AnnuAl RepoRt 2013
Contents
THE GLOBAL NEED
Air purificATiON DivisiON
WATEr purificATiON DivisiON
rEsOurcE rEcOvEry
2013 yEAr iN rEviEW
cHAirMAN’s rEpOrT
cEO’s rEpOrT
Our pEOpLE
fiNANciAL rEpOrT
sHArEHOLDEr iNfOrMATiON
cOrpOrATE DirEcTOry
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102
Ibc
The global need
Globalisation
Urbanisation
Emerging Economies
are all putting pressure
on the world’s air, water
and natural resources.
Clean TeQ is striving
for excellence in
the development of
sustainable solutions.
Annual Report 2013 CleanTeQ | 1
Air Purification Division
Currently tuning the business
model to increase returns
Ready to expand into the high
growth markets of Asia and
the Middle East
20 year history in successfully
treating air pollution in
Australia
Solutions for treating odour,
volatile organic compounds,
toxics and dust and particulates
Over 100 reference sites in
Australia and Asia
World class intellectual
property portfolio in biological,
thermal and physical treatment
processes
2 | CleanTeQ Annual Report 2013
Air Purification Technologies
Odour
Biological
Systems
Regenerative
Thermal
Oxidisers
Four technologies that treat:
odour
particles
toxics, and
volatile organics
Volatile
Organics
Clean TeQ
Air Purification
Particles
Activated
Carbon &
Scrubbers
Advanced
Cyclone
Systems
Toxics
Annual Report 2013 CleanTeQ | 3
Water Purification Division
Targeting filtration, separation
and purification of industrial
waters and wastewaters
Salty water from coal seam gas
production successfully treated
to irrigation quality
Suite of products developed
around Continuous Ion
Exchange for water and
wastewater recycling
Now engaged on securing large
opportunities to treat process
waters from the gas and mining
sectors
Desalination plant designed
and constructed by Associated
Water Pty Ltd
Future development focussed
on delivering potential value in
by-products - salts and metals
Salt
Reduction
Continuous
Ionic
Filtration
(CIF™)
DeSALx™
Metals
Removal &
Recovery
Clean TeQ
Water Purification
Solids
Removal
Evaporation
HIROx™
Brine
Reduction
& Salt
Recovery
4 | CleanTeQ Annual Report 2013
Water Purification Technologies
1. water
contaminated
2. filtration
Continuous Ionic Filtration
5. water
irrigation
4. purification
3. separation
6. by-products
soil conditioner
1. Contaminated water from coal seam gas
production is fed to the Continuous Ionic
Filtration Process
2. Particles are filtered from the water
3. Salts are separated from the water
4. Purified water is produced
5. Water is suitable for irrigation or other
beneficial reuse
6. By-product salts such as gypsum, sodium
sulphate and calcium chloride are produced for
use as soil conditioners and industrial use
Annual Report 2013 CleanTeQ | 5
Resource Recovery
Continuous Ion Exchange suite
of technologies developed for
metal extraction from pulps and
solutions
Successfully demonstrated for
the extraction and purification
of scandium from refinery waste
streams
Focused on markets where
extraction and purification
technology provides a
competitive advantage
Strong intellectual property
portfolio
Opportunities for economic
processing of low grade, base
metal ores
Business strategy aimed at
owning part of the values
created by the technology
Base
Metals
Continuous
Ion Exchange
(Clean-iX®)
Continuous
Ion Exchange
in Packed
Columns
(Clean-iX®)
Light
Metals
Clean TeQ
Resource
Recovery
Precious
Metals
Continuous
Resin-in-
Pulp (cRIP)
Continuous
Ion Exchange
in Fluidised
Columns
(Clean-iX®)
Uranium
6 | CleanTeQ Annual Report 2013
Resource Recovery Technologies
extraction
Continuous Ion Exchange
purification
separation
Annual Report 2013 CleanTeQ | 7
2013 year in review
Lower revenue and profit from
Mr Robert Friedland invests
prior year
Results for the year: Revenue
$10.424m
Net profit/(loss) after tax
($4.631m)
Cash at 30 June 2013 $1.081m
Successful results of coal seam
gas water treatment
Progress on the extraction and
purification of scandium from
sludges
Continuing R&D activity in
relation to water treatment
and recovery and light metal
recovery from wastes
Conservative approach to R&D
holdings on the Balance Sheet
to reflect commercialisation in
a slowing economy
into Clean TeQ with a potential
19.9% stake
REVENUE per annum
$18m
$16m
$14m
$12m
$10m
$8m
$6m
$4m
$2m
$3m
$2m
$1m
$0m
-$1m
-$2m
-$3m
-$4m
-$5m
-$6m
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Financial year ended 30 June
NET PROFIT after tax
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Financial year ended 30 June
8 | CleanTeQ Annual Report 2013
Chairman’s Report
Let me begin by saying how pleased I am to have
joined the Clean TeQ Board. This is a highly innovative
Australian company with an exciting and unique
technology platform that has global application across
many industries and sectors. If managed well, its future
is very bright.
However, I am also conscious that the company’s
financial and operating performance over the last
twelve months has been unacceptable for our
shareholders. As Peter has indicated in his CEO’s
Report, the issues that have impacted our performance
have been identified and are being addressed by our
management team. The Board’s first priority is to
ensure we do not see a repeat of the last twelve months
and that we start to generate satisfactory returns on the
capital we are deploying.
Having recently taken up the position of Chairman of
Clean TeQ Holdings Ltd and seen its technology applied
across a number of diverse uses, let me share with you
some initial observations that I believe are relevant to
your decision, as shareholders, to invest in a company
like Clean TeQ.
Firstly, this is a company with a quite extraordinary
track record of technology development and
deployment. It is today the market leader in Australia
for biological filtration units in the air treatment
industry, a market that is growing rapidly throughout
Asia and the Middle East. Over the past decade it has
invested heavily to develop an innovative and ground-
breaking water treatment and metal recovery process,
utilizing continuous ionic-filtration (CIF™). Pilot
testing of Clean TeQ’s CIF™ plant in Queensland’s coal
seam gas fields was extremely encouraging, offering
the potential for lower capital and operating costs
while giving farmers the ability to maintain physical
possession of on-site water. Australia’s east coast
coal seam gas fields remain a prime market for this
technology. In addition, results from piloting rare metal
recoveries in Japan have also been very encouraging
and, we believe, can be extended to other mining-
industry applications. This culture of innovation and
technology deployment has been a hallmark of Clean
TeQ’s operating philosophy for many years and it is a
strength that must be preserved and encouraged.
My second observation is that Clean TeQ is a company at
an inflection point in its development, which the Board
recognizes as a period of uncertainty and volatility for
investors. The company’s CIF™ technology is highly
innovative but not well-known or utilized outside the
former Soviet Union or in certain mining industry
applications. Like any small company marketing a new
product to solve old problems, there will be difficulty
convincing end-users to look differently at solutions to
their problems. However, your Board is convinced that
Clean TeQ does have a significant value proposition
to offer customers and that its technology platform is
robust and capable of being deployed globally. I will be
working with the Board over coming months to ensure
our strategy and management team is aligned to make
the transition from aspiring technology developer to
product and service vendor as quickly as possible.
Finally, to make the transition referred to above, Clean
TeQ must be global in its outlook, focused on growth
and able to attract capital to implement its strategy.
Again, this is an area where the Board must focus
considerable energy over the next twelve months
to ensure the management team has the tools and
resources necessary to deliver on our strategy.
I look forward to working with the Board and
management team to ensure that we protect and grow
the investment made in Clean TeQ by its shareholders
and that this innovative Australian company is a success
for all its stakeholders.
Yours faithfully
Sam Riggall
Chairman
Annual Report 2013 CleanTeQ | 9
CEO’s Report as at 30 June 2013
The 2013 financial year for Clean TeQ Holdings
Limited (ASX: CLQ) has been challenging in terms of
delivering revenue and profit whilst at the same time
continuing our investment in new technologies that
hold significant potential in the water and resource
markets. However, the central tenet of the Clean TeQ
proposition of added value through technical innovation
still holds true, and in fact has been reinforced, with
the successful results of demonstration test work
during the year as well as the outcome of tenders
in the marketplace. Clean TeQ is at the forefront of
developing disruptive technologies for water and
mining industries, but as with any new technology it
relies on the gradual displacement of conventional
technologies and processes. We believe that as Clean
TeQ’s technology offering is progressively proven in
commercial applications, the roll-out will accelerate.
Clean TeQ is working with potential customers to apply
its innovative continuous ion exchange technology to
environmental challenges which currently are difficult
or uneconomic to solve using conventional solutions
and to successfully unlock potential economic value
from these challenges. Clean TeQ innovations are
underpinned by an extensive intellectual property
(IP) portfolio. IP is now considered one of the keys to
success in an increasingly competitive global economy
and our IP portfolio is capable of delivering the
underlying framework for many of the environmental
challenges which as they are commercialised will
significantly enhance the valuation of the Company.
Clean TeQ develops and provides solutions to reuse
and restore our resources through this portfolio of
innovative and economically sound environmental
technologies.
The key to the success of the Company lies in the
acceptance and growing use of these technologies
in the marketplace. While we lay claim to being the
best odour control provider in our region, we also aim
to be the leading provider of solutions based around
continuous ion exchange technology for the water
and resource markets and are seeking alliances with
synergistic businesses around the world.
This report, for the year ended 30 June 2013, shows
that the company failed to meet several milestones that
we set out to accomplish in this year. Despite this, our
aim continues to be to transform our Company from
principally an engineering and project delivery business,
to a Company that derives its income from a number of
sources including projects, service provision and IP fees
and ultimately delivering annuity income streams. This
means that we will continue to invest into R&D and to
build our IP portfolio.
It is particularly significant this year that a global
investor of the calibre of Mr Robert Friedland has
chosen to invest into Clean TeQ. Mr Friedland, who is a
renowned global mining and technology entrepreneur,
adds credence to the Clean TeQ proposition of being
able to add value in the resources sector. We will
continue to pursue the application of the technology
to resource recovery as that sector offers huge upside
potential. We welcome Mr Friedland’s association with
the Company and the potential opportunities that may
eventuate from the relationship.
10 | CleanTeQ Annual Report 2013
Performance
air Division
30 June
2013
$’000
30 June
2012
$’000
30 June
2011
$’000
10,424
12,035
3,998
(4,348)
1,345
(3,514)
(4,631)
1,248
(5,274)
Revenue*
EBITDA*+
Net Profit/(Loss)
After Tax
* From continuing operations
+ Earnings before Interest, Tax, Depreciation, Amortisation
and Impairment expense
The financial performance for the year was
unsatisfactory and was impacted by poor performance
in the Air Division for a small number of projects, and
by the delay in receiving a licence fee in the resource
recovery area. Whilst the overall results for the year
are unacceptable, the second half performance was
demonstrably improved on the first half with almost two
times the revenue and reduced operational loss in the
second half compared to the first. This followed internal
management and operational changes to ensure the
delivery of projects was improved in line with the prior
year’s performance. These changes will continue to be
beneficial in the 2014 financial year.
As part of the audit process the Board has reviewed
the carrying value of its intangibles and deferred tax
assets. In light of the current economic conditions
combined with lower commodity prices, the uptake of
new technologies may be slowed to some extent. In
this light the Board has decided to take a conservative
financial approach and make a provision against the
carrying value of our intellectual property and also to
not bring to account deferred tax assets. These non-
cash adjustments amount to approximately $2 million
on a net loss after tax basis.
The Air Division provides engineered solutions for
air purification issues including odour nuisance,
greenhouse gas and toxic emissions abatement.
The revenue for the Air Division in 2013 was $8.9m,
an increase over the previous year of near 50% with
projects delivered across most States of Australia.
This rapid sales growth required the Company to
quickly recruit additional staff and, in a tight labour
market for experienced engineers, we were unable to
oversee and manage the larger number of projects
effectively which resulted in poor cost control and an
overall unacceptable return. Operational and personnel
changes have been instituted to safeguard the future
performance on timing and profit objectives for delivery
of projects.
The size of the Air market in Australia in which Clean
TeQ operates is limited, so to grow the revenue for this
business will require extending our reach into other
parts of the world, notably Asia and the Middle East.
The effects of air pollution are being felt on a daily
basis in China where The Ministry of Environmental
Protection Air Quality in China reported that in 74
major cities the air quality was deemed unsafe for
nearly half of the days in the first six months of this year.
In the Middle East, rapid infrastructure development in
wastewater services opens up a growing odour control
market for our products.
To this end, we are in discussions with parties on the
potential opportunities available to enter these markets.
An outcome of these discussions is expected in 2014.
Annual Report 2013 CleanTeQ | 11
CEO’s Report CONTINUED
Water Division
Whilst the revenue for this Division in 2013 was small,
at $0.7m without UV Guard which was divested at the
beginning of the year, we continue to be certain that
the potential opportunities for our newly developed
water technologies are large and growing as we move
into demonstration of the technology in selected water
markets. The primary goal we have is to identify those
markets with the burning need for a water treatment
solution and gain traction in those selected markets.
We have identified key market opportunities in the
desalination of produced water (Associated Water joint
venture) in oil and gas operations and in the treatment
of contaminated waters in mining applications.
In Australia, in response to the Asian energy demand,
some $180 billion worth of liquefied natural gas
(LNG) projects are being developed. Alongside this
development is the need to treat water that is co-
extracted. The treatment of produced water and the
protection of the aquifers are a high priority for the coal
seam gas companies.
While coal seam gas companies have been using
conventional technology at large scale, recent
legislation has changed the priorities to emphasise
the beneficial reuse aspects for water and salts within
the local community. Our technology and business
approach emphasises a decentralised approach, local
treatment and beneficial reuse of water and salts in the
community from where the underground water is taken.
During 2013, Associated Water (a Joint Venture with
Nippon Gas Co, Ltd.) conducted extensive trials of our
new Continuous Ionic Filtration (CIF™) process treating
produced water in Queensland. Representatives of the
gas companies, government officials and engineering
companies visited the site and were introduced to
the benefits of the technology. A globally recognised
water consultancy has produced an internal report for
Associated Water detailing the ability of the process
12 | CleanTeQ Annual Report 2013
to achieve above standard results for water recovery,
energy use and brine reuse. The CIF™ process
successfully removed salt from the produced water
to allow the treated water to be used for general
agricultural purposes including livestock and irrigation
for fodder crops. When combined with a water recovery
of 90% this result represents an exceptional outcome.
The Continuous Ionic Filtration process has all the
attributes that warrants its use for produced water
treatment; including high water conversion, low brine
production, low energy and simple operation, combined
with lower capital costs and lower operational costs
compared to alternative processes. Plants can be
constructed as centralised water treatment facilities,
or as mobile units servicing disparate areas and
allowing treatment at source. It can also be configured
to remove species such as toxic fluoride from produced
water and allow direct agricultural use and as a pre-
treatment for the conventional membrane processes.
