costs of disposal.
When developing IFRS 13 Fair Value Measurement, the IASB decided to amend IAS 36 Impairment of
Assets to require disclosures about the recoverable amount of impaired assets. The IASB noticed
however that some of the amendments made in introducing those requirements resulted in the
requirement being more broadly applicable than the IASB had intended. These amendments to IAS 36
therefore clarify the IASB’s original intention that the scope of those disclosures is limited to the
recoverable amount of impaired assets that is based on fair value less costs of disposal.
AASB 2013-3 makes the equivalent amendments to AASB 136 Impairment of Assets and is applicable to
annual reporting periods beginning on or after 1 January 2014. The adoption of these amendments in this
financial report has not had a material impact on the Group as they are largely of the nature of clarification
of existing requirements.
AASB 2014-1 Amendments to Australian Accounting Standards (Part A: Annual Improvements 2010-
2012 and 2011-2013 Cycles)
Part A of AASB 2014-1 makes amendments to various Australian Accounting Standards arising from the
issuance by the IASB of International Financial Reporting Standards Annual Improvements to IFRSs
2010-2012 Cycle and Annual Improvements to IFRSs 2011-2013 Cycle.
Among other improvements, the amendments arising from Annual Improvements to IFRSs 2010-2012
Cycle:
clarify that the definition of a ‘related party’ includes a management entity that provides key
management personnel services to the reporting entity (either directly or through a group entity)
amend AASB 8 Operating Segments to explicitly require the disclosure of judgements made by
management in applying the aggregation criteria
Among other improvements, the amendments arising from Annual Improvements to IFRSs 2011-2013
Cycle clarify that an entity should assess whether an acquired property is an investment property under
AASB 140 Investment Property and perform a separate assessment under AASB 3 Business
Combinations to determine whether the acquisition of the investment property constitutes a business
combination.
Part A of AASB 2014-1 is applicable to annual reporting periods beginning on or after 1 July 2014. The
adoption of these amendments has not had a material impact on the Group as they are largely of the
nature of clarification of existing requirements.
(c) Impact of standards issued but not yet applied by the Group
New and revised accounting standards and amendments that are currently issued for future reporting periods
that are relevant to the Group include:
AASB 9
Financial Instruments
AASB 9 introduces new requirements for the classification and measurement of financial assets and
liabilities. These requirements improve and simplify the approach for classification and measurement of
financial assets compared with the requirements of AASB 139.
The effective date is for annual reporting periods beginning on or after 1 January 2018.
The entity is yet to undertake a detailed assessment of the impact of AASB 9. However, based on the
entity’s preliminary assessment, the Standard is not expected to have a material impact on the
36
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
transactions and balances recognised in the financial statements when it is first adopted for the year
ending 30 June 2019.
AASB 15
Revenue from Contracts with Customers
AASB 15 replaces AASB 118: Revenue, AASB 111 Construction Contracts and some revenue-related
Interpretations. In summary, AASB 15:
establishes a new revenue recognition model;
provides a new and more detailed guidance on specific topics (eg multiple element
changes the basis for deciding whether revenue is to be recognised over time at a point in time;
arrangements, variable pricing, rights of return and warranties); and
expands and improves disclosures about revenue.
The entity is yet to undertake a detailed assessment of the impact of AASB 15. However, based on the
entity’s preliminary assessment, the Standard is not expected to have a material impact on the
transactions and balances recognised in the financial statements when it is first adopted for the year
ending 30 June 2018.
AASB
2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions
of Interests in Joint Operations
This amendment impacts on the use of AASB 11 when acquiring an interest in a joint operation.
The effective date is for annual reporting periods beginning on or after 1 January 2016.
When these amendments are first adopted for the year ending 30 June 2017, there will be no material
impact on the transactions and balances recognised in the financial statements.
AASB 2014-4 Amendments to Australian Accounting Standards – Clarification of Acceptable Methods
of Depreciation and Amortisation
The amendments to AASB 116 prohibit the use of a revenue-based depreciation method for property,
plant and equipment. Additionally, the amendments provide guidance in the application of the diminishing
balance method for property, plant and equipment.
The effective date is for annual reporting periods beginning on or after 1 January 2016.
When these amendments are first adopted for the year ending 30 June 2017, there will be no material
impact on the transactions and balances recognised in the financial statements.
AASB 2014-9 Amendments to Australian Accounting Standards – Equity Method in Separate
Financial Statements
The amendments introduce the equity method of accounting as one of the options to account for an
entity’s investments in subsidiaries, joint ventures and associates in the entity’s separate financial
statements.
The effective date is for annual reporting periods beginning on or after 1 January 2016.
When these amendments are first adopted for the year ending 30 June 2017, there will be no material
impact on the financial statements.
AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture
The amendments address a current inconsistency between AASB 10 Consolidated Financial Statements
and AASB 128 Investments in Associates and Joint Ventures (2011). The amendments clarify that, on a
sale or contribution of assets to a joint venture or associate or on a loss of control when joint control or
37
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
significant influence is retained in a transaction involving an associate or a joint venture, any gain or loss
recognised will depend on whether the assets or subsidiary constitute a business, as defined in AASB 3
Business Combinations. Full gain or loss is recognised when the assets or subsidiary constitute a
business, whereas gain or loss attributable to other investors’ interests is recognised when the assets or
subsidiary do not constitute a business.
The effective date is for annual reporting periods beginning on or after 1 January 2016.
When these amendments are first adopted for the year ending 30 June 2017, there will be no material
impact on the financial statements.
(d) Group Accounting Policies
Interests in Joint Arrangements
Joint arrangements represent the contractual sharing of control between parties in a business venture
where unanimous decisions about relevant activities are required.
Separate joint venture entities providing joint venturers with an interest to net assets are classified as a
"joint venture" and accounted for using the equity method.
Joint venture operations represent arrangements whereby joint operators maintain direct interests in each
asset and exposure to each liability of the arrangement. The Group's interests in the assets, liabilities,
revenue and expenses of joint operations are included in the respective line items of the consolidated
financial statements.
Gains and losses resulting from sales to a joint operation are recognised to the extent of the other parties'
interests. When the Group makes purchases from a joint operation, it does not recognise its share of the
gains and losses from the joint arrangement until it resells those goods/assets to a third party.
Fair Value of Assets and Liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring
basis, depending on the requirements of the applicable Accounting Standard.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability
in an orderly (ie unforced) transaction between independent, knowledgeable and willing market
participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is
used to determine fair value. Adjustments to market values may be made having regard to the
characteristics of the specific asset or liability. The fair values of assets and liabilities that are not traded in
an active market are determined using one or more valuation techniques. These valuation techniques
maximise, to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or
liability (ie the market with the greatest volume and level of activity for the asset or liability) or, in the
absence of such a market, the most advantageous market available to the entity at the end of the
reporting period (ie the market that maximises the receipts from the sale of the asset or minimises the
payments made to transfer the liability, after taking into account transaction costs and transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant's ability
to use the asset in its highest and best use or to sell it to another market participant that would use the
asset in its highest and best use.
The fair value of liabilities and the entity's own equity instruments (excluding those related to share-based
payment arrangements) may be valued, where there is no observable market price in relation to the
transfer of such financial instruments, by reference to observable market information where such
instruments are held as assets. Where this information is not available, other valuation techniques are
adopted and, where significant, are detailed in the respective note to the financial statements.
38
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
Valuation techniques
In the absence of an active market for an identical asset or liability, the Group selects and uses one or
more valuation techniques to measure the fair value of the asset or liability, The Group selects a valuation
technique that is appropriate in the circumstances and for which sufficient data is available to measure fair
value. The availability of sufficient and relevant data primarily depends on the specific characteristics of
the asset or liability being measured. The valuation techniques selected by the Group are consistent with
one or more of the following valuation approaches:
-
-
-
Market approach: valuation techniques that use prices and other relevant information
generated by market transactions for identical or similar assets or liabilities.
Income approach: valuation
income and expenses into a single discounted present value.
techniques that convert estimated
future cash flows or
Cost approach: valuation techniques that reflect the current replacement cost of an
asset at its current service capacity.
Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use
when pricing the asset or liability, including assumptions about risks. When selecting a valuation
technique, the Group gives priority to those techniques that maximise the use of observable inputs and
minimise the use of unobservable inputs. Inputs that are developed using market data (such as publicly
available information on actual transactions) and reflect the assumptions that buyers and sellers would
generally use when pricing the asset or liability are considered observable, whereas inputs for which
market data is not available and therefore are developed using the best information available about such
assumptions are considered unobservable.
Fair value hierarchy
AASB 13 requires the disclosure of fair value information by level of the fair value hierarchy, which
categorises fair value measurements into one of three possible levels based on the lowest level that an
input that is significant to the measurement can be categorised into as follows:
Level 1
Measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities that
the entity can access at the measurement date.
Measurements based on inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly or indirectly.
Level 2
Measurements based on inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly or indirectly.
Level 3
Measurements based on unobservable inputs for the asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or
more valuation techniques. These valuation techniques maximise, to the extent possible, the use of
observable market data. If all significant inputs required to measure fair value are observable, the asset or
liability is included in Level 2. If one or more significant inputs are not based on observable market data,
the asset or liability is included in Level 3.
The Group would change the categorisation within the fair value hierarchy only in the following
circumstances:
if a market that was previously considered active (Level 1) became inactive (Level 2 or Level 3)
or vice versa; or
39
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
if significant inputs that were previously unobservable (Level 3) became observable (Level 2) or
vice versa.
When a change in the categorisation occurs, the Group recognises transfers between levels of the fair
value hierarchy (i.e. transfers into and out of each level of the fair value hierarchy) on the date the event
or change in circumstances occurred.
(e) Principles of Consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent,
Alexium International Group Limited and all of the subsidiaries. Subsidiaries are entities the parent
controls. The parent controls an entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity. A
list of the subsidiaries is provided in Note 22.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of
the Group from the date on which control is obtained by the Group. The consolidation of a subsidiary is
discontinued from the date that control ceases. Intercompany transactions, balances and unrealised gains
or losses on transactions between Group entities are fully eliminated on consolidation. Accounting policies
of subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the
accounting policies adopted by the Group.
Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non
controlling interests". The Group initially recognises non-controlling interests that are present ownership
interests in subsidiaries and are entitled to a proportionate share of the subsidiary's net assets on
liquidation at either fair value or at the non-controlling interests' proportionate share of the subsidiary's net
assets. Subsequent to initial recognition, non-controlling interests are attributed their share of profit or loss
and each component of other
comprehensive income. Non-controlling interests are shown separately within the equity section of the
statement of financial position and statement of comprehensive income.
(f) Foreign currency translation
The functional and presentation currency of Alexium International Group Limited 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
40
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
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 profit or loss.
(g) 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.
(ii) Leased assets
The Group uses finance leases for several pieces of analytical equipment used in our research and
product development. Management applies judgment in considering the substance of a lease agreement
and whether it transfers substantially all the risks and rewards incidental to ownership of the leased asset.
Key factors considered include the length of the lease term in relation to the economic life of the asset,
the present value of the minimum lease payments in relation to the asset’s fair value, and whether the
Group obtains ownership of the asset at the end of the lease term. See accounting policy (iv) for the
depreciation methods and useful lives for assets held under finance leases.
The interest element of lease payments is charged to profit or loss, as finance costs over the period of the
lease.
All other leases are treated as operating leases. Where the Group is a lessee, payments on operating
lease agreements are recognised as an expense on a straight-line basis over the lease term. Associated
costs, such as maintenance and insurance, are expensed as incurred.
(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 profit or loss as an expense as incurred.
(iv) Depreciation
Depreciation is charged to the consolidated statement of profit or loss and other 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:
3 years
Computer equipment
Machinery and equipment
3 to 15 years
Furniture, fixtures and office equipment 3 to 10 years
Leased plant and equipment
Shorter of the lease term or the useful life
The residual value, the useful life and the depreciation method applied to an asset are reassessed at least
annually.
41
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
(h) Intangible assets
(i) Acquired intangible assets
Intangible assets acquired separately are capitalised at cost. Following initial recognition, the cost model
is applied to the class of intangible assets whereby capitalized costs are amortized on a straight-line basis
over their estimated useful lives, as these assets are considered finite.
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 (i)).
Expenditure on internally generated goodwill and brands is recognised in the statement of comprehensive
income as an expense as incurred.
(ii) 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 expenditures are expensed
as incurred.
(iii) 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 profit or loss
when the asset is derecognised.
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 are tested for impairment where an indicator of impairment exists (see accounting policy
(i)). Useful lives are also examined on an annual basis and adjustments, where applicable, are made on
a prospective basis.
(i) 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
42
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
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.
(j) 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.
An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts
are written off when identified.
(k) Determination and presentation of operating segments
For management purposes, the Group is organised into one main operating segment which involves the
development and licensing of its proprietary flame retardant (FR) chemicals and reactive surface
treatment (RST) technologies, and selling its specialized chemistry to customers. All of the Group’s
activities are interrelated and discrete financial information is reported to the Chief Executive Officer
(Chief Operating Decision Maker) as a single segment. Accordingly, all significant operating decisions
are based upon analysis of the Group as one segment.
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.
(l) 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.
(m) Financial instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions of the financial instrument and are measured initially at fair value adjusted for
transaction costs, except for those carried at fair value through profit or loss which are measured initially
at fair value.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset
expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial
liability is derecognised when it is extinguished, discharged, cancelled or expired.
43
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
(n) Embedded Derivative
The Company has issued liability classified embedded derivatives in connection with its convertible debt.
An embedded derivative is a component of a hybrid instrument that also includes a non-derivative host
contract with the effect that some of the cash flows of the combined instrument vary in a way similar to a
standalone derivative.
The embedded derivative is separated from the host contract and accounted for as a derivative if the
economic characteristics and risks of the embedded derivative are not closely related to the economic
characteristics and risks of the host contract. The embedded derivative is measured at fair value with
changes in value being recorded in profit or loss.
(o) 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.
(p) 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.
(q) 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.
(r) 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 measured reliably.
Risks and rewards of ownership are considered passed to the buyer at the time of delivery of the goods to
the customer.
44
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
Rendering of services
During the reporting period the Group had instances in which it rendered research and development
services to third-parties. Revenue arising from the rendering of services is recognised when the following
criteria are met:
• The amount of revenue can be measured reliably;
• It is probable that the economic benefits will flow to the seller;
• The stage of completion at the balance sheet date can be measured reliably; and
• The costs incurred, or to be incurred, in respect of the transaction can be measured reliably.
For practical purposes, when services are performed by an indeterminate number of acts over a specified
period of time, revenue is recognised on a straight-line basis over the specified period unless there is
evidence that some other method better represents the stage of completion. When a specific act is much
more significant than any other acts, the recognition of revenue is postponed until the significant act is
executed.
Grant revenue
Government grants are recognisable in profit or loss, once there is reasonable assurance that the grant
will be received and the Group will comply with the conditions attached to the grant. Grant revenue is
recognised on a systematic basis over the periods in which the entity recognises as expenses the related
costs for which the grants are intended to compensate
Deferred income
License agreements for the right to sell the Company’s products in given markets are generally granted
by the Company for a specific time period and consideration. Consideration received for the license is
initially deferred, included in other liabilities, and recognized on a straight-line basis over the
corresponding license period.
Interest and dividends
Interest income is recorded when earned based on cash balances. Interest expenses are reported on an
accrual basis using the effective interest method. Dividends are recognised at the time the right to receive
payment is established.
(s) 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
45
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
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.
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.
(t) 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.
(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.
46
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
(ii) Long Term Employee Benefits
The Company’s liabilities for annual leave and long service leave are included in other long term
benefits as they are not expected to be settled wholly within twelve (12) months after the end of the
period in which the employees render the related service. They are measured at the present value of
the expected future payments to be made to employees. The expected future payments incorporate
anticipated future wage and salary levels, experience of employee departures and periods of service,
and are discounted at rates determined by reference to market yields at the end of the reporting
period on high quality corporate bonds (2014: government bonds) that have maturity dates that
approximate the timing of the estimated future cash outflows. Any re-measurements arising from
experience adjustments and changes in assumptions are recognised in profit or loss in the periods in
which the changes occur.