We expect that 2014 will see the first CIF™ plants
processing produced water with a tolling business
model being our preferred method.
In addition to the use of our technology for oil and
gas applications, other opportunities exist for this
technology in the mining sphere. An example of this was
presented during the year for the removal of sulphates
from mining waters where our technology was tendered
and selected as the best and most cost effective. This
marketplace for sulphate and other contaminant
removal, such as selenium, arsenic, nitrate and
mercury, is large in the treatment of mine, coal and flue
gas desulphurisation waters, with significant application
to markets in the Americas. Whilst the current mine
water project is delayed whilst a study is conducted to
look at the mine water balance, other projects are now
being identified where Continuous Ionic Filtration offers
the best outcome for our client.
resource recovery Division
The Resource Recovery Division has been operating
with reduced resource during this year. Work has
concentrated on the application of the platform Clean-
iX® technology for the recovery of scandium from
by-product streams such as refinery sludge and mining
tailings. A patent has been applied for this application
which adds to the overall IP base of the Company.
Following the signing of a letter of intent (LOI) in
November 2012 with Ishihara Sangyo Kaisha, Ltd.,
Japan, we have focussed on the separation and
purification of scandium from titanium dioxide process
streams. Pursuant to this LOI, Clean TeQ agreed to
undertake work in partnership with ISK to demonstrate
the effectiveness of the Clean-iX® technology as
a primary step in the production of a high purity
scandium. The final purification steps were undertaken
by an external research organisation to produce refined
scandium to 99.9% purity.
Upon a decision to proceed to a commercial scale plant,
a $3.5m licence fee to Clean TeQ becomes payable.
Work is continuing on this project with ISK in Japan,
with Clean TeQ anticipating an investment decision in
the 2014 financial year.
This project with ISK has indicated the potential for
the application of Clean-iX® extraction and separation
technologies to the recovery of valuable metals
from wastes with the technology having worldwide
applications.
funDing
With the delay in licence fees and the lowered
performance of the normally profitable Air Division
Clean TeQ needed to raise funds for the working capital
needs of the business. Short term loans were sourced
from related parties on an arm’s length basis, and late
in the year Mr Robert Friedland agreed to invest over
$3.5m into the business. The first tranche occurred in
the 2013 financial year.
Mr Friedland has extensive global interests in the
mining sector which will strategically assist Clean TeQ
in this area.
At 30 June 2013 the Company had $1.081 million cash
and cash equivalents, along with $0.290 million in term
deposits to cover project guarantees.
finally
With the investment from Mr Friedland, we welcome a
new Chairman to the Board, Mr Sam Riggall. Mr Greg
Toll has moved to an Executive Director role and Mr Bob
Cleary has now retired from the Board. In July 2013,
Mr Ian Knight has been appointed as an Independent
Non-Executive Director and Chairman of the Audit
Committee.
Bob Cleary has been a long term Director of the
Company and has contributed extensively to the
business strategy and direction over this period.
We wholeheartedly thank him for these contributions,
and welcome the new Directors to the Board. It is also
important to recognise the efforts of our employees
over this difficult year with expectations of significant
successes in the coming year.
Yours faithfully
Peter Voigt
Chief Executive Officer
Annual Report 2013 CleanTeQ | 13
Following investment from
Robert Friedland, a new
non-executive Chairman
(Sam Riggall) was appointed
with extensive resources
and international business
experience.
An additional non-executive
Director (Ian Knight) was
appointed with substantial
experience in business
consulting and consolidation,
to further strengthen the Board.
Our People
Clean TeQ consists of a group
of professionals, especially
engineers and chemists
who are specialised in the
technologies that are owned by
the Company, many of whom
have been with the business for
an extended period.
The skill base continues to
increase as the development
of the core technologies
progresses.
Global opportunities will
become apparent as other
geographies are developed
for the technologies.
A full-time CFO (Tony
Panther) and full-time
COO (Cory Williams) were
appointed during the year to
increase the management
depth, especially for growth
with commercialisation of
technologies.
14 | CleanTeQ Annual Report 2013
Mr Sam Riggall
Non-executive Chairman
Mr Peter Voigt
Chief Executive Officer
Mr Greg Toll
Executive Director
Mr Roger Harley
Non-executive Director
Mr Ian Knight
Non-executive Director
Mr Cory Williams
Chief Operating Officer
Mr Tony Panther
Chief Financial Officer
Ms Melanie Leydin
Company Secretary
Mr Matthew Lakey
General Manager
– Air Division
Mr John Carr
General Manager
– Water Division
Annual Report 2013 CleanTeQ | 15
Financial Report
FOR THE YEAR ENDED 30 JUNE 2013
Clean TeQ Holdings Limited and its controlled entities
ABN 34 127 457 916
Directors’ report
AUDitor’s iNDepeNDeNce DecLArAtioN
corporAte goverNANce stAteMeNt
17
34
35
stAteMeNt oF proFit or Loss AND other coMpreheNsive iNcoMe 42
stAteMeNt oF FiNANciAL positioN
stAteMeNt oF chANges iN eQUitY
stAteMeNt oF cAsh FLoWs
Notes to the FiNANciAL stAteMeNts
Directors’ DecLArAtioN
iNDepeNDeNt AUDitor’s report
43
44
45
46
99
100
16 | CleanTeQ Annual Report 2013
Directors’ report
The directors present their report, together with
the financial statements, on the consolidated entity
(referred to hereafter as the ‘consolidated entity’)
consisting of CleanTeQ Holdings Limited (referred
to hereafter as the ‘parent entity’, ‘the Company’
or ‘CleanTeQ’) and the entities it controlled, and
interests in associates for the year ended 30 June
2013, and the auditor’s report thereon.
There have been no other significant changes in the
nature of the consolidated entity’s activities during the
financial year.
DiviDenDs
There were no dividends paid, recommended or
declared during the current or previous financial year.
Directors
The following persons were directors of Clean TeQ
Holdings Limited during the whole of the financial year
and up to the date of this report, unless otherwise
stated:
review of oPerations
The loss for the consolidated entity after providing for
income tax amounted to $4,631,000 (30 June 2012:
profit of $1,248,000).
• Sam Riggall (Chairman and Non-Executive
Overview of the consolidated entity
Director, appointed 4 June 2013)
• Peter Voigt (Executive Director and Chief
Executive Officer)
• Greg Toll (Executive Director, resigned as
Chairman on 4 June 2013)
• Roger Harley (Independent Non-Executive
Director)
• Bob Cleary (Independent Non-Executive Director,
retired 6 June 2013)
•
Ian Knight (Independent Non-Executive Director,
appointed 17 July 2013)
PrinciPal activities
During the financial year the principal continuing
activities of the consolidated entity consisted of:
• Providing air purification and odour elimination
solutions to customers;
• The continued development and use of the
Clean-iX® and proprietary CIF™ Technologies in
conjunction with other technologies, which can
be used for the purification and recycling of waste
water and for desalination of brackish water to
produce high quality industrial water. A licence
for the use of the proprietary CIF™ technology is
held and operated by Associated Water Pty Ltd,
a Joint Venture with Nippon Gas Co., Ltd, for
the recovery of clean water in the coal seam gas
industry in Australia. The consolidated entity holds
a 50% stake in the Joint Venture; and
• The continued development and use of the
Clean-iX® Technology which can be used to
extract a range of resources in the mining
industry including base metals, precious metals
and radioactive elements.
During the course of this year the consolidated entity
experienced difficulties with delivery of some Air
projects in line with budgets, and the completion
of the purification of scandium from secondary
industrial streams in Japan. These two areas cost
the consolidated entity in terms of revenue and
profitability. The consolidated entity continued to
invest in R&D and to increase the intellectual property
portfolio of the business predominantly in water
purification and scandium recovery. Additionally, Clean
TeQ was selected as the preferred tenderer for a
mining water project in Asia against global competition.
Actions have been taken to correct the delivery
issues in the Air Division with personnel and systems
changes so as not to experience these conditions in
the future. The current projects being delivered have
reverted to more normal margins. The uptake of new
technologies for the water and mining markets relies
on our ability to show the advantages to prospective
customers and to have them willing to implement
them in light of entrenched attitudes related to known
“safe” technologies. This process is continuing with a
number of potential opportunities.
Financial review of operations
During the financial year the consolidated entity’s
revenues were down from $12.035 million to $10.424
million, largely due to the revenues generated in the
water purification segment in 2012, which were of
a one-off nature. The consolidated entity recorded
losses for the year from continuing operations of
$5.213 million after tax (2012: $1 million profit).
This was as a result of the reduced revenue, cost
overruns on key projects in the Air Division, and of
an impairment of development assets of $1 million
(see note 19 to the financial statements).
Annual Report 2013 CleanTeQ | 17
A profit from discontinued operations of $0.582 million
was reported for the current year (2012: $0.248
million), resulting from the disposal of UV Guard
operations in July 2012 for $1.8 million (see note 9
to the financial statements).
The Air Division revenue grew to $8.9m, a growth
of near 50%. This growth rate led to the need to
recruit quickly to be able to deliver projects, with this
recruitment and the inherent risks associated with
rapid growth, as well as the limitations of existing
systems to manage projects and growth leading to
significant time and cost overruns on projects. The
margins in two key projects were reduced which led
to a poor result for this division. New projects are
being delivered in line with prior years.
The revenue in the Water Purification and Resource
Recovery Divisions was small with the key emphasis
on technology development. In the water area, the
emphasis was on the demonstration of the purification
of coal seam gas water in Queensland; whilst the
resources area concentrated on the extraction and
purification of scandium. These areas are anticipated
to produce substantial revenues in the future.
The focus on development of the applications resulted
in $1.517 million of expenditure being capitalised into
intangible assets during the year. This expenditure,
along with the net cash outflows from operating
activities of $3.775 million was financed by short
term debt financing. During the year the consolidated
entity received short term loans of $1 million from
Associated Water Pty Ltd (a company in which the
consolidated entity holds a 50% interest) and $0.7
million from Toll Associates Pty Ltd, a company
co-owned by Greg Toll. In addition, the consolidated
entity issued convertible notes to Mr Robert Friedland,
receiving $1.841 million during the year, and a further
$1.732 million subsequent to 30 June 2013 (see
note 21 to the financial statements for details of
borrowings and note 41 for details of events after the
reporting period).
As a result of the above, at 30 June 2013 the
consolidated entity had net assets of $11.195 million,
including net current liabilities of $1.252 million,
which includes the loans received and convertible
note liability outlined above. The consolidated entity
will continue to develop the Clean-IX technology to
commercialise applications in the Water Purification
and Resource Recovery Divisions.
Further details of the consolidated entity’s operations
are contained in the Chief Executive Officer’s Report
preceding this report.
significant changes in the state
of affairs
During the year the consolidated entity completed
the sale of UV Guard Australia Pty Ltd, the details of
which are set out in note 9 to the financial report.
There were no other significant changes in the
state of affairs of the consolidated entity during the
financial year.
Matters subsequent to the enD
of the financial year
On 2 August 2013 the consolidated entity issued
17,317,866 unlisted convertible notes, with a
conversion price of $0.10 (10 cents) per share,
interest rate of 10% per annum and a maturity date
of 1 August 2016. The price of each convertible note
was $0.10 (10 cents), and the issue raised a total of
$1,731,787 before costs.
No other matter or circumstance has arisen since
30 June 2013 that has significantly affected, or may
significantly affect the consolidated entity’s operations,
the results of those operations, or the consolidated
entity’s state of affairs in future financial years.
likely DeveloPMents anD
exPecteD results of oPerations
The consolidated entity will continue to pursue its
objectives of advancing the development of its suite
of applications for the treatment of water for use
with the water and resource sectors, along with
continued development of its air filtration applications.
This will include further commercial development of
the applications that are both currently in use and in
development and advancing the market penetration
strategies to enable the consolidated entity to fully
exploit the potential of its products in the Resource
Recovery and Water Purification Divisions.
The consolidated entity intends to fund its
development through operational revenues from
contracts entered into, and through securing additional
contracts throughout the year. The consolidated entity
will consider both debt and equity funding should
the need arise.
18 | CleanTeQ Annual Report 2013
directors’ report Continued Further information on likely developments in the operations of the consolidated entity and the expected results
of operations have not been included in this report because the directors believe it would be likely to result in
unreasonable prejudice to the consolidated entity.
environMental regulation
The consolidated entity is not subject to any specific significant environmental regulations under either
Commonwealth or State legislation. However, the Board believes that the consolidated entity has adequate
systems in place for the management of its environmental requirements and is not aware of any breach of
environmental requirements as they apply to the consolidated entity.
inforMation on Directors
Sam Riggall
Qualifications
Experience and expertise
Chairman & Non-Executive Director
MBA
Sam is a graduate in law and commerce and an MBA from
Melbourne University. He was previously Executive Vice
President of Business Development and Strategic Planning
at Ivanhoe Mines Ltd. Prior to that Sam worked in a variety of
roles in Rio Tinto for over a decade covering project generation
and evaluation, business development and capital market
transactions.
Sam has been appointed to the Clean TeQ Board and has been
elected Chairman by the Board, and is a member of the Audit
Committee and the Nomination and Remuneration Committee.
Other current directorships
Nil
Former directorships (in the last 3 years)
Inova Resources Limited (ASX Code: IVA, formerly Ivanhoe
Australia Limited, resigned 19 April 2012)
Special responsibilities
Interests in shares
Interests in options
Sam is a member of the Audit Committee and of the Nomination
and Remuneration Committee.
Nil
Nil
Annual Report 2013 CleanTeQ | 19
directors’ report Continued Peter Voigt
Qualifications
Experience and expertise
Executive Director and Chief Executive Officer
Peter has a Bachelor and Masters of Applied Science
(Chemistry) from the Royal Melbourne Institute of Technology.
Peter Voigt established CleanTeQ in 1990 and was CleanTeQ’s
Chief Technology Officer, responsible for all research and
development activities and the negotiation and management
of overseas licences. He became a director of the Company on
10 September 2007. On 2 August 2010 Peter was appointed
Chief Executive Officer.
Peter is a biochemist, with extensive experience in product
development, technology commercialisation and developing
complete engineering solutions. Prior to founding CleanTeQ,
Peter held product and technology development roles with
Arnott’s and Uncle Bens’.
Other current directorships
Nil
Former directorships (in the last 3 years) Nil
Special responsibilities
Nil
Interests in shares
Interests in options
Greg Toll
Qualifications
Experience and expertise
25,831,596 fully paid ordinary shares
1,000,000 unlisted options exercisable at $0.1935
(19.35 cents) per option
Executive Director
Greg has a Bachelor of Science (Veterinary) Degree with First
Class Honours from Sydney University and is a Graduate
Member of the Australian Institute of Company Directors.