The Company presents employee benefit obligations as current liabilities in the statement of financial
position if the Company does not have an unconditional right to defer settlement for at least twelve
(12) months after the reporting period, irrespective of when the actual settlement is expected to take
place.
(iii) Short-term employee benefits
Short-term employee benefits are benefits, other than termination benefits, that are expected to be
settled wholly within twelve (12) months after the end of the period in which the employees render the
related service. Examples of such benefits include wages and salaries, non-monetary benefits and
accumulating sick leave. Short-term employee benefits are measured at the undiscounted amounts
expected to be paid when the liabilities are settled.
(iv) 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.
3. PRIOR PERIOD ADJUSTMENTS
The Company has made prior period adjustments to its financial statements for a transaction originally
recognized under the guidance for business combinations as a reverse acquisition that was recognised
when the Company obtained control of Alexium Limited and Alexium Marketing Services Limited on 26
February 2010. The Company has adjusted previously stated period balances to recognise the
transaction in accordance with AASB 2 because the Company did not include a business at that time.
In addition, the Company has made prior period adjustments to its financial statements related to certain
conversion options embedded in the convertible debt. The relevant details of the convertible debt has
been disclosed in Note 16 of the financial statements. The Company previously treated the conversion
options as an equity financial instrument. The adjustment involved recognition of the embedded options
as derivative financial liabilities.
The Company also made prior period adjustments to its financial statements related to certain additions to
the cost basis of intellectual property. These costs were originally capitalized over the useful life of the
asset and should have been expensed in the period incurred. The adjustment involved recognizing the
transactions in accordance with AASB 138.
The prior period adjustments also includes adjustments made to equity accounts and employee benefits
expense for valuation adjustments made on shares issued in lieu of salary.
47
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
The accounting impact of the prior period adjustments are outlined as follows:
Statement of Financial Position (Extract)
Intangible assets
Deferred tax liability
Convertible notes
Derivative liability
Issued capital
Accumulated losses
Reserve
Total equity / net assets
30 June 2014
Previous
Amount
$ DR / (CR)
Adjustment
$ DR / (CR)
Restated Amount
$ DR / (CR)
9,052,124
(8,690,580)
361,544
(2,580,008)
2,580,008
-
(1,566,220)
218,666
(1,347,554)
-
(417,890)
(417,890)
(24,773,640)
(31,699)
(24,805,339)
15,942,775
6,267,300
22,210,075
(523,678)
74,196
9,354,543
(6,309,797)
(449,482)
3,044,746
Statement of Profit or Loss and Other
Comprehensive Income (Extract)
Previous
Amount
$ DR / (CR)
30 June 2014
Adjustment
$ DR / (CR)
Gain (loss) from embedded derivative
-
(457,050)
Depreciation and amortisation expense
787,329
(680,058)
Restated
Amount
$ DR / (CR)
(457,050)
107,271
1,390,679
497,962
-
3,336,527
3,461,079
1,362,274
287,915
28,405
210,047
(203,685)
203,685
4,012,644
(676,117)
4,216,329
(879,802)
3,336,527
Employee benefits expense
Interest expense
Loss before income tax
Income tax benefit
Loss for the year
Total comprehensive income for the year
4,137,196
(676,117)
Statement of Cash Flows (Extract)
30 June 2014
Previous
Amount
$ DR / (CR)
Adjustment
$ DR / (CR)
Restated Amount
$ DR / (CR)
Payments to suppliers and employees
(3,205,902)
(17,944)
(3,223,846)
Investments in intangibles
(51,602)
17,944
(33,658)
The net effect on cash flows for the period was nil.
48
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
Statement of Financial Position (Extract)
Intangible assets
Deferred tax liability
Convertible notes
Derivative liability
Issued capital
Accumulated losses
Reserve
Total equity/ net assets
4. REVENUE
Sales
Other income
30 June 2013
Previous
Amount
$ DR / (CR)
Adjustment
$ DR / (CR)
Restated Amount
$ DR / (CR)
9,679,524
(9,351,785)
327,739
2,783,693
(2,783,693)
-
1,637,038
(428,713)
1,208,325
-
888,220
888,220
18,092,756
(9,986)
18,082,770
(11,930,131)
(6,943,417)
(18,873,548)
514,749
(74,196)
6,677,374
(7,027,599)
440,553
(350,225)
Consolidated Group
2015
$
59,190
326,446
385,636
2014
$
242,465
-
242,465
Interest received
29,812
19,042
Grant Revenue
During the period the Group received $319,642 (2014: Nil) in grant revenue from the South Carolina
Research Authority (SCRA). There were no other forms of government assistance from which the Group
has directly benefited.
5. ADMINISTRATIVE EXPENSES
Depreciation -
Property, plant and equipment
Leased assets
Total Depreciation
Amortisation of Intangibles
Superannuation Guarantee Contribution
paid
Employee Benefits Expense
Professional fees
49
Consolidated Group
2015
$
2014
$
102,647
22,121
124,768
9,697
9,871
66,284
3,761
70,045
37,226
11,273
2,978,954
1,612,887
896,345
258,934
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
6. AUDITORS’ REMUNERATION
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:
(a) Stantons International (Australia)
Audit and review of financial reports
(b) Grant Thornton Audit Pty Ltd
(c) Grant Thornton LLP
(d) Elliott Davis (USA)
7. 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 not booked
Tax losses not brought to account
Income tax benefit attributable to reversal
of deferred tax liability on intangible assets
(b) Deferred tax assets
Deferred tax assets at 30 June not brought
to account:
Employee benefits
Other
Income tax losses
Consolidated Group
2015
$
42,171
25,000
77,964
-
145,135
2014
$
44,191
-
19,717
63,908
2015
$
2014
$
(3,529,070)
(1,000,958)
220,884
3,308,186
293,108
707,850
-
-
2,004
418,508
7,550,899
7,971,411
5,625
-
3,206,692
3,212,317
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 it is probable 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 $17,782,641 (2014: $11,112,066) 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.
50
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
8. 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.
Weighted average number of ordinary shares used
in the calculation of basic earnings per share
Basic loss
Consolidated
Consolidated
2015
Number
2014
Number
203,599,773
177,533,628
$
$
(11,763,566)
(3,336,527)
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:
Equity securities
Options over ordinary
shares
Convertible Notes
Performance Rights
Consolidated
2015
Number of
securities
Consolidated
2014
Number of
securities
29,825,000
-
8,500,000
19,415,000
16,475,000
8,600,000
38,325,000
44,490,000
The group has incurred a loss for the year. The diluted earnings per share is therefore disclosed as the
same as the basic earnings per share.
9. TRADE AND OTHER RECEIVABLES
Current
Trade debtors
Other receivables
Consolidated Group
2015
$
2014
$
113,383
5,894
119,277
64,738
6,237
70,975
None of the trade and other receivables are past due or impaired.
51
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
10. OTHER ASSETS
Current
Prepayments
11. PROPERTY, PLANT & EQUIPMENT
Furniture and Equipment
Cost
Accumulated depreciation
Net book value
Leased assets
Cost
Accumulated depreciation
Net book value
Consolidated Group
2015
$
2014
$
170,430
103,660
Consolidated Group
2015
$
2014
$
728,879
519,198
(362,513)
(216,124)
366,366
303,074
436,046
255,591
(287,793)
(215,523)
148,253
40,068
Total property, plant and equipment
514,619
343,142
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
2015
$
2014
$
303,074
62,784
103,155
(102,647)
293,111
(6,832)
83,079
(66,284)
366,366
303,074
Furniture & equipment
Balance at the beginning of year
Foreign exchange movements
Additions at cost
Amortisation / Depreciation expense
52
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
Leased assets
Balance at the beginning of year
Foreign exchange movements
Additions at cost
Amortisation / Depreciation expense
12. INTANGIBLE ASSETS
Patents and intellectual property
Cost
Accumulated amortisation
Net carrying value
Consolidated Group
2015
$
40,068
9,324
120,982
(22,121)
148,253
2014
$
-
(1,305)
45,134
(3,761)
40,068
Consolidated Group
2015
$
2014
$
313,408
496,528
(128,561)
(134,984)
184,847
361,544
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
Impairment
Foreign exchange movements
Amortisation expense
Consolidated Group
2015
$
361,544
22,071
(225,908)
36,837
(9,697)
184,847
2014
$
327,739
33,658
-
37,413
(37,266)
361,544
Intangible assets have finite useful lives. The current amortisation charges for intangible assets are
included under depreciation and amortisation expense per the consolidated statement of profit or loss and
other 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 2(h(iii)) on
significant accounting policies, amortisation will be calculated on a straight-line basis over the average
useful life of the patents being 17 years.
53
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
Impairment
During the year ended 30 June 2015 the Company determined that certain patents needed to be
disposed of and impaired (see above) before the previously expected date. This determination was made
on the basis that the company is no longer pursuing the markets for which these patents were initially
developed due to changes in the regulatory environment.
13. TRADE AND OTHER PAYABLES
Current
Trade creditors
Other creditors
Consolidated Group
2015
$
2014
$
155,807
482,677
638,484
71,883
117,797
189,680
Trade and other payable 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.
14. OTHER LIABILITIES – DEFERRED INCOME
Consolidated Group
2015
$
2014
$
Current - deferred income
116,676
63,564
During the period ended 30 June 2014 the Company entered into licensing agreements with third-parties
to market and sell the Company’s products for a specified period of time. The license fees were received
at the beginning of the license period and amortized ratably over the life of the agreement. The deferred
income is in respect of product license fees covering future periods.
15. CONVERTIBLE NOTES
In September 2012, the Company placed a total of 11 million convertible notes with a face value of 10
cents per note to raise AUD $1.1 million (before costs) to Sophisticated and Professional Investors. In
April 2013 the Company placed a total of 11 million convertible notes with a face value of 10 cents per
note to raise AUD $1.1 million (before costs) to Sophisticated and Professional Investors. During the year
7,610,267 shares (2014: 550,000) were issued at a price of $0.08 each on conversion of 6,430,000 (2014:
550,000) A series convertible notes and 10,045,000 shares (2014: 955,000) were issued at a price of
$0.10 each on conversion of 10,045,000 (2014: 955,000) B series convertible notes.
The movement in number of convertible notes is given hereunder:
A Series Convertible Notes
B Series Convertible Notes
Balance at
beginning of the
year
6,430,000
10,045,000
Issued during the
Year
-
-
Converted to
Equity during the
Year
(6,430,000)
(10,045,000)
Balance at the
end of the year
-
-
54
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
A Series
$
30 June 2015
B Series
$
Total
$
A Series
$
30 June 2014
B Series
$
Total
$
598,828
748,727
1,347,555
44,172
(643,000)
255,773
(1,004,500)
299,945
(1,647,500)
462,672
191,156
(55,000)
745,653
1,208,325
98,573
(95,500)
289,729
(150,500)
-
-
-
598,828
748,726
1,347,554
Balance at the beginning of
the period
Unwinding of finance costs
Conversion during the year
Balance at the end of the
year
The Terms and conditions of A Series and B Series Convertible Note are as under:
Convertible Notes – A Series
A maturity date of 30 August 2014.
Coupon rate of 13% per annum with interest paid quarterly in arrears.
Convertible notes are unlisted and unsecured and are convertible to fully paid ordinary shares.
Conversion price is lesser of:
$0.10 per share
OR;
87.5% of the previous 30 day volume weighted average price for the Company’s ordinary shares
OR;
In the event of a future issue of ordinary shares during the term, the price of issue of such fully paid
ordinary shares.
The note holder may elect to convert the convertible notes at any time after 90 days from the Allotment
Date until the Maturity Date.
Convertible Notes – B Series
A maturity date of 30 March 2016.
Coupon rate of 12% per annum with interest paid quarterly in arrears.
Convertible notes are unlisted and unsecured and are convertible to fully paid ordinary shares.
Conversion price is lesser of:
$0.10 per share
OR;
87.5% of the previous 30 day volume weighted average price for the Company’s ordinary shares
OR;
In the event of a future issue of ordinary shares during the term, the price of issue of such fully paid
ordinary shares.
The note holder may elect to convert the convertible notes at any time after 90 days from the Allotment
Date until the Maturity Date.
55
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
Embedded Derivative Financial Instrument
Options embedded in Convertible Notes were as follows:
Consolidated Group
2015
AUD
2014
AUD
417,890
888,220
4,674,520
(457,050)
(5,092,410)
(13,280)
417,890
Opening balance
Movement in fair value
Options exercised in period
Closing balance
The cumulative change in the fair value of the financial liability is $4,529,420.
-
The convertibles notes issued by the Group contain an embedded option to convert the debt to ordinary
shares. The embedded options have been separated from the host contract and accounted for as a
derivative as the economic characteristics and risks of the embedded derivative are not closely
related to the economic characteristics and risks of the host contract. The embedded derivatives
are measured at fair value with changes in value being recorded in profit or loss.
Embedded options have been valued using a Black-Scholes pricing model which approximates the results
that would have been achieved by using a binomial lattice Monte Carlo simulation.
16. CONTRIBUTED EQUITY
(a) Issued Capital
Consolidated Group
2015
$
2014
$
261,350,490 (2014: 202,025,435) Ordinary shares
fully paid
41,363,396
24,805,339
Total issued capital
41,363,396
24,805,339
(b) Movements in share capital
.
Movement in ordinary share capital
Balance at beginning of year
Series A Convertible Notes
Series B Convertible Notes
Transfer of conversion note reserve to equity
Options converted to shares
Capital raising
Costs of capital raising
Capital raising costs include $809,203 paid and
$1,640,317 to recognise the value of the free
attaching options issued.
Share purchase plan
Unmarketable parcel buy back
Derivative
Shares issued in lieu of salary (note 17a)
Totals
2015
$
24,805,339
643,000
1,004,500
74,196
1,759,502
10,162,500
(2,449,600)
-
-
5,018,214
345,745
41,363,396
56
2014
$
18,092,756
55,000
95,500
126,667
5,220,000
(403,812)
1,499,975
(12,446)
3,294
128,405
24,805,339
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
Movement in the number of ordinary shares
Balance of shares at beginning of year
Series A Convertible Notes
Series B Convertible Notes
Options converted to shares
Capital raising
Share purchase plan
Unmarketable parcel buy back
Conversion of performance rights
Shares issued in lieu of salary (note 17a)
Totals
2015
202,025,435
7,610,267
10,045,000
8,390,000
24,250,000
-
-
7,700,000
1,329,788
261,350,490
2014
149,197,632
550,000
955,000
938,337
39,700,000
9,999,832
(93,576)
-
778,210
202,025,435
(c) Movements in Performance Rights
Balance of performance rights at
beginning of year
Rights forfeited during year
Rights converted to shares during
year
Rights issued, net of costs**
Balance of performance rights at
end of year
November 2014 Performance Rights
2015
Number
2015
$
2014
Number
2014
$
8,600,000
(900,000)
(7,700,000)
8,500,000
198,660
(20,790)
(177,870)
464,100
-
-
8,600,000
198,660
8,500,000
464,100
8,600,000
198,660
** The underlying value of an Alexium share trading on ASX on 10 November 2014 was $0.26, this has been used
as an underlying value of a performance right in Alexium. The 8,500,000 discounted performance rights in Alexium
issued to Directors and employees has an underlying value of $464,100 based on the closing share price on 10
November 2014 of $0.26.
As announced on the 13th November 2014, Alexium issued 8,500,000 performance rights; 5,500,000 issued to
Directors and 3,000,000 issued to employees. The performance rights were issued for nil consideration.
In order to vest, milestone 1 and any 2 of the other milestones will need to be achieved by 30June 2016
. Share Price Appreciation
The price of Shares as traded on ASX must equal or exceed $0.187, over a 5 day volume weighted average closing
price during the Period, being the price which is a 35% premium to the 60 day volume weighted average closing
price per Share, calculated as at the date being 7 days before the date of the Notice.
Revenue of not less than $5m for the Period
The Company must achieve at least $5m in revenues during the Period.
Achieving Product Sales on 3 Products
The Company must achieve either direct product sales revenues or licencing revenues on at least 3 products during
the Period.