Greg Toll was appointed the Chief Executive Officer of the
Company in 2007 and has been with the predecessor Company
since 2001. He became a Director of the Company on 10
September 2007. Greg retired as the Chief Executive Officer
of the Company with effect from 2 August 2010 and was
appointed Executive Chairman on 1 October 2010. On 4 June
2013 Greg resigned as Chairman.
Prior to joining Clean TeQ, Greg held senior executive positions
in R&D, sales and marketing with Uncle Bens’, Masterfoods,
Nestle and Lion Nathan.
Other current directorships
Nil
Former directorships (in the last 3 years) Nil
Special responsibilities
Greg is a member of the Market Disclosure Committee
Interests in shares
Interests in options
13,070,229 fully paid ordinary shares
1,000,000 unlisted options exercisable at $0.1935
(19.35 cents) per option
20 | CleanTeQ Annual Report 2013
directors’ report Continued Roger Harley
Qualifications
Experience and expertise
Independent Non-Executive Director
Roger has a science degree from the University of Melbourne
and is a Fellow of the Australian Institute of Company Directors.
Roger Harley is a founder and principal of independent corporate
advisory firm, Fawkner Capital. He is also a Non-Executive
Director of National Financial Solutions. Previously he worked
11 years for Deutsche Bank, and held positions including
Director of Corporate Finance and Director of Equity Capital
Markets. Roger Harley has had various appointments by the
Commonwealth Government that related to the oversight of
innovation and venture capital programs and policies. These
include membership of the Pooled Development Funds
Registration Board, the Industry Research and Development
Board and Innovation Australia. His previous Board positions
include Director of Medibank Private. He was appointed as a
Director on 1 June 2010.
Other current directorships
Nil
Former directorships (in the last 3 years) Nil
Special responsibilities
Interests in shares
Interests in options
Ian Knight
Qualifications
Experience and expertise
Roger is a member of the Audit Committee and Chair of
the Nomination and Remuneration Committee and Market
Disclosure Committee.
1,551,718 fully paid ordinary shares
500,000 unlisted options exercisable at $0.1935 (19.35 cents)
per option
Independent Non-Executive Director
FCA, CPA
Ian is a graduate in Business Studies and is also a fellow of the
Institute of Chartered Accountants, a member of the Australian
Society of Certified Practicing Accountants, an Associate Fellow
of the Australian Institute of Management and a member of
the Institute of Company Directors. His experience includes
presenting and working with Boards of Public, Private and
Private Equity ownership, State and Federal Governments and
provides extensive experience in strategising and implementing
mergers, acquisitions, divestments and capital raising initiatives.
Ian was also formerly a Partner of KPMG and was Head of
Private Equity for KPMG Corporate Finance. Currently he is a
Director of Rockwell Corporate Pty Ltd.
Other current directorships
Nil
Former directorships (in the last 3 years) Nil
Special responsibilities
Chair of the Audit Committee
Interests in shares
Interests in options
100,000 fully paid ordinary shares
None
Annual Report 2013 CleanTeQ | 21
directors’ report Continued Bob Cleary
Qualifications
Experience and expertise
Independent Non-Executive Director (retired 6 June 2013)
B. Sc(tech) Chem Eng, graduated as a Chemical Engineer from
the University of NSW.
Bob Cleary was employed for 18 years by the Rio Tinto/North
Ltd/Energy Resources Australia Limited Group. His last position
with that organisation was Managing Director of Energy
Resources of Australia Limited from July 1999 to January
2004. Since 2004 Bob has continued to be involved in the
Australian and international resources industry through his role
as a Director of a number of resources companies, as well as
industry consultant. Bob retired from the Board on 6 June 2013.
Other current directorships
Nil
Former directorships (in the last 3 years) Natasa Mining Limited (company de-listed from ASX on 29 June
2010) Stonehenge Mineral Limited (ASX Code: SHE, resigned
21 August 2012) Crossland Uranium Mines Limited (ASX Code:
CUX, resigned 24 February 2013)
Special responsibilities
Interests in shares
Interests in options
Nil
Nil
500,000 unlisted options exercisable at $0.1935 (19.35 cents)
per option
‘Other current directorships’ quoted above are current directorships for listed entities only and excludes
directorships in all other types of entities, unless otherwise stated.
‘Former directorships (in the last 3 years) quoted above are directorships held in the last 3 years for listed entities
only and excludes directorships in all other types of entities, unless otherwise stated.
coMPany secretary
Melanie Leydin was appointed to the position of Company Secretary and Chief Financial Officer on 7 July 2011,
resigning as Chief Financial Officer on 10 January 2013. Melanie is a Chartered Accountant and is a Registered
Company Auditor.
She graduated from Swinburne University in 1997, became a Chartered Accountant in 1999 and since February
2000 has been the principal of chartered accounting firm, Leydin Freyer.
Her practice audits listed and unlisted public companies involved in the resources and biotechnology industry.
Her practice also provides outsourced company secretarial and accounting services to public companies in the
resources sector. This includes preparation of statutory financial statements, annual reports, half year reports,
stock exchange announcements and quarterly ASX reporting and other statutory requirements.
Melanie has over 20 years experience in the accounting profession and is a director and/or company secretary for
a number of oil and gas, junior resources and exploration entities on the Australian Stock Exchange.
22 | CleanTeQ Annual Report 2013
directors’ report Continued Meetings of Directors
The number of meetings of the company’s Board of Directors (‘the Board’) and of each board committee held
during the year ended 30 June 2013, and the number of meetings attended by each director were:
Full Board
Nomination and
Remuneration
Committee
Audit Committee
Attended
Held
Attended
Held
Attended
Held
13
14
13
14
14
14
14
14
-
-
2
2
-
-
2
2
-
-
3
3
-
-
3
3
Peter Voigt
Greg Toll
Bob Cleary
Roger Harley
Held: represents the number of meetings held during the time the director held office or was a member of the
relevant committee.
No meetings of the Market Disclosure Committee were held during the year. In addition, no relevant meetings
were held subsequent to Sam Riggall’s appointment as a director on 4 June 2013. Ian Knight was appointed
subsequent to the balance date.
reMuneration rePort (auDiteD)
The remuneration report, which has been audited, outlines the director and executive remuneration
arrangements for the consolidated entity and the Company, in accordance with the requirements of the
Corporations Act 2001 and its Regulations. Remuneration is referred to as compensation throughout the
Remuneration Report.
The remuneration report is set out under the following main headings:
A Principles used to determine the nature and amount of remuneration
B Details of remuneration
C Service agreements
D Share-based compensation
E Additional information
a Principles used to determine the nature and amount of remuneration
The Board of Directors are responsible for approving the compensation arrangements for the Directors and senior
executives following recommendations received from the Remuneration and Nomination Committee. The Board
in conjunction with the Remuneration and Nomination Committee assesses the appropriateness of the nature
and amount of emoluments of such officers on a periodic basis by reference to relevant employment market
conditions, with the overall objective of ensuring maximum stakeholder benefit from the retention of a high
quality Board and executive team.
Annual Report 2013 CleanTeQ | 23
directors’ report Continued Key management personnel have authority and
responsibility for planning, directing and controlling the
activities of the consolidated entity. Key management
personnel as identified for the purposes of this report
by the criteria set out are as follows:
• Sam Riggall – Chairman and Non-Executive
Director
• Peter Voigt – Executive Director and Chief
Executive Officer
• Greg Toll – Executive Director
• Roger Harley – Independent Non-Executive
Director
• Bob Cleary – Independent Non-Executive Director
• Tony Panther – Chief Financial Officer
• Melanie Leydin – Company Secretary
There were no other employees in the consolidated
entity that met the definition of an executive or key
management personnel in accordance with the
Corporations Act 2001 or the Australian Accounting
Standards.
Compensation levels for key management personnel
and the Company Secretary are competitively set
to attract and retain appropriately qualified and
experienced directors and executives. As and
when required the Nomination and Remuneration
Committee has access to independent advice on the
appropriateness of compensation packages given
trends in comparative companies and the objectives of
the compensation strategy. Independent advice was
not sought during the 2013 or 2012 financial years.
The compensation structures explained below are
designed to attract and retain suitably qualified
candidates, reward the achievement of strategic
objectives, and create the broader outcome of
creating value for shareholders. The compensation
structures take into account:
•
•
the capability and experience of the key
management personnel;
the key management personnel’s ability to control
the relevant segments’ performance;
•
the consolidated entity’s performance including:
»
»
»
the consolidated entity’s earnings;
the growth in share price and delivering
constant returns on shareholder wealth; and
the amount of incentives within each key
management person’s compensation.
The directors and executives remuneration and
incentive policies and practices are performance based
24 | CleanTeQ Annual Report 2013
and aligned to the consolidated entity’s vision, values
and overall business objectives. They are designed to
motivate key management personnel to pursue the
consolidated entity’s long term growth and success.
Compensation packages include a mix of fixed and
variable compensation and short and long-term
performance- based incentives.
In addition to their salaries, the consolidated
entity also provides non-cash benefits to its key
management personnel, and contributes to post-
employment superannuation plans on their behalf.
Fixed remuneration
Fixed compensation consists of base compensation
as well as employer contributions to superannuation
funds.
Compensation levels are reviewed annually by the
Nomination and Remuneration Committee through a
process that considers individual, segment and overall
performance of the consolidated entity. An executive’s
compensation is also reviewed on promotion.
Performance-linked remuneration
Performance-linked compensation includes both
short-term and long-term incentives and is designed
to reward key management personnel for meeting
or exceeding their financial and personal objectives.
The short-term incentive (“STI”) is an “at risk” bonus
provided in the form of cash and bonus shares, while
the long-term incentive (“LTI”) is provided as options
over ordinary shares of the Company under the rules
of the Employee Share Option Plan. The Board did
exercise discretion on the payment of bonuses and
options as the plans provide for such discretion.
Refer to section E of this remuneration report
for an analysis of the consolidated entity’s recent
performance and link to overall remuneration.
Short-term incentive bonus
Each year the Nomination and Remuneration
Committee sets the key performance indicators
(“KPI’s”) for the key management personnel. The
KPI’s generally include measures relating to the
consolidated entity, the relevant segment and the
individual, and include financial, staff management,
safety, customer and strategy and risk measures.
The measures are chosen as they directly align the
individual’s reward to the KPI’s of the consolidated
entity and to its strategy and performance.
directors’ report Continued The financial performance objectives are earnings
compared to budgeted amounts and “share price
growth” compared to the closing price at 30 June in
the corresponding previous period. The non-financial
objectives vary with position and responsibility
and include measures such as achieving strategic
outcomes, safety and environmental performance,
customer satisfaction and staff development. Financial
and non-financial objectives each account for up to 50
percent of the maximum STI.
At the end of the financial year, the Nomination
and Remuneration Committee assesses the actual
performance of the consolidated entity, the relevant
segment and individual against the KPI’s set at the
beginning of the financial year. A percentage of
the pre-determined maximum amount is awarded
depending on results. No bonus is awarded where
performance falls below the minimum. A bonus is
paid based on this predetermined performance. There
were no bonuses or incentives paid during the 2012
and 2013 financial years.
Long-term incentive
Options are issued under the Employee Share
Option Plan and it provides for key management
personnel to receive options over ordinary shares for
no consideration. The ability to exercise the options
is conditional upon each employee serving minimum
service periods.
The Employee Share Option Plan which was adopted
on 24 September 2007 states that the total number
of options on issue must not exceed 10% of the
total number of issued shares in the Company.
The Nomination and Remuneration Committee in
conjunction with the Board determine the number
of options and the terms and conditions associated
with those options that are to be issued to key
management personnel and employees each year.
The criteria used to assess the number of options
issued include consolidated entity performance,
individual performance and an industry analysis of
best practice. The method of assessment was chosen
as it provides the Nomination and Remuneration
Committee with an objective means of measuring
performance against expected performance.
The Company has adopted an Employee Tax Exempt
Share Plan which allows eligible employees of the
consolidated entity the opportunity to become
shareholders of the Company without having to pay
any amount for the acquisition of the Shares.
Each eligible employee is entitled to acquire the
equivalent of $1,000 of shares per annum. These
shares are required to be held in escrow for a three
year period or until such time as eligible employees
terminate their employment with the consolidated
entity.
Short-term and long-term incentive structure
The Nomination and Remuneration Committee
considers that the above performance-linked
compensation structure will generate the desired
outcome.
In the current year the consolidated entity has not
achieved its forecast earnings targets, with most
segments not meeting budgeted results. The level
of performance achieved during the current year
has resulted in the minimum short-term incentives
not being achieved, which has led to no short term
incentives being paid to the key management
personnel.
Non-Executive Directors
The Constitution provides that the Non-Executive
Directors may be paid or provided remuneration
for their services the total amount or value of
which must not exceed an aggregate maximum of
$500,000 per annum or such other maximum amount
determined from time to time by the Company in a
general meeting. The aggregate maximum sum will
be apportioned among them in such manner as the
Directors in their absolute discretion determine. Non-
Executive Directors fees are set based on advice from
external advisors with reference to fees paid to other
Non- Executive Directors of comparable companies.
Non-Executive Directors do not receive performance
related remuneration. Directors’ fees cover all main
Board and Committee activities.
A Non-Executive Director is entitled to be paid
travelling and other expenses properly incurred by
them in attending Directors’ or general meetings of
the Company or otherwise in connection with the
business of the consolidated entity.
No retirement benefits are to be paid to Non-
Executive Directors.
The Company determines the maximum amount for
remuneration, including thresholds for share-based
remuneration, for Directors by resolution.
Annual Report 2013 CleanTeQ | 25
directors’ report Continued Other benefits
Key management personnel can receive non-cash benefits as part of their base compensation as part of the
terms and conditions of their appointment. Non-cash benefits typically include motor vehicles and toll road
payments. The Company pays fringe benefits tax on these benefits.
Voting and comments made at the company’s 18 November 2012 Annual General Meeting (‘AGM’)
The company received 97.5% of ‘for’ votes in relation to its remuneration report for the year ended 30 June
2012. The company did not receive any specific feedback at the AGM regarding its remuneration practices.
b Details of remuneration
Amounts of remuneration
Details of the remuneration of the key management personnel of the consolidated entity are set out in the
following tables.
2013
Short-term benefits
Post-
employment
benefits
Long-
term
benefits
Share-
based
payments
Cash
salary
and fees
Bonus
Non-
monetary
Super-
annuation
Long
service
leave
Equity-
settled
Total
$
$
$
NON-EXECUTIVE
DIRECTORS
Bob Cleary****
Roger Harley****
45,835
45,871
EXECUTIVE
DIRECTORS
Peter Voigt
Greg Toll
OTHER KEy
MANAGEMENT
PERSONNEL
Melanie Leydin
Tony Panther*
240,000
150,000
96,000
83,686
661,392
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
4,128
21,600
13,500
-
7,531
$
-
-
$
$
13,250
13,250
59,085
63,249
3,115
27,500
292,215
-
-
-
27,500
191,000
-
-
96,000
91,217
46,759
3,115
81,500
792,766
* Tony Panther was appointed as Chief Financial Officer on 10 January 2013 and as a result details of his remuneration are from that date.