Entering into Joint Ventures
The Company must enter into a new joint venture for the development of its products in the field of bromine
replacement in Fire Retardants, with a recognised leader in the field, the subject of the joint venture, during the
Period.
(i)
(ii)
(iii)
(iv)
(v)
Product Sales for Chem/Bio Protection
The Company must achieve either direct product sales revenues or licencing revenues from its RST applications on
Chemical and Biological Protection ensembles during the Period.
(vi)
United States Quotation
The Company’s shares, American depositary receipts or the shares of the entity resulting from a merger of the
Company and its US subsidiary being quoted on the New York Stock Exchange, the NASDAQ Securities Exchange
or any subsidiary exchanges thereof relevant to companies the size of the Company or an equivalent US Securities
Exchange for technology companies of similar standing, during the Period.
57
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
(vii)
US Department of Defense Contracts
The Company must enter into, directly or through a supplier, at least one significant contract with an arm or agency
of the US Department of Defense during the Period in relation to products utilising either the RST technology or FR
technology.
November 2013 Performance Rights
** The underlying value of an Alexium share trading on ASX on 25 November 2013 was $0.165, this has been used
as an underlying value of a performance right in Alexium. The 8,600,000 discounted performance rights in Alexium
issued to Directors and employees has an underlying value of $198,660 based on the closing share price on 25
November 2013 of $0.165.
As announced on the 25th November 2013, Alexium issued 8,600,000 performance rights; 5,500,000 issued to
Directors and 3,100,000 issued to employees. The performance rights were issued for nil consideration.
In order to vest, milestone 1 and any of the other milestones will need to be achieved by 31 December 2014.
Share Price Appreciation
The price of Shares as traded on ASX must exceed $0.186325 over a 10 day volume weighted average price during
the Period, being a 45% premium to the average closing price of Shares on ASX in the 10 trading days immediately
prior to the date of the 2013 AGM of $0.1285.
Revenue of not less than $3.0m for the Period
The Company must achieve at least $3.0m in revenues during the Period.
Achieving Product Sales on 3 Products
The Company must achieve either direct product sales revenues or licencing revenues on at least 3 products during
the Period.
Entering into an Additional Licences
The Company must enter into one or more additional licences on its FR products in addition to its current licence to
Duro LLC with large national companies for licenses geographically restricted to national or regional areas or
multinational companies for multi-jurisdictional licences during the Period.
Entering into Joint Ventures
The Company must enter into a new joint venture for the development of its products outside textile finishing, with
a recognised leader in the field, the subject of the joint venture, during the Period.
Product Sales for Chem/Bio Protection
The Company must achieve either direct product sales revenues or licencing revenues from its RST applications on
Chemical and Biological Protection ensembles during the Period.
NASDAQ Quotation
The Company’s shares, American depositary receipts or the shares of the entity resulting from a merger of the
Company and its US subsidiary being quoted on the NASDAQ Securities Exchange or equivalent US Securities
Exchange for technology companies of similar standing, during the Period.
US Department of Defense Contracts
The Company must enter into, directly or through a supplier, at least one significant contract with an arm or agency
of the US Department of Defense during the Period in relation to products utilising either the RST technology or FR
technology.
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(d) Share options issued
At the year end there were 11,730,000 free attaching options outstanding (2014: NIL) and 18,095,000
share based payment options outstanding (2014: 19,415,000). Refer to Note 17(e) for details of the share
based payment options outstanding.
58
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
(e) Movements in share options
Expiry
date
Exercise
Price
Grant
date
Balance at
beginning
of year
Number
Granted
during the
year
Number
Reinstated
during the
year
Exercised
during the
year
Number
Forfeited
during the
year
Number
Balance at end of
year
Number
2015
year
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
2014
year
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
30/07/10
$0.30
31/12/14
2,500,000
21/03/11
$0.15
31/12/15
-
21/03/11
$0.15
31/12/15
6,375,000
21/03/11
$0.20
21/03/11
$0.25
22/06/11
$0.10
31/12/15
31/12/15
21/06/16
-
1,000,000
540,000
21/09/11
$0.15
31/12/15
5,000,000
-
-
-
-
-
-
-
10/11/14
$0.198
9/11/17
1/9/14
$0.18
31/8/17
13/5/15
$0.70
31/12/17
13/5/15
$0.80
31/12/17
20/5/15
$0.13
31/8/17
-
-
-
-
-
750,000
750,000
1,000,000
1,000,000
1,500,000
30/11/12
$0.074
31/12/16
4,000,000
-
10/11/14
$0.25
9/11/16
6/5/15
$0.75
7/5/18
-
-
5,500,000
7,800,000
(2,500,000)
750,000
(750,000)
(2,020,000)
750,000
(750,000)
-
-
-
-
(300,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-)
-
-
-
-
-
-
-
-
-
-
4,355,000
-
1,000,000
540,000
5,000,000
750,000
450,000
1,000,000
1,000,000
1,500,000
(750,000)
(750,000)
2,500,000
(1,570,000)
-
-
-
3,930,000
7,800,000
19,415,000
18,300,000
1,500,000
(8,640,000)
(750,000)
29,825,000
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
30/07/10
$0.30
31/12/14
2,500,000
21/03/11
$0.15
31/12/15
750,000
21/03/11
$0.15
31/12/15
6,750,000
21/03/11
$0.20
21/03/11
$0.25
22/06/11
$0.10
31/12/15
31/12/15
21/06/16
750,000
1,000,000
540,000
21/09/11
$0.15
31/12/15
5,000,000
22/02/12
$0.125
22/08/13
5,000,000
30/11/12
$0.074
31/12/16
4,000,000
26,290,000
-
-
-
-
-
-
-
-
-
-
-
-
-
2,500,000
(750,000)
-
(375,000)
-
6,375,000
-
-
-
-
(750,000)
-
-
-
-
1,000,000
540,000
5,000,000
(563,337)
(4,436,663)
-
-
(938,337)
-
(5,936,663)
4,000,000
19,415,000
Nil options expired during the current year (2014: 4,436,663).
750,000 options were forfeited during the current year due to resignation of a staff member (2014:
1,500,000).
59
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
7,070,000 share based payment options were exercised during the current year (2014: 375,000)and
1,570,000 free attaching options were exercised (2014: NIL).
563,337 options were exercised during the current year (2013: Nil).
All options were exercised for an equivalent number of ordinary shares.
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.
(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.
17. SHARE-BASED PAYMENTS
(a) Shares
2015
Number
2015
Value per
Share
$
2015
$
Share-based payments issued during the year for
services received
Share-based payments issued during the year for
payment in lieu of salary
Total
-
-
-
1,329,788
0.26
1,329,788
345,745
345,745
2014
Number
2014
Value per
Share
$
2014
$
Share-based payments issued during the year for
services received
Share-based payments issued during the year for
payment in lieu of salary
Total
-
-
-
778,210
0.165
778,210
128,405
128,405
60
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
(b) Performance rights
2015
Number
2015
Value per
Share
$
2015
$
Share-based payments issued during the year
8,500,000
0.0546
Total
8,500,000
464,100
464,100
The Company agreed and approved at the 10 November 2014 AGM to issue a total of 8,500,000
performance rights to Directors and employees. The terms and conditions of the performance rights are
detailed in the Notice of General Meeting dated 10 November 2014. The performance rights were issued
for nil consideration.
The underlying value of an Alexium share trading on ASX on 10 November 2014 was $0.26, this has
been used as an underlying value of a performance right in Alexium. The 8,500,000 discounted
performance rights in Alexium issued to Directors and employees has an underlying value of $464,100
based on the closing share price on 10 November 2014 of $0.26 and with a probability discount of 70%
and an unlisted status discount of 30% has been applied. Only $185,640 was expensed during the year
as the vesting period ends 30 June 2016. There were 8,600,000 share based payment performance rights
issued in 2014. $70,899 was expensed for the performance rights issued 25 November 2013 as the
vesting period for these rights ended 31 December 2014.
2014
Number
2014
Value per
Share
$
2014
$
Share-based payments issued during the year
8,600,000
0.0231
Total
8,600,000
198,660
198,660
The Company agreed and approved at the 25 November 2013 AGM to issue a total of 8,600,000
performance rights to Directors and employees. The terms and conditions of the performance rights are
detailed in the Notice of General Meeting dated 25 November 2013. The performance rights were issued
for nil consideration.