** Share based payments include options granted to key management personnel, and share issued to Greg Toll and Peter Voigt under
the employee share scheme. See section D.
*** Sam Riggall was appointed as Chairman on 6 June 2013. He received no remuneration during the period up to 30 June 2013.
**** Options granted to Non-Executive Directors do not have any performance conditions attached.
26 | CleanTeQ Annual Report 2013
directors’ report Continued 2012
Short-term benefits
Post-
employment
benefits
Long-
term
benefits
Share-
based
payments
Cash
salary
and fees
Bonus
Non-
monetary
Super-
annuation
Long
service
leave
Equity-
settled
$
$
$
NON-EXECUTIVE
DIRECTORS
Bob Cleary
Roger Harley
EXECUTIVE
DIRECTORS
Peter Voigt
Greg Toll
OTHER KEy
MANAGEMENT
PERSONNEL
41,686
45,872
240,000
150,000
Melanie Leydin*
78,000
Marc
Lichtenstein**
Ross Dive***
24,107
140,000
719,665
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
4,128
$
-
-
$
-
-
Total
$
41,686
50,000
21,600
8,344
1,000
270,944
18,676
-
2,169
12,600
-
-
-
-
1,000
169,676
-
78,000
1,000
27,276
1,000
153,600
59,173
8,344
4,000
791,182
* Melanie Leydin was appointed Chief Financial Officer on 7 July 2011 and as a result details of her remuneration are from that date.
** Marc Lichtenstein resigned as Chief Financial Officer on 7 July 2011 and as a result details of his remuneration are included to that date.
*** Ross Dive is executive director of the company’s 100% owned subsidiary, UV Guard Australia Pty Ltd.
The fair value of the options is calculated at the date of grant using either the Binomial or Black-Scholes option
valuation model. Refer to notes 2 and 45 of the financial statements for further details. The fair value of ordinary
shares issued is calculated at the date of grant with reference to the market value.
Annual Report 2013 CleanTeQ | 27
directors’ report Continued The proportion of remuneration linked to performance and the fixed proportion are as follows:
Fixed remuneration
At risk – STI
At risk – LTI
2013
2012
2013
2012
2013
2012
100%
100%
100%
100%
100%
100%
-
-
100%
100%
100%
100%
100%
-
96%
99%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4%
1%
NON-EXECUTIVE DIRECTORS
Bob Cleary
Roger Harley
EXECUTIVE DIRECTORS
Peter Voigt
Greg Toll
OTHER KEy MANAGEMENT
PERSONNEL
Melanie Leydin
Tony Panther
Marc Lichtenstein
Ross Dive
c service agreements
Remuneration and other terms of employment for key management personnel are formalised in service
agreements. Details of these agreements are as follows:
Peter Voigt
Executive Director and Chief Executive Officer
Agreement commenced
March 2011, remuneration updated 1 July 2013
Term of agreement
No fixed term
Details
From 1 July 2013 remuneration is set at a base salary of
$200,000 per annum plus superannuation of $18,500 based on
duties as executive director. For the year ended 30 June 2013
remuneration was set at a base salary of $240,000 per annum
plus superannuation of $21,600. The Company may terminate
the agreement upon six month’s notice. Mr Voigt can terminate
the agreement upon three month’s notice. The Company may
terminate the agreement immediately where the executive
commits any act of serious misconduct, persistent breach or
non-observance of a term of this agreement.
28 | CleanTeQ Annual Report 2013
directors’ report Continued Greg Toll
Executive Director
(previously Chairman until resigned on 4 June 2013)
Agreement commenced
March 2011, remuneration updated 1 July 2013
Term of agreement
No fixed term
Details
From 1 July 2013 remuneration is set at a base salary of
$100,000 per annum plus superannuation of $9,250 based
on duties as executive director. During the year ended 30
June 2013 remuneration was set at a base salary of $150,000
per annum plus superannuation of $13,500 for services as
Chairman and executive director. The Company may terminate
the agreement upon six month’s notice. Mr Toll can terminate
the agreement upon three month’s notice. The Company may
terminate the agreement immediately where the executive
commits any act of serious misconduct, persistent breach or
non-observance of a term of this agreement.
Tony Panther
Chief Financial Officer
Agreement commenced
December 2012
Details
Remuneration set at base salary of $175,000 per annum plus
superannuation based on duties as chief financial officer. The
Company may terminate the agreement upon three month’s
notice. Mr Panther can terminate the agreement upon three
month’s notice. The Company may terminate the agreement
immediately where the executive commits any act of serious
misconduct, persistent breach or non-observance of a term of
this agreement.
The service contracts outline the components of compensation paid to the key management personnel. The
service contracts of the key management personnel prescribe how compensation levels are modified year to
year. Compensation levels are reviewed each year to take into account cost-of-living changes, any change in
the scope of the role performed by the senior executive and any changes required to meet the principles of the
compensation policy.
D share-based compensation
Issue of shares
Details of shares issued to directors and other key management personnel as part of compensation during the
year ended 30 June 2013 are set out below:
Peter Voigt
Greg Toll
Date
No. of shares
Issue price
13 August 2012
13 August 2012
8,333
8,333
$0.120
$0.120
$
1,000
1,000
* Shares were issued in accordance with the terms and conditions of the CleanTeq Holdings Limited Employee Tax Exempt Share Plan.
Annual Report 2013 CleanTeQ | 29
directors’ report Continued Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and
other key management personnel in this financial year or future reporting years are as follows:
Grant date
Vesting date and
exercisable date
Expiry date
Exercise price
at grant date
Fair value
per option
15 November 2012
Immediately
30 November 2015
$0.194
$0.0265
Options granted carry no dividend or voting rights.
All options were granted and vested in the financial year 2013.
The number of options over ordinary shares granted to and vested by directors and other key management
personnel as part of compensation during the year ended 30 June 2013 are set out below:
Bob Cleary
Roger Harley
Peter Voigt
Greg Toll
Number of options granted
during the year
Number of options vested
during the year
2013
500,000
500,000
1,000,000
1,000,000
2012
-
-
-
-
2013
500,000
500,000
1,000,000
1,000,000
2012
-
-
-
-
All options listed above were granted and fully vested in the 2013 financial year.
Values of options over ordinary shares granted, exercised and lapsed for directors and other key management
personnel as part of compensation during the year ended 30 June 2013 are set out below:
Value of
options
granted
during the
year
Value of
options
exercised
during the
year
Value of
options
lapsed
during the
year
Remuneration
consisting
of options
for the year
$
13,250
13,250
26,500
26,500
$
-
-
-
-
$
-
-
5,460
5,460
%
22
21
9
14
Bob Cleary
Roger Harley
Peter Voigt
Greg Toll
* Options vested in prior years and expired in the current year are disclosed in note 45 to the financial statements.
30 | CleanTeQ Annual Report 2013
directors’ report Continued Equity instruments
During the course of the 2008 financial year the Company introduced a share option plan for employees and
Directors of Clean TeQ (“the Plan”). All options refer to options over ordinary shares of Clean TeQ Holdings
Limited, which are exercisable on a one-for-one basis under the Employee Share Option Plan. The broad details
of the Plan are set out below:
(a) Under the Plan, eligible persons will be offered, and if accepted, granted, options entitling the holder
to subscribe for Shares. The options may be subject to vesting and exercise restrictions which will be
determined by the Board at the time of issue. If a person no longer qualifies for the Plan, they will have three
months to exercise any options which are capable of being exercised (except in limited circumstances).
(b) It is intended that the exercise price will generally be at or in excess of the prevailing volume weighted
average sale price of Shares traded on ASX in the period immediately prior to the date of offer of the options.
(c) The Board has at its discretion the ability to waive any conditions under certain limited circumstances and/or
to allow options to be exercised and Shares acquired or transferred for monetary consideration equivalent to
their value. The options are not otherwise transferable once granted.
(d) The determination of eligibility to participate is at the absolute discretion of the Board. The Board may also
determine at its absolute discretion the applicable performance criteria to be achieved and the time period in
which those criteria must be satisfied. While not limiting the Board’s discretion, the performance criteria are
generally focused on the key financial and other performance measures set by the Company.
e additional information
In considering the consolidated entity’s performance and benefits for shareholder wealth, the current Nomination
and Remuneration Committee have regard to the following profit after tax in the current and previous four
financial years, along with the share price and movement in the share price.
The earnings of the consolidated entity for the five years to 30 June 2013 are summarised below:
Profit/(loss) after income tax
2009
$’000
511
2010
$’000
1,333
2011
$’000
(5,274)
2012
$’000
1,248
2013
$’000
(4,631)
The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:
Share price at financial year end ($A)
Movement in share price ($A$)
2009
0.345
0.020
2010
0.280
2011
0.040
(0.065)
(0.240)
2012
0.130
0.090
2013
0.100
(0.030)
Net profit after income tax is considered as one of the financial performance targets in setting the short term
incentives. Dividends and changes in share price are included in the total shareholder return calculation which is
one of the performance criteria assessed for the long term incentives. The other performance criteria assessed
for the long term incentives is growth in earnings per share, which again takes into account the consolidated
entity’s net profit after income tax.
This concludes the remuneration report, which has been audited.
Annual Report 2013 CleanTeQ | 31
directors’ report Continued shares unDer oPtion
Unissued ordinary shares of Clean TeQ Holdings Limited under option at the date of this report are as follows:
Grant date
Expiry date
Exercise price
30 June 2011
30 June 2011
30 June 2011
1 July 2010
1 July 2010
30 June 2014
30 June 2015
30 June 2016
1 July 2014
1 July 2015
15 November 2012
30 November 2015
$0.080
$0.250
$0.400
$0.310
$0.340
$0.194
Number
under option
1,000,000
500,000
500,000
115,000
115,000
3,000,000
5,230,000
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share
issue of the Company or of any other body corporate.
For details of options issued to directors and executives as remuneration refer to the remuneration report.
shares issueD on the exercise of oPtions
There were no shares of Clean TeQ Holdings Limited issued on the exercise of options during the year ended
30 June 2013 and up to the date of this report.
inDeMnity anD insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity
as a director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and
executives of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract
of insurance prohibits disclosure of the nature of liability and the amount of the premium.
inDeMnity anD insurance of auDitor
The Company has not, during or since the financial year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of
the Company or any related entity.
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 Company, or to intervene in any proceedings to which the Company is a party for the purpose of
taking responsibility on behalf of the Company for all or part of those proceedings.
32 | CleanTeQ Annual Report 2013
directors’ report Continued auDitor’s inDePenDence
Declaration
A copy of the auditor’s independence declaration
as required under section 307C of the Corporations
Act 2001 is set out on page 26 and forms part of
the directors’ report for the financial year ended
30 June 2013.
auDitor
KPMG continues in office in accordance with section
327 of the Corporations Act 2001.
This report is made in accordance with a resolution
of directors, pursuant to section 298(2)(a) of the
Corporations Act 2001.
On behalf of the directors
Peter Voigt
Director
6 September 2013
Melbourne
non-auDit services
Details of the amounts paid or payable to the auditor
for non-audit services provided during the financial
year by the auditor are outlined in note 33 to the
financial statements.
The directors are satisfied that the provision of
non-audit services during the financial year, by the
auditor (or by another person or firm on the auditor’s
behalf), is compatible with the general standard
of independence for auditors imposed by the
Corporations Act 2001.
The directors are of the opinion that the services as
disclosed in note 33 to the financial statements do
not compromise the external auditor’s independence
requirements of the Corporations Act 2001 for the
following reasons:
•
all non-audit services have been reviewed and
approved to ensure that they do not impact the
integrity and objectivity of the auditor, and
• none of the services undermine the general
principles relating to auditor independence as set
out in APES 110 Code of Ethics for Professional
Accountants issued by the Accounting
Professional and Ethical Standards Board,
including reviewing or auditing the auditor’s own
work, acting in a management or decision- making
capacity for the Company, acting as advocate for
the Company or jointly sharing economic risks and
rewards.
officers of the coMPany who
are forMer Partners of kPMg
Ian Knight, recently appointed as a Non-Executive
Director, was previously a Partner of KPMG and Head
of Private Equity for KPMG Corporate Finance, until
June 2012.
rounDing of aMounts
The Company is of a kind referred to in Class Order
98/100, issued by the Australian Securities and
Investments Commission, relating to ‘rounding-
off’. Amounts in this report have been rounded off
in accordance with that Class Order to the nearest
thousand dollars, or in certain cases, the nearest dollar.
Annual Report 2013 CleanTeQ | 33
directors’ report Continued AuDitor’s inDepenDence DeclArAtion
34 | CleanTeQ Annual Report 2013
corporAte GovernAnce stAtement
The Board of Directors of Clean TeQ Holdings Limited
(“The Company”) are responsible for the corporate
governance of the consolidated entity. The Board
guides and monitors the business and affairs of the
Company on behalf of the shareholders by whom they
are elected and to whom they are accountable.
To ensure the Board is well equipped to discharge
its responsibilities it has established guidelines for
the nomination and selection of directors and for the
operation of the Board.
The Directors are focused on fulfilling their
responsibilities individually and as a Board to all of the
Company stakeholders. This involves the recognition
of, and a need to adopt, principles of good corporate
governance. The Board supports the guidelines
of “The Corporate Governance Principles and
Recommendations” established by the ASX Corporate
Governance Council.
Given the size and structure of the Company, the
nature of its business, the stage of its development
and the cost of strict and detailed compliance with all
of the recommendations, the Company has adopted
some modified systems, procedures and practices
which it considers allow it to meet the principles of
good corporate governance.
In accordance with the ASX Corporate Governance
Council’s recommendations, the Corporate
Governance Statement must contain specific
information, and also report on the Company’s
adoption of the Council’s principles and
recommendations on an exception basis, whereby
disclosure is required of any recommendations
that have not been adopted by the Company,
together with the reasons why. The Company’s
corporate governance principles and policies are
therefore structured with reference to the Corporate
Governance Council’s corporate governance principles
and recommendations, which are as follows:
1. Lay solid foundations for management and
oversight;
2. Structure the Board to add value;
3. Promote ethical and responsible decision making;
4. Safeguard integrity in financial reporting;
5. Make timely and balanced disclosure;
6. Respect the rights of shareholders;
7. Recognise and manage risk; and
8. Remunerate fairly and responsibly.
1. lay solid foundations for
Management and oversight
The Board is responsible for the development of:
•
strategy;
• oversight of management;
•
risk management and compliance systems; and
• monitoring performance.
The Board has adopted a Board Charter the purpose
of which is to promote high standards of corporate
governance, clarify the role and responsibilities
of the Board and enable the Board to provide
strategic governance for the Group and effective
management oversight. A copy of the Board Charter
is available on the Company’s website. The Board has
established certain policies and protocols in relation
to the Company’s operations, some of which are
summarised in the remainder of this statement.
2. structure the board to add value
The current composition of the Board consists of
two Executive Directors and three Non-Executive
Directors. Currently two of the Non-Executive
Directors satisfy the test of independence. Two of
the Directors have substantial shareholdings and are
fulfilling an executive role in the Company.
Given the nature and size of the Company, its
business interests and the stage of development,
the Board is of the view that there is a broad mix of
skills required and that given their experience each
of the Directors are aware of and capable of acting in
an independent manner and in the best interests of
the shareholders.
The Chairman of the Board is not an independent
Non-Executive Director. The roles of Chairman and
Chief Executive Officer are not exercised by the same
person. These roles are exercised by Sam Riggall who
is the Non-Executive Chairman, whilst Peter Voigt is
Chief Executive Officer.
To ensure the Board is well equipped to discharge
its responsibilities, it has established guidelines for
the nomination and selection of directors and for the
operation of the Board. Details of the Nomination and
Remuneration Committee are provided below.
Annual Report 2013 CleanTeQ | 35
Each Director has the right of access to all relevant
Company information and to the Company’s
executives and, subject to prior consultation with the
Chairman, may seek independent professional advice
from a suitably qualified adviser at the consolidated
entity’s expense. The Director must consult with an
advisor suitably qualified in the relevant field, and
obtain the Chairman’s approval of the fee payable for
the advice before proceeding with the consultation.
The Nomination and Remuneration Committee
oversees the appointment and induction process for
Directors and Committee members, and the selection,
appointment and succession planning process of the
Company’s Chief Executive Officer. The Committee
makes recommendations to the Board on the
appropriate skill mix, personal qualities, expertise and
diversity of each position. When a vacancy exists or
there is a need for particular skills, the Committee in
consultation with the Board determines the selection
criteria based on the skills deemed necessary. The
Committee identifies potential candidates. The Board
then appoints the most suitable candidate. Board
candidates must stand for election at the next general
meeting of shareholders.
The terms and conditions of the appointment and
retirement of Non-Executive Directors are set out
in a letter of appointment, including expectations of
attendance and preparation for all Board meetings,
minimum hourly commitments, appointments
to other Boards, the procedures for dealing with
conflicts of interest, and the availability of independent
professional advice.
The Nomination and Remuneration Committee also
conducts an annual review of the performance of the
Chief Executive Officer and the senior executives
reporting directly to him and the results are discussed
at a Board meeting.
The performance of the Board and executives is
reviewed on an annual basis both collectively and
individually. The performance criteria takes into account
each Director’s and Executive’s contribution to setting
the direction, strategy and financial objectives of the
Consolidated entity, and monitoring compliance with
regulatory requirements and ethical standards. During
the course of the current financial year the Nomination
and Remuneration Committee has reviewed the
performance of all Directors and executives within the
consolidated entity. Short term incentives may then
be awarded by the Committee in accordance with the
level of performance of each executive.
The Committee is responsible for determining and
reviewing the remuneration and performance of the
Directors and the Executive Officers of the Company
and reviewing the operation of the Company’s
Employee Option and Share Plans. This process
requires consideration of the levels and form of
remuneration appropriate to securing, motivating,
and retaining executives with the skills to manage
the Company’s operations. Accordingly, the Board
has established a Nomination and Remuneration
Committee to focus on the performance of the
Directors and executives within the organisation.
This committee reports directly to the Board
of Directors.
The consolidated entity has a formal process to
educate new directors about the nature of the
business, current issues, the corporate strategy
and the expectations of the consolidated entity
concerning performance of directors. Directors also
have the opportunity to visit the consolidated entity
facilities and meet with management to gain a better
understanding of business operations. Directors are
given access to continuing education opportunities to
update and enhance their skills and knowledge.
3. Pr omote ethical and responsible
Decision Making
The Board recognises the need for Directors and
employees to observe the highest standards of
behaviour and business ethics when engaging in
corporate activity. Consequently, the Company follows
the Code of Conduct established by the Board, which
sets out the principles and standards with which all
officers and employees are expected to comply in the
performance of their respective functions.
The Board has adopted a code of conduct for
Directors and Senior Executives which fully complies
with the regulation. The purpose of the code of
conduct is to:
•
articulate the high standards of honesty integrity,
ethical and law-abiding behaviour expected of
Directors and Senior Executives;
• encourage the observance of those standards to
protect and promote the interests of shareholders
and other stakeholders (including employees,
customers, suppliers and creditors);
• guide Directors and Senior Executives as to
the practices thought necessary to maintain
confidence in the consolidated entity’s integrity;
36 | CleanTeQ Annual Report 2013
Corporate GovernanCe Statement Continued •
set out the responsibility and accountability of
Directors and Senior Executives to report and
investigate any reported violations of this code or
unethical or unlawful behaviour; and
• promote ethical and responsible decision-
making by the Company in consideration of the
reasonable expectations of its stakeholders,
including shareholders, employees, customers,
suppliers, creditors, consumers and the broader
community in which it operates.
As the Board acts on behalf of and is accountable
to the shareholders, the Board seeks to identify the
expectations of the shareholders, as well as other
regulatory and ethical expectations and obligations. In
addition, the Board is responsible for identifying areas
of significant business risk and ensuring arrangements
are in place to adequately manage those risks.
All employees and Directors of Clean TeQ are
expected to observe the highest standards of honesty,
ethics, integrity and law-abiding behaviour during the
course of their employment with the Company.
The standards expected include:
• Compliance with Company policies, procedures
and contracts;
• Compliance with all reasonable and legal
instructions of management; and
• To be honest and fair in dealings with all
stakeholders including clients, colleagues,
Company management and the general public.
Specifically, Directors and Senior Executives are
expected to:
• Act with integrity in the performance of their duties;
• Maintain client confidentiality;
• Avoid any conflicts of interest both directly and
indirectly;
• Exercise proper courtesy, consideration and
sensitivity in their dealings with clients and
colleagues;
• Comply with the provisions of relevant legislation
and ethical requirements of their profession;
• Respect the Company’s ownership of all Company
funds, equipment, supplies, records and property;
• Maintain during employment with the Company
and after termination of employment, the
confidentiality of any information acquired during
the course of the employment with Clean TeQ;
• Not make any unauthorised statements to the
media about the Company’s business;
• Refrain from sexual or other unlawful harassment
in the workplace; and
• Observe occupational health and safety rules.
Further details of the Company’s Code of Conduct,
including the full text of the code, can be found on the
Company’s website.
The Company has established a formal written Share
Trading Policy which is required to be adhered to by all
Directors, Senior Management and employees of the
Company and its subsidiaries. Trading in the Company’s
shares and/or options over such shares by Directors
and Executives of the Company should only occur in
circumstances where the market is considered to be
fully informed of the Company’s activities. Directors,
Executives and staff are required to discuss their
intention to trade in the Company’s shares with the
Chairman of the Company prior to trading. The Board
recognises that it is the individual responsibility of each
Director and employee to carry this policy through.
Furthermore, there is a clear understanding that the
only appropriate time to trade is after an announcement
to a fully-informed market. Further details of the
Company’s Share Trading Policy, including a full copy of
the policy, is available on the Company’s website.
Directors must keep the board advised, on an ongoing
basis, of any interest that could potentially conflict
with those of the Company. The Board has developed
procedures to assist Directors to disclose potential
conflicts of interest.
Where the Board believes that a significant conflict
exists for a Director on a Board matter, the Director
concerned does not receive the relevant Board papers
and is not present at the meeting whilst the item is
considered and may not vote on the matter. Details of
Director related entity transactions with the Company
and the consolidated entity are set out in the notes to
the financial statements.
The Company has adopted a Diversity Policy that
considers the benefits of diversity, ways to promote a
culture of diversity, factors to be taken into account in
the selection process of candidates for Board and senior
management positions in their Company, education
programs to develop skills and experience in preparation
for Board and senior management positions, processes
to include review measurable diversity performance
objectives for the Board, CEO and senior management.
The Diversity Policy states that the Company will
report, where appropriate, in each annual report, the
measurable objectives for achieving gender diversity
set by the Board.
Annual Report 2013 CleanTeQ | 37
Corporate GovernanCe Statement Continued The following table provides a break-up of the gender
diversity in the organisation:
•
assessing management processes supporting
external reporting;
Number
%
• establishing procedures for selecting, appointing,
and if necessary, removing the external auditor;
Number of women employees
in the whole organisation
Number of women in senior
executive positions
Number of women on the Board
5
1
-
10
2
-
4. safeguard integrity in financial
reporting
In accordance with Recommendation 4.1 of the
ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations,
the Board has delegated the responsibility for the
establishment and maintenance of a framework of
internal control mechanisms for the management of
the Company to the Audit Committee.
The Company has had regard to the independence
and expertise of each of its Directors, the level
of the Company’s current operations, the costs
of compliance and the effectiveness of previous
audits when determining the make up of its Audit
Committee. The Audit Committee comprises of three
Non-Executive Directors. The Company complies
with the recommendation in that the majority of the
members of the Committee are independent Non-
Executive Directors. The Chair of the Audit Committee
is a financial professional with significant experience
in financial matters. The Chair of the Audit Committee
is not the Chairman of the Board.
The Audit Committee members are:
•
Ian Knight (Chairman) – Independent Non-Executive
• Roger Harley – Independent Non-Executive
• Sam Riggall – Non-Executive
The Audit Committee intends to meet at least 4 times
per annum and is responsible for:
•
reviewing the annual and half-year financial
reports and other financial information distributed
externally. This includes approving new
accounting policies to ensure compliance with
Australian Accounting Standards (AASBs), and
assessing whether the financial information is
adequate for shareholder needs;
•
assessing corporate risk assessment processes;
•
•
assessing the need for an internal audit function;
assessing whether non-audit services provided
by the external auditor are consistent with
maintaining the external auditor’s independence.
Each reporting period the external auditor
provides an independence declaration in relation
to the audit or review;
• providing advice to the Board in respect of
whether the provision of the non-audit services by
the external auditor is compatible with the general
standard of independence of auditors imposed by
the Corporations Act 2001;
•
assessing the adequacy of the internal control
framework and the Company’s code of ethical
standards;
• organising, reviewing and reporting on any special
reviews or investigations deemed necessary by
the Board;
• monitoring the procedures to ensure compliance
with the Corporations Act 2001 and the
ASX Listing Rules and all other regulatory
requirements; and
•
addressing any matters outstanding with auditors,
Australian Taxation Office, Australian Securities
and Investments Commission, ASX and financial
institutions.
The Audit Committee reviews the performance of
the external auditors on an annual basis and normally
meets with them during the year to:
• discuss the external audit plan, identifying any
significant changes in structure, operations,
internal controls or accounting policies likely to
impact the financial statements and to review the
fees proposed for the audit work to be performed;
•
•
•
review the half-year and preliminary final report
prior to lodgement with the ASX, and any
significant adjustments required as a result
of the auditor’s findings, and to recommend
Board approval of these documents, prior to
announcement of results;
review the draft annual and half-year financial
report, and recommend Board approval of the
financial report; and
review the results and findings of the auditor, the
adequacy of accounting and financial controls,
and to monitor the implementation of any
recommendations made.
38 | CleanTeQ Annual Report 2013
Corporate GovernanCe Statement Continued The external auditors, Chief Executive Officer
and Chief Financial Officer are invited to attend
Audit Committee meetings at the discretion of the
Committee. The external auditor meets with the Audit
Committee during the course of the year without
management being present.
The Audit Committee operates under a formal charter
approved by the Board. The Audit Committee’s
charter is available on the Company’s website along
with information on procedures for the selection
and appointment of the external auditor, and for the
rotation of external audit engagement partners.
The Company does not have a Compliance
Committee. The Chairman, Chief Executive Officer
and Company Secretary monitor the Company’s
compliance requirements.
In accordance with the ASX Corporate Governance
Council’s Corporate Governance Principles and
Recommendations, the Chief Executive Officer and
the Chief Financial Officer declared in writing to the
Board that the financial records of the Company for
the financial year have been properly maintained,
the Company’s financial reports for the financial
year ended 30 June 2013 comply with accounting
standards and present a true and fair view of the
Company’s financial condition and operational results.
This statement is required annually.
5. Make timely and balanced
Disclosure
The Board and Senior Management are aware of the
Continuous Disclosure requirements of the ASX and
have procedures in place to disclose any information
concerning the Company that a reasonable person
would expect to have a material effect on the price of
the Company’s securities.
The Board has established a Market Disclosure
Protocol which includes the establishment of a
Committee to help the Board to achieve its objective
to establish, implement and supervise a continuous
disclosure system.
The Market Disclosure Committee consists of:
• Greg Toll
• Roger Harley
The Market Disclosure Committee did not meet
during the year as all disclosure issues were
discussed by the Board as a whole.
The Board has appointed the Company Secretary
as the Disclosure Officer of the Company. The
Company Secretary is responsible for overseeing
and coordinating the disclosure of information to
the ASX, analysts, stockbrokers, shareholders, the
media and the public. The Chief Executive Officer
and Chairman are authorised to make statements and
representations on the Company’s behalf.
The Board provides shareholders with information
using a comprehensive Market Disclosure Protocol
which includes identifying matters that may have
a material effect on the price of the Company’s
securities, notifying them to the ASX, posting them on
the Company’s website, and issuing media releases.
More details of the protocol are available on the
Company’s website.
In summary, the Market Disclosure Protocol operates
as follows:
•
•
•
•
the Chief Executive Officer, and the Company
Secretary are responsible for interpreting the
Company’s policy and where necessary informing
the Board. The Company Secretary is responsible
for all communications with the ASX. Such
matters are advised to the ASX on the day they
are discovered subject to approval of the Market
Disclosure Committee;
the full annual report is provided via the
Company’s website to all shareholders (unless
a shareholder has specifically requested to
receive a physical copy or not to receive the
document), including relevant information about
the operations of the consolidated entity during
the year, changes in the state of affairs and details
of future developments;
the half-yearly report contains summarised
financial information and a review of the
operations of the consolidated entity during the
period. The half-year reviewed financial report is
lodged with the ASX, posted on the Company’s
website and sent to any shareholder who
requests it;
the quarterly report contains summarised financial
information and a review of the operations of
the consolidated entity during the period. The
quarterly financial report is lodged with the ASX;
• proposed major changes in the consolidated entity
which may impact on share ownership rights are
submitted to a vote of shareholders;
Annual Report 2013 CleanTeQ | 39
Corporate GovernanCe Statement Continued •
•
•
all announcements made to the market, and
related information (including presentations
provided to analysts or the media during
briefings), are placed on the Company’s website
after they are released to the ASX;
some media briefings are web-cast, and are
placed on the Company’s website; and
the full texts of notices of meetings and
associated explanatory material are placed on the
Company’s website.