The underlying value of an Alexium share trading on ASX on 25 November 2013 was $0.165, this has
been used as an underlying value of a performance right in Alexium. The 8,600,000 discounted
performance rights in Alexium issued to Directors and employees has an underlying value of $198,660
based on the closing share price on 25 November 2013 of $0.165 and with a probability discount of 80%
and an unlisted status discount of 30% has been applied. Only $106,971 was expensed during the year
as the vesting period ends 31 December 2014. There were no share based payment performance rights
issued in 2013.
(c) Options
Options for services rendered
During the reporting period, 4,250,000 (2014: Nil) options were expensed for services rendered. 750,000
(2014: 1,500,000) options were forfeited.
Share based payments for options expensed during the year totalled $1,060,962 (2014: $26,510). These
options vest immediately.
61
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
The Company also made share based payments to professional services providers. The Company could
not readily determine a fair value of the services due to the fact that the fair value of services performed
were unknown. We determined the fair value based on a Black-Scholes pricing model. The total value
assigned to equity and expensed as a result of these 1,500,000 (2014: Nil) shares was $980,994 (2014:
Nil).
(d) Shares, options and performance rights expensed during year
Share based payments in shares 16 (a)
Share based payments in performance
rights 16 (b)
Share based payments in options 16 (c)
Totals
2015
$
2014
$
345,745
128,405
256,539
1,060,962
1,663,246
106,971
26,510
261,886
Share Based Payment Options Issued
Grant
date
Exercise
Price
Expiry
date
Balance at
beginning of
year
Granted
during
the year
Re-
Instated
during
the year
Exercised
during
the year
Number
Number
Number
Other
changes
during the
year
(Forfeited)
Number
Balance
at end of
year
Vested and
exercisable
at the end of
period
Number
Number
2015
year
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
30/07/10
$0.30
31/12/14
2,500,000
21/03/11
$0.15
31/12/15
6,375,000
21/03/11
$0.20
31/12/15
-
21/03/11
$0.25
31/12/15
1,000,000
22/06/11
$0.10
21/06/16
540,000
21/09/11
$0.15
31/12/15
5,000,000
30/11/12
$0.074
31/12/16
4,000,000
-
-
-
-
-
-
-
(2,500,000)
750,000
(2,770,000)
750,000
(750,000)
-
-
-
-
-
-
-
-
-
4,355,000
4,355,000
-
-
1,000,000
1,000,000
540,000
540,000
5,000,000
5,000,000
(750,000)
(750,000)
2,500,000
2,500,000
10/11/14
$0.198
9/11/17
1/9/14
$0.18
31/8/17
13/5/15
$0.70
31/12/17
13/5/15
$0.80
31/12/17
20/5/15
$0.13
31/8/17
-
-
-
-
-
750,000
750,000
1,000,000
1,000,000
1,500,000
-
-
-
-
-
-
(300,000)
-
-
-
-
-
-
-
-
750,000
750,000
450,000
450,000
1,000,000
1,000,000
1,000,000
1,000,000
1,500,000
1,500,000
Weighted average exercise price ($)
0.16
0.40
0.18
0.20
0.074
0.36
0.36
19,415,000
5,000,000
1,500,000
(7,070,000)
(750,000)
18,095,000
18,095,000
62
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
Exercise
Price
Expiry
date
Grant
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
2014
year
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
Unlisted
options
30/07/10
$0.30
31/12/14
2,500,000
21/03/11
$0.15
31/12/15
7,500,000
21/03/11
$0.20
31/12/15
750,000
21/03/11
$0.25
31/12/15
1,000,000
22/06/11
$0.10
21/06/16
540,000
21/09/11
$0.15
31/12/15
5,000,000
30/11/12
$0.074
31/12/16
2,000,000
21,290,000
0.16
Weighted average exercise price ($)
-
-
-
-
-
-
-
-
-
-
2,500,000
2,500,000
(375,000)
(750,000)
6,375,000
6,375,000
-
-
-
-
(750,000)
-
-
-
-
-
1,000,000
1,000,000
540,000
540,000
5,000,000
5,000,000
-
(375,000)
-
(1,500,000)
4,000,000
19,415,000
2,000,000
17,415,000
0.15
0.175
0.16
0.17
The above tables are for share based payment options issued for services rendered or under ESOP.
7,070,000 share based payment options were exercised during the current year (2014: 375,000).
750,000 options were forfeited during the current year due to resignation of a staff member (2014:
1,500,000).
The weighted average remaining contractual life of share options outstanding at the end of the financial
year was 2.66 years (2014: 1.60 years), and the exercise prices range from 7.4 cents to 80 cents. (2014:
7.4 cents to 30 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. No options were issued in 2014.
Issued 2015
Expiry date
OPTION SERIES OPTION SERIES OPTION SERIES OPTION SERIES OPTION SERIES
31/8/17
31/12/17
31/12/17
31/8/17
9/11/17
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of options (years)
Underlying share price ($)
Option exercise price ($)
Value of Option ($)
-
41.4
2.09
2.28
.59
.13
.466
-
41.4
2.14
2.64
.595
.70
.134
-
41.4
2.14
2.64
.595
.80
.108
-
43.7
2.66
3.0
.155
.18
.042
-
42.5
2.57
3.0
.26
.198
.108
63
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
18. RESERVES
Option premium reserve
Performance Rights reserve
Foreign currency translation reserve
Consolidated Group
2015
$
3,304,317
363,510
749,255
2014
$
603,038
106,971
(260,527)
Balance at end of year
4,417,082
449,482
Balance at end of year
-
74,196
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 (Note 17(c))
Stock Warrant
Balance at end of year
Performance rights reserve
Balance at beginning of year
Performance rights expense
Balance at end of year
Consolidated Group
2015
$
2014
$
603,038
576,528
1,060,962
1,640,317
26,510
-
3,304,317
603,038
Consolidated Group
2015
$
106.971
256,539
363,510
2014
$
-
106,971
106,971
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 2 (d). The reserve is recognised in profit and loss when the net
investment is disposed of.
Consolidated Group
2014
$
2014
$
(260,527)
(135,975)
1,009,782
(124,552)
749,255
(260,527)
Balance at beginning of year
Foreign currency translation differences
arising during the year
Balance at end of year
64
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
19. ACCUMULATED LOSSES
Consolidated Group
2015
$
2014
$
(22,210,075)
(18,873,548)
-
-
(11,763,566)
(3,336,527)
(33,973,641)
(22,210,075)
Balance at beginning of year
Transfer from share capital to
accumulated losses
Net loss attributable for the year
Balance at end of year
20. 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
2015
$
2014
$
11,621,603
4,197,460
(b) Reconciliation of operating loss after income tax to net cash used in operating activities
Consolidated Group
2015
$
2014
$
Operating loss after income tax
(11,763,566)
(3,336,527)
Non-cash items
Depreciation and amortisation of non-current assets
Share-based payment
Unrealised foreign exchange (gains) / losses
Changes in assets and liabilities net of effect of
purchase of subsidiaries
(Increase)/Decrease in trade and other receivables
(Increase)/Decrease in other current assets
Increase / (Decrease) in payables
134,465
1,663,246
1,634
107,271
261,886
31,840
(48,302)
(66,770)
448,804
(48,409)
(7,256)
61,452
Net cash (used in) operating activities
(4,169,455)
(2,887,922)
65
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
(c) Non-cash Financing and Investing Activities
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 was received
by Alexium Inc during the year ended 30 June 2011.
This amount is being recognised as income over three years.
21. 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.
Geographic information of revenue and non-current assets excluding financial instruments are as follows:
2015
Sales Revenue
Property, Plant and
Equipment
Intangible assets
2014
Sales Revenue
Property, Plant and
Equipment
Intangible assets
Australia
-
6,704
-
-
7,722
-
US
59,190
441,887
Cyprus
-
66,028
-
184,847
242,465
272,774
-
62,646
-
361,544
Total
59,190
514,619
184,847
242,465
343,142
361,544
22. INVESTMENTS IN CONTROLLED ENTITIES
Name of Entity
Parent Entity
Country of
Incorporation
Percentage Owned
(ordinary shares)
2014
2015
%
%
Alexium International Group Limited
Australia
Subsidiaries of Alexium International Group Limited
Alexium Limited
Alexium Inc
Cyprus
United States of America
100
100
100
100
The parent entity has an interest free unsecured loan with Alexium Inc amounting to $22,235,265
(2014: $9,081,153).