All of the above information is made available on the
Company’s website within one day of public release.
The Company is committed to giving all shareholders
comprehensive and equal access to information about
our activities and to fulfilling its continuous disclosure
requirements to the wider market.
6. respect the rights of shareholders
The Board aims to ensure that all shareholders are
informed of major developments affecting the affairs
of the Company. Information is communicated to the
shareholders through the annual and half year reports,
disclosures made to the ASX, notices of meetings and
occasional letters to shareholders where appropriate.
The auditor is invited to attend each Annual General
Meeting of the Company and to be available to answer
shareholder questions about the conduct of the audit,
accounting policies adopted by the Company, the
preparation and content of the auditor’s report and the
independence of the auditor in relation to the conduct
of the audit. The Chairman ensures that appropriate
time is allocated to the auditor at the Annual General
Meeting to answer all shareholder questions relevant
to the conduct of the external audit.
7. recognise and Manage risk
The Board oversees the establishment,
implementation, and annual review of the Company’s
Risk Management System. Management has
established and implemented the Risk Management
System for assessing, monitoring and managing
all risks, including material business risks, for the
consolidated entity.
The Board has procedures in place to recognise,
assess and manage risk in accordance with
the Corporate Governance Principles and
Recommendations. The Board takes a proactive
approach to risk management.
40 | CleanTeQ Annual Report 2013
The Board is responsible for ensuring that risks and
also opportunities are identified on a timely basis.
All risks identified by the Board are recorded in the
Company’s risk register and acted upon accordingly.
The Company’s objectives and activities are aligned
with the risks and opportunities identified. The Board
believes that it is crucial for all Board members to be
a part of this process and as such the Board has not
established a separate Risk Management Committee.
The Chief Executive Officer and Chief Financial Officer
state to the Board, in writing, that the statement
given in accordance with the Corporate Governance
Principles and Recommendation regarding the
integrity of financial statements is founded on a
system of risk management and internal compliance
and control that implements the policies adopted by
the Board. The statement provided by Chief Executive
Officer and Chief Financial Officer includes a comment
that the risk management and internal compliance
and control systems are operating efficiently and
effectively in all material respects.
Management provide the risk profile on a six monthly
basis to the Audit Committee that outlines the
material business risks to the Company. Risk reporting
includes the status of risks through integrated risks
management programs aimed at ensuring risks are
identified, assessed and appropriately managed.
Management review the risk register on a quarterly
basis to ensure that all risks are identified, acted upon
or being monitored.
The Audit Committee reports the status of material
business risks to the Board on a six monthly basis.
Each business operational unit is responsible and
accountable for implementing and embedding the risk
policy into the operations of its business unit.
Material business risks for the Company may arise
from such matters as actions by competitors,
government policy changes, economic conditions,
the impact of exchange rate movements on the price
of raw materials and sales, difficulties in sourcing
raw materials, environment, occupational health and
safety, property, financial reporting, and the purchase,
development and use of information systems.
The Board is responsible for the overall internal control
framework, but recognises that no cost-effective
internal control system will preclude all errors and
irregularities.
Corporate GovernanCe Statement Continued The Board’s policy on internal control is
comprehensive and comprises the Company’s internal
compliance and control systems, including:
• Operating unit controls – Operating units
confirm compliance with financial controls
and procedures including information systems
controls detailed in procedures manuals;
• Functional speciality reporting – Key areas
subject to regular reporting to the Board include
Environmental, Legal and Insurance matters;
•
Investment appraisal – Guidelines for capital
expenditure include annual budgets, detailed
appraisal and review procedures, levels of
authority and due diligence requirements where
businesses are being acquired or divested.
Comprehensive practices have been established to
ensure:
•
capital expenditure and revenue commitments
above a certain size obtain prior board approval;
• occupational health and safety standards
and management systems are monitored
and reviewed to achieve high standards of
performance and compliance with regulations;
• business transactions are properly authorised and
executed;
•
the quality and integrity of personnel (refer below);
• financial reporting accuracy and compliance with
the financial reporting regulatory framework.
Formal appraisals are conducted at least annually
for all employees. Training and development and
appropriate remuneration and incentives with regular
performance reviews create an environment of
cooperation and constructive dialogue with employees
and senior management. A formal succession plan is
also in place to ensure competent and knowledgeable
employees fill senior positions when retirements or
resignations occur.
Monthly actual results are reported against budgets
approved by the Directors and revised forecasts for
the year are prepared regularly.
The Company is committed to protecting the
environment and safeguarding public and employee
health in all aspects of its operations. Environmental
protection and safety are the responsibility of the
Company, its employees, its alliance partners and
suppliers of goods and services. Specifically, the
Company will comply with the intent and provision of
all applicable laws, regulations and standards.
8. remunerate fairly and responsibly
It is the Company’s objective to provide maximum
shareholder benefit from the retention of high quality
Board members and Executives. The Nomination
and Remuneration Committee ensures that Directors
and Senior Executives are remunerated fairly and
responsibly. The Nomination and Remuneration
Committee reviews and makes recommendations
to the Board on remuneration packages and policies
applicable to the Executive Officers and Directors
of the Company. It is also responsible for share
option schemes, incentive performance packages,
superannuation entitlements, retirement and
termination entitlements, fringe benefits policies and
professional indemnity and liability insurance policies.
Directors and Executives are remunerated with
reference to market rates for comparable positions.
The Nomination and Remuneration Committee
comprises:
• Roger Harley (Chairman) – Independent
Non-Executive
•
Ian Knight – Independent Non-Executive
• Sam Riggall – Non-Executive
The Board policy is that the Nomination and
Remuneration Committee will comprise of at least
three Non- Executive Directors the majority of which
are independent. The Nomination and Remuneration
Committee comprises of three Non-Executive Directors.
The Company complies with the recommendation in
that the majority of the members of the Committee are
independent Non-Executive Directors. The Chair of the
Nomination and Remuneration Committee is not the
Chairman of the Board.
The Chief Executive Officer, Peter Voigt, is invited to
Nomination and Remuneration Committee meetings,
as required, to discuss senior executives’ performance
and remuneration packages but does not attend
meetings involving matters pertaining to him.
Executive Directors and senior management’s
remuneration packages include fixed, performance
based and equity based components. Non-Executive
Directors only receive a fixed remuneration package
which is not linked to the performance of the Company.
Further details of the Nomination and Remuneration
Committee’s charter and policies, including those
for appointing Directors and senior executives, are
available on the Company’s website.
Annual Report 2013 CleanTeQ | 41
Corporate GovernanCe Statement Continued stAtement oF proFit or loss AnD
other comprehensive income
FOR THE YEAR ENDED 30 JUNE 2013
Revenue from continuing operations
Share of losses of joint ventures accounted for using the equity method
EXPENSES
Changes in finished goods
Raw materials and other direct costs
Employee benefits expenses
Impairment of capitalised development costs
Depreciation and amortisation expenses
Legal and professional expenses
Occupancy expenses
Marketing expenses
Other expenses
Finance costs
Profit/(loss) before income tax benefit from continuing operations
Income tax benefit
Profit/(loss) after income tax benefit from continuing operations
Profit after income tax expense from discontinued operations
Profit/(loss) after income tax benefit for the year attributable to
the owners of Clean TeQ Holdings Limited
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Total comprehensive income for the year is attributable to:
Continuing operations
Discontinued operations
Earnings per share from continuing operations attributable to
the owners of Clean TeQ Holdings Limited
Basic earnings per share
Diluted earnings per share
Earnings per share from discontinued operations attributable to
the owners of Clean TeQ Holdings Limited
Basic earnings per share
Diluted earnings per share
Earnings per share for profit/(loss) attributable to
the owners of Clean TeQ Holdings Limited
Basic earnings per share
Diluted earnings per share
Note
Consolidated
2013
$’000
10,424
(161)
140
(9,783)
(3,086)
(1,000)
(568)
(701)
(239)
(271)
(637)
(96)
(5,978)
765
(5,213)
582
2012
$’000
12,035
(153)
(653)
(5,392)
(2,607)
(123)
(490)
(821)
(212)
(204)
(588)
(100)
692
308
1,000
248
(4,631)
1,248
1
1
(1)
(1)
(4,630)
1,247
(5,212)
582
(4,630)
999
248
1,247
Cents
Cents
(3.626)
(3.626)
0.405
0.405
(3.221)
(3.221)
0.816
0.785
0.202
0.195
1.018
0.980
5
6
7
19
7
8
9
44
44
44
44
44
44
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
42 | CleanTeQ Annual Report 2013
stAtement oF FinAnciAl position
As AT 30 JUNE 2013
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Other financial assets
Assets of disposal groups classified as held for sale
Total current assets
NON-CURRENT ASSETS
Investments accounted for using the equity method
Other financial assets
Plant and equipment
Intangibles
Total non-current assets
Total assets
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Borrowings
Employee benefits
Other
Liabilities directly associated with assets classified as held for sale
Total current liabilities
NON-CURRENT LIABILITIES
Borrowings
Deferred tax
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
EQUITy
Issued capital
Reserves
Retained profits/(accumulated losses)
Total equity
Note
Consolidated
2013
$’000
2012
$’000
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
1,081
3,717
1,625
683
121
7,227
-
7,227
1,454
2,028
1,801
421
75
5,779
1,790
7,569
1,884
2,045
169
372
10,068
12,493
19,720
3,799
3,573
259
848
8,479
-
8,479
17
-
29
46
8,525
117
442
10,002
12,606
20,175
2,412
24
282
1,389
4,107
172
4,279
49
70
30
149
4,428
11,195
15,747
13,149
13,151
91
(2,045)
11,195
190
2,406
15,747
The above statement of financial position should be read in conjunction with the accompanying notes.
Annual Report 2013 CleanTeQ | 43
stAtement oF chAnGes in equity
FOR THE YEAR ENDED 30 JUNE 2013
Contributed
equity
Reserves
Retained
profits
$’000
$’000
$’000
CONSOLIDATED
Balance at 1 July 2011
Profit after income tax benefit for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs
(note 28)
Share-based payments (note 45)
Share-based payments to consultants
Issue of shares related to business combination
Issue of shares as a result of a rights issue
Lapse of options
Cost of capital raised
Balance at 30 June 2012
10,059
-
-
-
2,154
22
-
94
1,013
-
(191)
13,151
82
-
(1)
(1)
-
-
156
-
-
(47)
-
190
Balance at 1 July 2012
13,151
190
Loss after income tax benefit for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Share-based payments (note 45)
Lapse of options
Cost of convertible notes
Balance at 30 June 2013
-
-
-
17
-
(19)
13,149
-
1
1
80
(180)
-
91
Total
equity
$’000
11,252
1,248
(1)
1,247
2,154
22
156
94
1,013
-
(191)
1,111
1,248
-
1,248
-
-
-
-
-
47
-
2,406
15,747
2,406
(4,631)
-
15,747
(4,631)
1
(4,631)
(4,630)
-
180
-
97
-
(19)
(2,045)
11,195
The above statement of changes in equity should be read in conjunction with the accompanying notes.
44 | CleanTeQ Annual Report 2013
stAtement oF cAsh Flows
FOR THE YEAR ENDED 30 JUNE 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of GST)
Payments to suppliers (inclusive of GST)
Interest received
Interest and other finance costs paid
Income taxes refunded
Net cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment
Development expenditure
Acquisition of other intangibles
Proceeds from sale of business, net of cash disposed
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Proceeds from issue of convertible notes
Repayment of convertible notes
Repayment of finance lease
Payment of hire purchases
Payment for investment in associate
Proceeds from borrowings
Cash on deposit for security over bank guarantees
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
10
Note
Consolidated
2013
$’000
2012
$’000
42
18
28
10,000
11,687
(14,140)
(12,027)
34
(90)
421
60
(95)
-
(3,775)
(375)
(47)
(232)
(1,517)
(1,055)
-
1,373
(191)
-
1,841
-
-
(29)
-
1,700
(98)
3,414
(552)
1,633
1,081
(34)
-
(1,321)
2,986
469
(1,167)
(5)
11
(120)
-
(192)
1,982
286
1,347
1,633
The above statement of cash flows should be read in conjunction with the accompanying notes.
Annual Report 2013 CleanTeQ | 45
notes to the financial stateMents
FOR THE YEAR ENDED 30 JUNE 2013
note 1. general inforMation
The financial report covers Clean TeQ Holdings
Limited (‘the Company’) as a consolidated entity
consisting of Clean TeQ Holdings Limited and the
entities it controlled. The financial report is presented
in Australian dollars, which is Clean TeQ Holdings
Limited’s functional and presentation currency.
Any significant impact on the accounting policies
of the consolidated entity from the adoption of
mandatory changes to Accounting Standards and
Interpretations are disclosed below. The adoption
of mandatory changes to Accounting Standards and
Interpretations did not have any significant impact
on the financial performance or position of the
consolidated entity.
The financial report consists of the financial
statements, notes to the financial statements and the
directors’ declaration.
Clean TeQ Holdings Limited is a listed public company
limited by shares, incorporated and domiciled in
Australia. Its registered office and principal place of
business is:
270-280 Hammond Road
Dandenong South
VIC 3175
A description of the nature of the consolidated
entity’s operations and its principal activities are
included in the directors’ report, which is not part of
the financial report.
The financial report was authorised for issue,
in accordance with a resolution of directors, on
6 September 2013. The directors have the power
to amend and reissue the financial report.
note 2. significant
accounting Policies
The principal accounting policies adopted in the
preparation of the financial statements are set out
below. These policies have been consistently applied
to all the years presented, unless otherwise stated.
New, revised or amending Accounting Standards
and Interpretations adopted
The consolidated entity has adopted all of the new,
revised or amending Accounting Standards and
Interpretations issued by the Australian Accounting
Standards Board (‘AASB’) that are mandatory for the
current reporting period.
Any new, revised or amending Accounting Standards
or Interpretations that are not yet mandatory have not
been early adopted.
46 | CleanTeQ Annual Report 2013
The following Accounting Standards and Interpretations
are most relevant to the consolidated entity:
AASB 101 Presentation of Financial Statements
The consolidated entity has applied amendments to
AASB 101 outlined in AASB 2011-9 “Amendments
to Australian Accounting Standards - Presentation
of Items of Other Comprehensive Income”. The
amendments requires grouping together of items
within other comprehensive income on the basis
of whether they will eventually be ‘recycled’ to the
profit or loss (reclassification adjustments). The
change provides clarity about the nature of items
presented as other comprehensive income and
the related tax presentation. The amendments also
introduced the term ‘Statement of profit or loss
and other comprehensive income’ clarifying that
there are two discrete sections, the profit or loss
section (or separate statement of profit or loss)
and other comprehensive income section. The
change in accounting policy has had no impact on
consolidated earnings per share and has been applied
retrospectively.