The parent entity has an interest free unsecured loan with Alexium Ltd amounting to $470,874
(2014: $413,831).
66
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
23. 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
Mr Nicholas Clark
Mr Craig Metz (appointed 1 December 2014)
Brigadier General Stephen Cheney (appointed 13 April 2015)
The Company Secretary is Ms Kim Lucraft.
Other key management personnel during the financial year were:
Mr Stefan Susta – VP Sales and Marketing (resigned 31 July 2014)
Dr Bob Brookins – Vice President of Research and Development
Dr Dirk Van Hyning - President
(b) Compensation of key management personnel
Detailed remuneration disclosures are provided in the Remuneration report on pages 10 to 21.
Consolidated Group
2015
$
2014
$
969,028
904,081
2,627
-
3,527
-
491,124
217,300
1,462,779
1,124,908
Short-term benefits
Post employment benefits
Termination benefits
Share-based payments
(c) Other transactions with key management personnel
(a) Viaticus Capital Pty Ltd.
During the period the following was paid or payable to Viaticus Capital Pty Ltd, a related party of Gavin
Rezos, the Company’s Executive Chairman:
(i)
Nil (2014:$11,153) for reimbursement of salary and wages in relation to administration and
bookkeeping personnel provided by Viaticus Capital of which G Rezos is a director.
$226,831 (2014: $133,401) to reimburse sums paid by Viaticus on behalf of Alexium for travel
and relocation expenses, administration services and equipment purchase.
Nil (2014: $36,384) for office rent.
(ii)
(iii)
(b) Nelson Mullins Riley & Scarborough, LLP
During the period the following was paid or payable to Nelson Mullins Riley & Scarborough, LLP, a related
party of Craig Metz, a Non-Executive Director of the Company:
(i)
(ii)
$97,531 US (2014:$28,815 US) for professional services fees related to providing legal
representation and consulting services.
$114,000 US (2014:$36,000 US) for services fees related to lobbying and government
relations.
67
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
(c) Alexium Government Solutions LLC (“AGS”)
During the period the Company had transactions with AGS in which Alexium holds an ownership interest.
As its impact on the consolidated financial statements is nominal, and the AGS financial activity in total is
immaterial, this company is not consolidated for financial reporting purposes. Transactions consisted of
operating expenses for tax preparation and quarterly payroll tax report (nil payroll) preparation.
24. 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:
2015
Variable
Interest
Rate
Weighted
Average
Effective
Interest
Rate
%
$
Fixed
Maturity
Dates
Less
than 1
Year
$
Fixed
Maturity
Dates 1-
5 Years
Fixed
Maturity
Dates
5+
years
Total
Non
Interest
Bearing
$
$
$
$
Financial
Assets
Cash and cash
equivalents
Trade and other
receivables/other
financial assets
Financial
Liabilities
Trade and other
payables
Convertible
Notes
.42
10,050,660
-
-
10,050,660
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,570,943
11,621,603
119,277
-
119,277
- 1,690,220 11,740,880
-
-
-
638,484
638,484
-
638,484
-
638,484
68
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
2014
Variable
Interest
Rate
Weighted
Average
Effective
Interest
Rate
%
$
Fixed
Maturity
Dates
Less
than 1
Year
$
Fixed
Maturity
Dates 1-5
Years
Fixed
Maturity
Dates
5+
years
Total
Non
Interest
Bearing
$
$
$
$
Financial
Assets
Cash and cash
equivalents
Trade and other
receivables/other
financial assets
Financial
Libilities
Trade and other
payables
Convertible
Notes
Derivative
financial
instruments
(b)
Interest rate risk
.71
1,191,910
-
-
1,191,910
-
-
12.4
-
-
-
-
-
-
-
-
-
3,005,550
4,197,460
70,975
-
70,975
- 3,076,525 4,268,435
-
189,680
189,680
598,828
748,726
1,347,554
96,450
321,440
695,278 1,070,166
-
417,890
189,680 1,955,124
-
At 30 June 2015, 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 $116,216 higher (2014:
changes of 1% $11,919 higher/$11,919 lower) based on cash and cash equivalent held at variable rates.
The 1% (2014: 1%) sensitivity is based on reasonably possible changes, over a financial year, using an
observed range of historical RBA movements over the last year.
(c)
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.
With instruments being held by overseas operations, fluctuations in the US dollar and UK pound sterling
may impact on the Group’s financial results.
69
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
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.
2015
Consolidated Group
Functional currency of
entity:
Australian dollar
US dollar
UK pound sterling
Statement of financial
position exposure
Net Financial Assets/(Liabilities) in AUD
USD
AUD
GBP
Other
Total AUD
22,235,265
-
22,235,265
-
-
-
-
470,874
(1,113,204)
-
(642,330)
-
-
-
-
22,706,139
(1,113,204)
21,592,935
The above balances relate to intercompany loans between member companies of the group.
2014
Consolidated Group
Functional currency of entity:
Australian dollar
US dollar
UK pound sterling
Statement of financial
position exposure
Net Financial Assets/(Liabilities) in AUD
USD
AUD
GBP
Other
Total AUD
9,081,153
-
9,081,153
-
-
-
-
413,831
(944,223)
-
(530,392)
-
-
-
-
9,494,984
(944,223)
8,550,761
The above balances relate to intercompany loans between member companies of the group.
(d) 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.
(e)
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. As at 30 June 2015, all financial assets and financial liabilities
have a maturity date of less than one year. As at 30 June 2014, Series B of the Convertible Note in the
amount of $1,004,500 and a maturity date of 30 March 2016 with an contractual obligation to pay interest
at 12% per annum. The full amount owing on finance leases as at 30 June 2015 is $57,691 which
includes interest.
70
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
(f)
Fair values of financial assets and liabilities
Cash and cash equivalents
The carrying amount approximates fair value because of their short-term to maturity.
Trade receivables and trade creditors
The carrying amount approximates fair value
Financial assets and financial liabilities measured at fair value in the statement of financial position are
grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability
of significant inputs to the measurement, as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly
• Level 3: unobservable inputs for the asset or liability.
The following table shows the Levels within the hierarchy of financial assets and liabilities measured at
fair value on a recurring basis at June 30, 2015 and June 30, 2014.
Financial liabilities
2014
Level 1
Level 2
Level 3
Total
Embedded derivatives
AUD
-
AUD
AUD
417,890
AUD
417,890
There were no transfers between Level 1, Level 2 and Level 3 in 2015 or 2014.
Measurement of fair value of financial instruments
The Group’s finance team performs valuations of financial items for financial reporting purposes, including
Level 3 fair values, in consultation with third party valuation specialists for complex valuations. Valuation
techniques are selected based on the characteristics of each instrument, with the overall objective of
maximising the use of market-based information. Valuation processes and fair value changes are
discussed among the audit committee and the valuation team at least every year, in line with the Group’s
reporting dates.
Embedded derivatives (Level 3)
The assessed fair values of the derivatives were determined using a Black-Scholes option pricing model
which approximates the results that would have been achieved by using a binomial lattice. The model
takes into account the expected price volatility of the underlying instrument, expected dividend yield and
the risk-free interest rate. A collection of comparable companies has been used as a proxy for the
volatility determined.
71
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
25. PARENT ENTITY INFORMATION
The following details information related to the parent Entity, Alexium International Group Limited, at 30 June
2015. 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
Performance rights reserves
Options 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
2015
$
2014
Restated
$
914,088
1,200,242
10,981,720
3,657,673
11,895,808
4,857,915
88,971
743,002
-
1,070,167
88,971
1,813,169
41,363,396
24,805,339
(33,224,386)
(22,470,602)
363,510
3,304,317
106,971
603,038
11,806,837
3,044,746
(10,753,784)
(10,316,638)
-
-
(10,753,784)
(10,316,638)
The Company’s commitments and contingencies are detailed in Note 26.