Going concern
The financial report has been prepared on a going
concern basis, which assumes continuity of normal
business activities and the realisation of assets and
the settlement of liabilities in the ordinary course of
business.
The consolidated entity reported a net loss after tax
from continuing operations for the financial year of
$5,213,000 (2012: $1,000,000 profit). The net loss is
directly attributable to a combination of operational
factors that led to adverse results on a number of
larger projects leading to poor margin results and
losses and an impairment of intangible assets of $1
million (see note 19), and non-recognition of deferred
tax assets of approximately $1 million. The operational
factors included unforeseen delays and consequential
cost overruns and adverse weather conditions, which
increased costs on other projects. The reduced project
margins were not sufficient to completely cover
the consolidated entity’s fixed cost base, resulting
in the net loss after tax for the period. The Board is
confident that these adverse operational factors were
isolated, as they relate to specific projects that are
close to being, or have already been, completed and
will not recur in future financial years.
The working capital position as at 30 June 2013 of
the consolidated entity results in an excess of current
liabilities over current assets of $1,252,000 (2012:
$3,290,000 excess of current assets over current
liabilities). The cash and cash equivalents balance as
at 30 June 2013 was $1,081,000 (2012: $1,454,000
excluding discontinued operations), with net cash
outflows from operating activities of $3,775,000 for
the year (2012: $375,000).
During the year and subsequent to 30 June 2013
the following events have taken place to support
the going concern basis of preparation for the
consolidated entity:
•
The consolidated entity has entered into an
agreement with Clean World Japan, an entity
controlled by Nippon Gas Co Ltd for the
licensing of a range of technologies. Under this
agreement a once off license fee payment of
$3.5m is payable upon the execution of the first
technology agreement between Clean World
Japan and a Japanese entity. This agreement is
currently expected to be signed during the 2014
financial year;
• During the last 12 months the consolidated entity
has been awarded contracts and agreed projects
with revenue in excess of $4.9 million expected
to be delivered in the 2014 financial year and has
further trading and tender opportunities which are
expected to lead to significant future sales;
• Discussions are occurring with global based
engineering groups as potential partners for
commercialisation of technologies, especially in
the Water and Air areas. Specific ventures are
envisaged within the next year, as licensing or
joint venture arrangements with subsequent
payments to the consolidated entity; and
• The directors are confident that the consolidated
entity can access debt and equity funding to meet
short term working capital requirements, and has
a history of securing such funding as required in
the past to support their confidence.
On the basis that sufficient funding is expected to be
raised to meet the consolidated entity’s expenditure
forecasts, the directors consider that the consolidated
entity remains a going concern and these financial
statements have been prepared on this basis.
Whilst the directors are confident in the consolidated
entity’s ability to continue as a going concern, in the
event the agreements and commercial opportunities
described above do not eventuate as planned, there
is uncertainty as to whether the consolidated entity
will be able to generate sufficient net operating
cash inflows or execute alternative funding
arrangements to enable it to continue as a going
concern. Consequently, material uncertainty exists
as to whether the consolidated entity will continue
as a going concern and the consolidated entity may
be required to realise assets at amounts different to
their carrying amounts in the statement of financial
position, extinguish liabilities at amounts different to
those recognised in the statement of financial position
and settle liabilities other than in the ordinary course
of business.
• During the 2013 financial year, Mr Robert
Basis of preparation
Friedland, a well-known and successful investor
in mining and technology- related ventures,
provided funding to the consolidated entity of
$1.8 million by way of convertible notes which the
consolidated entity has recognised as a current
borrowing liability at 30 June 2013 (see note 21).
Subsequent to the year-end Mr Friedland had
provided a further $1.732 million via convertible
notes which will also be recognised as a current
borrowing liability. The consolidated entity
expects that the relationship with Mr Friedland
will assist in widening the consolidated entity’s
opportunities for profitable commercialisation of
its technologies in addition to assisting in securing
any further funding required;
These general purpose financial statements have
been prepared in accordance with Australian
Accounting Standards and Interpretations issued by
the Australian Accounting Standards Board (‘AASB’)
and the Corporations Act 2001, as appropriate for
for-profit oriented entities. These financial statements
also comply with International Financial Reporting
Standards as issued by the International Accounting
Standards Board (‘IASB’).
Historical cost convention
The financial statements have been prepared under
the historical cost convention except as described in
the accounting policies.
Annual Report 2013 CleanTeQ | 47
note 2. significant
accounting Policies continued
Critical accounting estimates
The preparation of the financial statements requires
the use of certain critical accounting estimates. It
also requires management to exercise its judgement
in the process of applying the consolidated entity’s
accounting policies. The areas involving a higher
degree of judgement or complexity, or areas where
assumptions and estimates are significant to the
financial statements, are disclosed in note 3.
Parent entity information
In accordance with the Corporations Act 2001,
these financial statements present the results of the
consolidated entity only. Supplementary information
about the parent entity is disclosed in note 37.
Principles of consolidation
The consolidated financial statements incorporate the
assets and liabilities of all subsidiaries of Clean TeQ
Holdings Limited (‘company’ or ‘parent entity’) as at
30 June 2013 and the results of all subsidiaries for the
year then ended. Clean TeQ Holdings Limited and its
subsidiaries together are referred to in these financial
statements as the ‘consolidated entity’.
Subsidiaries are all those entities over which
the consolidated entity has the power to govern
the financial and operating policies, generally
accompanying a shareholding of more than one-
half of the voting rights. The effects of potential
exercisable voting rights are considered when
assessing whether control exists. Subsidiaries are
fully consolidated from the date on which control
is obtained by the consolidated entity. They are
de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised
gains on transactions between entities in the
consolidated entity are eliminated. Unrealised losses
are also eliminated unless the transaction provides
evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with the
policies adopted by the consolidated entity.
Unrealised gains arising from transactions with equity
accounted investees are eliminated against the
investment to the extent of the consolidated entity’s
interest in the associated entity.
Where the consolidated entity loses control over
a subsidiary, it derecognises the assets including
goodwill, liabilities and non-controlling interest in the
subsidiary together with any cumulative translation
differences recognised in equity. The consolidated
entity recognises the fair value of the consideration
received and the fair value of any investment retained
together with any gain or loss in profit or loss.
Operating segments
Operating segments are presented using the
‘management approach’, where the information
presented is on the same basis as the internal
reports provided to the Chief Executive Officer in
his capacity as the Chief Operating Decision Makers
(‘CODM’). The CODM is responsible for the allocation
of resources to operating segments and assessing
their performance.
Segment results that are reported to the CODM
include items directly attributable to a segment as
well as those that can be allocated on a reasonable
basis. Unallocated items comprise mainly corporate
assets, holding company expenses and income tax
assets and liabilities.
Foreign currency translation
The financial report is presented in Australian dollars,
which is Clean TeQ Holdings Limited’s functional and
presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into
Australian dollars using the exchange rates prevailing
at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such
transactions and from the translation at financial year-
end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in
profit or loss.
Foreign operations
The assets and liabilities of foreign operations
are translated into Australian dollars using the
exchange rates at the reporting date. The revenues
and expenses of foreign operations are translated
into Australian dollars using the average exchange
rates, which approximate the rate at the date of
the transaction, for the period. All resulting foreign
exchange differences are recognised in other
comprehensive income through the foreign currency
reserve in equity.
48 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued The foreign currency reserve is recognised in profit
or loss when the foreign operation or net investment
is disposed of.
Revenue recognition
Sale of goods and services
Revenue from the sale of goods is measured at the
fair value of the consideration received or receivable,
net of returns, trade discounts and volume rebates.
Revenue is recognised when the significant risks and
rewards of ownership have been transferred to the
buyer, recovery of the consideration is probable, the
associated costs and possible return of goods can be
estimated reliably, there is no continuing management
involvement with the goods and the amount of
revenue can be measured reliably. If it is probable
that discounts will be granted and the amount can be
reliably measured, then the discount is recognised as
a reduction of revenue as the sales are recognised.
Transfers of risks and rewards vary depending on
the individual terms of the contract of sale. For sales
of units developed and built, transfer usually occurs
when the product is received at the customer’s site
and or is commissioned ready for use.
Rendering of services
Revenue from contracted services rendered is
recognised in profit or loss in proportion to the stage
of completion of the transaction at the reporting date.
The stage of completion is assessed by reference to
the completion of key milestones in the contracts.
Contract revenue includes the initial amount agreed
in the contract plus any variations in contract work,
claims and incentive payments to the extent that
it is probable that they will result in revenue and
can be measured reliably. When the outcome of a
construction contract cannot be estimated reliably,
contract revenue is recognised only to the extent
of contract costs incurred that are likely to be
recoverable. Contract expenses are recognised as
they are incurred unless they create an asset related
to future contract activity. An expected loss on a
contract is recognised immediately in profit or loss.
Technology licensing income
Technology licensing income is recognised based
on the substance of the contractual arrangements
entered into. Upfront non-refundable fees for the
right to utilise the technology, where the economic
entity has no ongoing contractual obligations, are
recognised fully in profit or loss at the time the
contractual commitment is entered into. Technology
licensing fees where the licensee has the right to use
the technology over a specified period of time or on
a refundable basis is recognised in profit or loss on a
straight line basis over the agreed term of the Licence.
Interest
Interest revenue is recognised as interest accrues
using the effective interest method. This is a method
of calculating the amortised cost of a financial asset
and allocating the interest income over the relevant
period using the effective interest rate, which is the
rate that exactly discounts estimated future cash
receipts through the expected life of the financial
asset to the net carrying amount of the financial asset.
Sales of non-current assets
Gains on sale of non-current assets are included as
income at the date control of the asset passes to
the buyer, usually when an unconditional contract of
sale is signed.
Gains or losses on disposal are calculated as the
difference between the carrying amount of the
asset at the time of disposal and the net proceeds
on disposal.
Government grants
Government grants are recognised initially as deferred
income at fair value and when there is reasonable
assurance that they will be received and that the
consolidated entity will comply with the conditions
associated with the grant, they are then recognised
in profit or loss as other income on a systematic
basis over the useful life of the asset. Grants that
compensate the Group for expenses incurred are
recognised in profit or loss as other income on a
systematic basis in the same periods in which the
expenses are recognised.
Annual Report 2013 CleanTeQ | 49
notes to the financial statements for the year ended 30 june 2013 continued Deferred tax assets and liabilities are offset only
where there is a legally enforceable right to offset
current tax assets against current tax liabilities and
deferred tax assets against deferred tax liabilities; and
they relate to the same taxable authority on either the
same taxable entity or different taxable entity’s which
intend to settle simultaneously.
Clean TeQ Holdings Limited (the ‘head entity’) and
its wholly-owned Australian controlled entities have
formed an income tax consolidated group under
the tax consolidation regime. The head entity and
the controlled entities in the tax consolidated group
continue to account for their own current and deferred
tax amounts. The tax consolidated group has applied
the group allocation approach in determining the
appropriate amount of taxes to allocate to members of
the tax consolidated group.
In addition to its own current and deferred tax
amounts, the head entity also recognises the current
tax liabilities (or assets) and the deferred tax assets
arising from unused tax losses and unused tax
credits assumed from controlled entities in the tax
consolidated group.
Assets or liabilities arising under tax funding
agreements with the tax consolidated entities are
recognised as amounts receivable from or payable to
other entities in the tax consolidated group. The tax
funding arrangement ensures that the intercompany
charge equals the current tax liability or benefit of
each tax consolidated group member, resulting
in neither a contribution by the head entity to the
subsidiaries nor a distribution by the subsidiaries to
the head entity.
Nature of tax funding arrangements and tax
sharing arrangements
The head entity, in conjunction with other members of
the tax-consolidated group, entered into a tax funding
arrangement which sets out the funding obligations
of members of the tax-consolidated group in respect
of tax amounts. The tax funding arrangements require
payments to/from the head entity equal to the current
tax liability/(asset) assumed by the head entity and
any tax-loss deferred tax asset assumed by the head
entity, resulting in the head entity recognising an inter-
entity receivable/(payable) equal in amount to the tax
liability/(asset) assumed. The inter-entity receivables/
(payables) are at call.
note 2. significant
accounting Policies continued
Income tax
Tax expense comprises current and deferred tax.
Current tax and deferred tax is recognised in the profit
or loss except to the extent that it relates to business
combinations, or items recognised directly in equity
or in other comprehensive income. Current tax is the
expected tax payable or receivable on the taxable
income or loss for the year, using tax rates enacted
or stantively enacted at the reporting date, and any
adjustment to tax payable in respect of previous years.
Deferred tax assets and liabilities are recognised for
temporary differences at the tax rates expected to
apply when the assets are recovered or liabilities are
settled, based on those tax rates that are enacted or
substantively enacted, except for:
• When the deferred income tax asset or liability
arises from the initial recognition of goodwill or
an asset or liability in a transaction that is not a
business combination and that, at the time of the
transaction, affects neither the accounting nor
taxable profits; or
• When the taxable temporary difference is
associated with investments in subsidiaries,
associates or interests in joint ventures, and the
timing of the reversal can be controlled and it is
probable that the temporary difference will not
reverse in the foreseeable future.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only
if it is probable that future taxable amounts will
be available to utilise those temporary differences
and losses. The consolidated entity makes this
assessment at each reporting date.
Deferred tax is measured at the tax rates that are
expected to be applied to temporary differences when
they reverse, using tax rates enacted or substantively
enacted at the reporting date.
The carrying amount of recognised and unrecognised
deferred tax assets are reviewed each reporting date.
Deferred tax assets recognised are reduced to the
extent that it is no longer probable that future taxable
profits will be available for the carrying amount to
be recovered. Previously unrecognised deferred tax
assets are recognised to the extent that it is probable
that there are future taxable profits available to
recover the asset.
50 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued Contributions to fund the current tax liabilities are
payable as per the tax funding arrangement and
reflect the timing of the head entity’s obligation to
make payments for tax liabilities to the relevant tax
authorities.
The head entity in conjunction with other members
of the tax-consolidated group has also entered into
a tax sharing agreement. The tax sharing agreement
provides for the determination of the allocation of
income tax liabilities between the entities should the
head entity default on its tax payment obligations.
No amounts have been recognised in the financial
statements in respect of this agreement as payment
of any amounts under the tax sharing agreement is
considered remote.