26. COMMITMENTS AND CONTINGENCIES
The Group has the following contingent liabilities and commitments.
1) Alexium has entered into an agreement with the United States Department of Defence whereby
Alexium owns exclusive rights for the RST Technology under patent application 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, for the same
patent application excluding the United States, in exchange for a 5% gross sales royalty to be paid to
Dr Owens. These royalties only apply where the RST technology is used in the product production
process, which does not include all fire retardant products.
2) On February 9 2012 the Group entered into an agreement with Baker Young Stockbrokers Limited to
provide corporate advisory services for $5,000 per month for a period of 12 months. This agreement
continues on a month to month basis. This agreement was renewed in July 2015 for a further 12
months.
72
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
4) On November 10 2014 the Group entered into an agreement with EAS Advisors LLC to provide
corporate advisory services for US$12,000 per month for a period of 6 months and $14,000 per
month for the following 6 months.
5) On February 5 2015 the Group entered into an agreement with Foster Stockbroking to provide
corporate advisory services for $5,000 per month for a period of 6 months and $10,000 per month for
the following 6 months.
6) On April 1 2015 the Group entered into an agreement with NWR Communications Pty Ltd to provide
investor relations services for $5,000 per month for a period of 6 months.
(a) Commitments
Lease commitments
(i)
Operating leases
The Company leases certain premises under operating lease agreements. These premises are used for
administration and operational activities with lease terms approximating 3 years. There are no contingent
rent payments, and one lease contains a renewal option for one additional year.
Minimum future rental payments under non-cancellable leases having remaining terms in excess of one
year are as follows as of June 30:
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
Consolidated Group
2015
$
2014
$
80,041
10,913
90,954
69,483
71,992
141,475
Finance leases
(ii)
The Company leases certain equipment under financing leases expiring in various years through 2018,
with terms ranging from 3 to 4 years. The assets and liabilities under financing leases are initially
recorded at the lower of the present value of the minimum lease payments or the fair value of the asset.
The assets are depreciated over the shorter of their related lease terms or their estimated productive
lives.
Depreciation of assets under financing leases is included in depreciation expense and totalled $22,121
and $3,761 for the years ended June 30, 2015 and 2014, respectively.
During the year ended 30 June 2014 the Group engaged in one finance lease that offered a bargain
purchase option at the end of the 48 month term. Since the Group will obtain ownership of the equipment
at the end of the lease, depreciation is taken over the asset's useful life of 48 months.
There are no contingent rentals or subleases.
73
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
Present value of future minimum rental payments under financing leases having remaining terms in
excess of one year are as follows as of June 30:
Not later than one year
Later than one year and not later than
five years
Total
Future finance charges on finance leases
Present value of finance lease liability
2015
AUD
64,874
60,901
125,775
15,472
110,303
Present value of finance lease liabilities totals the following as of June 30:
Not later than one year
Later than one year and not later than
five years
2015
AUD
54,319
55,984
110,303
2014
AUD
13,060
33,740
46,800
7,086
39,714
2014
AUD
9,799
29,915
39,714
Lease liabilities are secured over property, plant, and equipment. These assets will revert back to the
lessor in the event of a default, as described in the agreements.
(iii)
Capital equipment lease
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 during the year ended 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. This agreement has
been extended for 24 months to June 1 2015. Alexium Inc are currently reviewing the buyout option.
The Group had no other commitments as at 30 June 2015.
(b) Contingencies
The Group has no other contingent liabilities as at 30 June 2015.
27. 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.
28. SUBSEQUENT EVENTS
Except for events disclosed elsewhere in this report no other significant event has occurred since the end of the
the Group
financial year
that may have a significant
financial position of
impact on
the
74
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DIRECTORS DECLARATION
The Directors of the Company declare that:
1.
the financial statements, comprising the consolidated statement of profit or loss and other comprehensive
income, the consolidated statement of financial position, the consolidated statement of cash flows, the
consolidated statement of changes in equity and accompanying notes, as set out on pages 31 to 74 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 2015 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.
the remuneration disclosure set out on pages 11 to 23 of the Directors’ report (as part of the audited
Remuneration Report) for the year ended 30 June 2015 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.
4.
5.
This declaration is made in accordance with a resolution of the Board of Directors.
Gavin Rezos
Executive Chairman
Perth, 30th September 2015
75
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Level 1
10 Kings Park Road
West Perth WA 6005
Correspondence to:
PO Box 570
West Perth WA 6872
T +61 8 9480 2000
F +61 8 9322 7787
E info.wa@au.gt.com
W www.grantthornton.com.au
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 (the “Company”), which comprises the consolidated statement of financial position
as at 30 June 2015, the consolidated statement of profit or loss and other comprehensive
income, consolidated statement of changes in equity and consolidated statement of cash
flows for the year then ended, notes comprising a summary of significant accounting
policies and other explanatory information and the directors’ declaration of 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.
Directors’ responsibility for the financial report
The Directors of the Company are responsible for the preparation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001. The Directors’ responsibility also includes such internal control as
the Directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or
error. The Directors also state, in the notes to the financial report, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, the financial
statements comply 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. Those standards
require us to 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
Company’s preparation of the financial report that gives a true and fair view in order to
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current
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design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the Directors, as well as evaluating the
overall presentation of the financial report.
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 2015 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations
Regulations 2001; and
b
the financial report also complies with International Financial Reporting Standards as
disclosed in the note 2 (a) to the financial statements.
Report on the remuneration report
We have audited the remuneration report included in pages 11 to 23 of the directors’ report
for the year ended 30 June 2015. 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 on the remuneration report
In our opinion, the remuneration report of Alexium International Group Limited for the
year ended 30 June 2015, complies with section 300A of the Corporations Act 2001.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
M J Hillgrove
Partner - Audit & Assurance
Perth, 30 September 2015
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ADDITIONAL INFORMATION
ALEXIUM INTERNATIONAL GROUP LIMITED
The distribution of members and their holdings at 21 September 2015 was as follows:-
NAME OF 20 LARGEST ORDINARY SHAREHOLDERS
Ms Joanne Ellen Rezos
Piper Buchanan Limited
JP Morgan Nominees Australia Ltd
Geonicclark Pty Ltd
Mr Peter John Bartter
Himstedt Superannuation Pty Ltd
Korcula (BVI) S A
Dr Stuart Phillips and Mrs Fiona Phillips
ABN AMRO Clearing Sydney Nominees Pty Ltd
Floreant Ambo Pty Ltd
Mr Egan Harvey Johnson
National Nominees Limited
Buttonwood Nominees Pty Ltd
Mr Anil Utturkar & Mrs Rekha Utturkar
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Ltd
Dr Stuart Phillips and Mrs Fiona Phillips
Catl Pty Ltd
HSBC Custody Nominees (Australia) Limited – GSCO ECA
P & D Williamson Super Pty Ltd
*
NUMBER OF
ORDINARY
FULLY PAID
SHARES HELD
20,000,000
11,363,000
9,893,284
8,820,000
7,000,000
4,928,319
4,812,000
4,600,000
% HELD OF
ISSUED
ORDINARY
CAPITAL
7.34
4.17
3.63
3.24
2.57
1.81
1.77
1.69
4,424,595
4,375,000
4,119,586
4,072,477
3,371,000
3,200,000
3,023,006
2,821,541
2,200,000
2,000,000
1,943,590
1,825,000
108,792,398
1.62
1.61
1.51
1.50
1.24
1.17
1.11
1.04
.81
.73
.71
.67
39.94
MARKETABLE PARCEL
At 21 September 2015, 185 shareholders held less
than a marketable parcel.
VOTING RIGHTS – ORDINARY SHARES
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.
SUBSTANTIAL SHAREHOLDERS
Shares held by substantial shareholders listed in
the company's register at 22 September 2014 are
indicated by * above.
STOCK EXCHANGE LISTING
Quotation has been granted for all the ordinary
shares of the company on all Member Exchanges
of the Australian Stock Exchange Ltd.
Quotation has been granted on the Frankfurt
Exchange
Alexium is fully quoted on the OTCQX
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
378
953
625
1,483
360
3,799
78
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