Discontinued operations
A discontinued operation is a component of the
consolidated entity that has been disposed of or
is classified as held for sale and that represents
a separate major line of business or geographical
area of operations, is part of a single co-ordinated
plan to dispose of such a line of business or area of
operations, or is a subsidiary acquired exclusively
with a view to resale. Classification as a discontinued
operation occurs upon disposal or when the operation
meets the criteria to be classified as held-for-sale,
if earlier. The results of discontinued operations are
presented separately on the face of the statement of
profit or loss and other comprehensive income. When
an operation is classified as a discontinued operation,
the comparative statement of profit and loss and
other comprehensive income is re-presented as if the
operation had been discontinued from the start of the
comparative year.
Cash and cash equivalents – financial instrument
Cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, other
short-term, highly liquid investments with original
maturities of three months or less that are readily
convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair value
and subsequently measured at amortised cost using
the effective interest method, less any provision for
impairment. Trade receivables are generally due for
settlement within 30 days.
Collectability of trade receivables is reviewed on
an ongoing basis. Debts which are known to be
uncollectable are written off by reducing the carrying
amount directly. A provision for impairment of
trade receivables is raised when there is objective
evidence that the consolidated entity will not be
able to collect all amounts due according to the
original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor
will enter bankruptcy or financial reorganisation and
default or delinquency in payments (more than 60
days overdue) are considered indicators that the
trade receivable may be impaired. The amount of
the impairment allowance is the difference between
the asset’s carrying amount and the present value of
estimated future cash flows, discounted at the original
effective interest rate. Cash flows relating to short-
term receivables are not discounted if the effect of
discounting is immaterial.
Other receivables are recognised at amortised cost,
less any provision for impairment.
Inventories
Raw materials, work in progress and finished goods
are stated at the lower of cost and net realisable value
on a ‘first in first out’ basis. Cost comprises direct
materials and delivery costs, direct labour, import
duties and other taxes, an appropriate proportion of
variable and fixed overhead expenditure based on
normal operating capacity, and, where applicable,
transfers from cash flow hedging reserves in equity.
Costs of purchased inventory are determined
after deducting rebates and discounts received or
receivable.
Net realisable value is the estimated selling price in
the ordinary course of business less the estimated
costs of completion and the estimated costs
necessary to make the sale.
Annual Report 2013 CleanTeQ | 51
notes to the financial statements for the year ended 30 june 2013 continued The consolidated financial statements include the
consolidated entity’s share of profit or loss and other
comprehensive income of equity accounted interests,
after adjustments to align the accounting policies
with those of the consolidated entity, from the date
that significant influence or joint control commences
until the date that significant influence or joint
control ceases.
When the consolidated entity’s share of losses
exceeds its interest in an equity accounted investee,
the carrying amount of that interest, including
any long-term interests that form part thereof, is
reduced to zero, and the recognition of further
losses is discontinued except to the extent that the
consolidated entity has an obligation or has made
payments on behalf of the investee.
Joint ventures
A joint venture is a contractual arrangement whereby
two or more parties undertake an economic activity
that is subject to joint control. Investments in joint
ventures are accounted for using the equity method.
Under the equity method, the share of the profits
or losses of the joint venture is recognised in profit
or loss and the share of the movements in equity is
recognised in other comprehensive income. Income
earned from joint venture entities is recognised as
revenue in the parent entity’s profit or loss, whilst in
the consolidated financial statements they reduce the
carrying amount of the investment.
Property, plant and equipment
Plant and equipment is stated at cost less
accumulated depreciation and accumulated
impairment losses.
Subsequent expenditure is capitalised only when it is
probable that the future economic benefits associated
with the expenditure will flow to the consolidated
entity. Ongoing repairs and maintenance are expensed
as incurred.
Items of property, plant and equipment are
depreciated from the date that they are installed
and are ready for use, or in respect of internally
constructed assets, from the date that the asset is
completed and ready for use.
note 2. significant
accounting Policies continued
Non-current assets or disposal groups classified
as held for sale
Non-current assets and assets of disposal groups are
classified as held for sale if their carrying amount will
be recovered principally through a sale transaction
rather than through continuing use. They are measured
at the lower of their carrying amount and fair value
less costs to sell. For non-current assets or assets of
disposal groups to be classified as held for sale, they
must be available for immediate sale in their present
condition and their sale must be highly probable.
An impairment loss is recognised for any initial or
subsequent write down of the non-current assets
and assets of disposal groups to fair value less costs
to sell. A gain is recognised for any subsequent
increases in fair value less costs to sell of a non-
current assets and assets of disposal groups, but
not in excess of any cumulative impairment loss
previously recognised.
Non-current assets are not depreciated or amortised
while they are classified as held for sale. Interest and
other expenses attributable to the liabilities of assets
held for sale continue to be recognised.
Non-current assets classified as held for sale and the
assets of disposal groups classified as held for sale
are presented separately on the face of the statement
of financial position, in current assets. The liabilities
of disposal groups classified as held for sale are
presented separately on the face of the statement of
financial position, in current liabilities.
Associates
Associates are entities over which the consolidated
entity has significant influence but not control or joint
control. Investments in associates are accounted
for using the equity method. Under the equity
method, the share of the profits or losses of the
associate is recognised in profit or loss and the share
of the movements in equity is recognised in other
comprehensive income. Investments in associates
are carried in the statement of financial position at
cost plus post-acquisition changes in the consolidated
entity’s share of net assets of the associates.
Dividends received or receivable from associates
reduce the carrying amount of the investment. The
cost of the investment includes transaction costs.
52 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued Depreciation is calculated on to write off the net
cost of each item of plant and equipment (excluding
land) over their expected useful lives. Depreciation
is generally recognised in profit or loss, unless the
amount is included in the carrying amount of another
asset. Leased assets are depreciated over the shorter
of the lease term and their useful lives unless it is
reasonably certain that the consolidated entity will
obtain ownership by the end of the lease term. Rates
of depreciation are as follows:
Factory equipment
2.5 to 20 years (straight line
and diminishing value)
Office furniture and
equipment
2.5 to 20 years (straight line
and diminishing value
Capitalised leased
equipment
3-7 years (diminishing value)
Motor vehicles
5-6 years (diminishing value)
The residual values, useful lives and depreciation
methods are reviewed, and adjusted if appropriate, at
each reporting date.
An item of plant and equipment is derecognised upon
disposal or when there is no future economic benefit
to the consolidated entity. Gains and losses between
the carrying amount and the disposal proceeds are
taken to profit or loss. Any revaluation surplus reserve
relating to the item disposed of is transferred directly
to retained profits.
Leased assets
Leases in terms of which the consolidated entity
assumes substantially all the risks and rewards of
ownership are classified as finance leases. Upon
initial recognition the leased asset is measured at
an amount equal to the lower of its fair value and
the present value of the minimum lease payments.
Subsequent to initial recognition, the asset is
accounted for in accordance with the accounting
policy applicable to that asset. Other leases are
operating leases and the leased assets are not
recognised on the consolidated entity’s statement of
financial position.
Other financial assets
Cash on deposit used as security for bank guarantees
that matures within four and twelve months of
each reporting period is disclosed as a current other
financial asset. Those deposits that do not mature for
in excess of twelve months are disclosed as non-
current other financial assets.
Leases
The determination of whether an arrangement is or
contains a lease is based on the substance of the
arrangement and requires an assessment of whether
the fulfilment of the arrangement is dependent on the
use of a specific asset or assets and the arrangement
conveys a right to use the asset.
A distinction is made between finance leases, which
effectively transfer from the lessor to the lessee
substantially all the risks and benefits incidental to
ownership of leased assets, and operating leases,
under which the lessor effectively retains substantially
all such risks and benefits.
Finance leases are capitalised. A lease asset and
liability are established at the fair value of the leased
assets, or if lower, the present value of minimum
lease payments. Lease payments are allocated
between the principal component of the lease liability
and the finance costs, so as to achieve a constant rate
of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are
depreciated over the asset’s useful life or over
the shorter of the asset’s useful life and the lease
term if there is no reasonable certainty that the
consolidated entity will obtain ownership at the end
of the lease term.
Operating lease payments, net of any incentives
received from the lessor, are charged to profit or loss
on a straight- line basis over the term of the lease.
Intangible assets
Intangible assets acquired as part of a business
combination, other than goodwill, are initially measured
at their fair value at the date of the acquisition.
Intangible assets acquired separately are initially
recognised at cost. Indefinite life intangible assets are
not amortised and are subsequently measured at cost
less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and
any impairment. The gains or losses recognised in profit
or loss arising from the derecognition of intangible
assets are measured as the difference between net
disposal proceeds and the carrying amount of the
intangible asset. The method and useful lives of finite
life intangible assets are reviewed annually. Changes
in the expected pattern of consumption or useful
life are accounted for prospectively by changing the
amortisation method or period.
Annual Report 2013 CleanTeQ | 53
notes to the financial statements for the year ended 30 june 2013 continued note 2. significant
accounting Policies continued
Research and development
Research costs are expensed in the period in which
they are incurred. Development costs are capitalised
when it is probable that the project will be a success
considering its commercial and technical feasibility;
the consolidated entity is able to use or sell the asset;
the consolidated entity has sufficient resources; and
intent to complete the development and its costs can
be measured reliably. Capitalised development costs
are amortised on a straight-line basis over the period
of their expected benefit, being between 4 and 20
years dependent on the project.
Impairment losses are recognised in profit or loss.
An impairment may be reversed only yo the extent
that the asset’s carrying amount does not exceed the
carrying amount that would have been determined,
net of depreciation or amortisation, if no impairment
had been recognised.
Trade and other payables – financial instrument
These amounts represent liabilities for goods and
services provided to the consolidated entity prior to
the end of the financial year and which are unpaid.
Due to their short-term nature they are measured at
amortised cost and are not discounted. The amounts
are unsecured and are usually paid within 30 days of
recognition.
Patents and trademarks
Significant costs associated with patents and
trademarks are deferred and amortised on a straight-
line basis over the period of their expected benefit,
being between 4 and 20 years.
Subsequent expenditure
Subsequent expenditure is capitalised only when it
increases the future economic benefits embodied
in the specific asset to which it relates. All other
expenditure, including expenditure on internally
generated goodwill and brands, is recognised in profit
or loss as incurred.
Impairment of non-financial assets
The carrying value of the consolidated entity’s non-
financial assets, other than inventory and deferred
tax assets, are reviewed at each reporting date
to determine whether there is any indication of
impairment. If any such indication exists, then the
assets recoverable amount is estimated. Indefinite life
intangible assets are tested annually for impairment.
An impairment loss is recognised if the carrying
amount of an asset or a cash-generating unit (CGU)
exceeds its recoverable amount.
The recoverable amount of an asset is the higher of an
asset’s fair value less costs to sell and value-in-use. The
value-in-use is the present value of the estimated future
cash flows relating to the asset using a pre-tax discount
rate specific to the asset or cash-generating unit to
which the asset belongs. For impairment testing, assets
are grouped together into the smallest group of assets
that generates cash inflows from continued use that are
largely independent of the cash inflows of other assets
or CGU. The consolidated entity tests for impairment on
an asset basis, with grouping under CGUs.
54 | CleanTeQ Annual Report 2013
Borrowings – financial instrument
Loans and borrowings are initially recognised at
the fair value of the consideration received, net of
transaction costs. They are subsequently measured at
amortised cost using the effective interest method.
Where there is an unconditional right to defer
settlement of the liability for at least 12 months
after the reporting date, the loans or borrowings are
classified as non-current.
Compound financial instruments issued by the
consolidated entity comprise convertible notes that can
be converted to share capital at the option of the holder,
when the number of shares to be issued is fixed.
The liability component of a compound financial
instrument is recognised initially at the fair value of a
similar liability that does not have an equity conversion
option. The equity component is recognised initially
at the difference between the fair value of the
compound financial instrument as a whole and the
fair value of the liability component. Any directly
attributable transaction costs are allocated to the
liability and equity components in proportion to their
initial carrying amounts.
Subsequent to initial recognition, the liability
component of the compound financial instrument
is measured at amortised cost using the effective
interest method. The equity component of a
compound financial instrument is not remeasured
subsequent to initial recognition.
Interest related to the financial liability is recognised
in profit or loss. On conversion, the financial liability is
reclassified to equity and no gain or loss is recognised.
notes to the financial statements for the year ended 30 june 2013 continued Employee benefits
Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-
monetary benefits, annual leave and accumulating
sick leave expected to be settled within 12 months of
the reporting date are recognised in current liabilities
in respect of employees’ services up to the reporting
date and are measured at the amounts expected to be
paid when the liabilities are settled. Non-accumulating
sick leave is expensed to profit or loss when incurred.
Long service leave
The liability for long service leave is recognised in
current and non-current liabilities, depending on the
unconditional right to defer settlement of the liability
for at least 12 months after the reporting date. The
liability is measured as the present value of expected
future payments to be made in respect of services
provided by employees up to the reporting date using
the projected unit credit method. Consideration is
given to expected future wage and salary levels,
experience of employee departures and periods of
service. Expected future payments are discounted
using market yields at the reporting date on national
government bonds with terms to maturity and
currency that match, as closely as possible, the
estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation
plans are expensed in the period in which they
are incurred.
Share-based payments
Equity-settled share-based compensation benefits are
provided to employees.
Equity-settled transactions are awards of shares, or
options over shares, that are provided to employees in
exchange for the rendering of services. Cash-settled
transactions are awards of cash for the exchange of
services, where the amount of cash is determined by
reference to the share price.
The cost of equity-settled transactions are measured
at fair value on grant date. Fair value is independently
determined using either the Binomial or Black-
Scholes option pricing model that takes into account
the exercise price, the term of the option, the
impact of dilution, the share price at grant date and
expected price volatility of the underlying share, the
expected dividend yield and the risk free interest
rate for the term of the option, together with non-
vesting conditions that do not determine whether the
consolidated entity receives the services that entitle
the employees to receive payment. No account is
taken of any other vesting conditions.
The cost of equity-settled transactions are recognised
as an expense with a corresponding increase in equity
over the vesting period. The cumulative charge to
profit or loss is calculated based on the grant date fair
value of the award, the best estimate of the number
of awards that are likely to vest and the expired
portion of the vesting period. The amount recognised
in profit or loss for the period is the cumulative
amount calculated at each reporting date less
amounts already recognised in previous periods.
The cost of cash-settled transactions is initially, and
at each reporting date until vested, determined by
applying either the Binomial or Black-Scholes option
pricing model, taking into consideration the terms
and conditions on which the award was granted. The
cumulative charge to profit or loss until settlement of
the liability is calculated as follows:
• during the vesting period, the liability at each
reporting date is the fair value of the award at
that date multiplied by the expired portion of the
vesting period.
•
from the end of the vesting period until
settlement of the award, the liability is the full fair
value of the liability at the reporting date.
All changes in the liability are recognised in profit or
loss. The ultimate cost of cash-settled transactions is
the cash paid to settle the liability.
Market conditions are taken into consideration
in determining fair value. Therefore any awards
subject to market conditions are considered to
vest irrespective of whether or not that market
condition has been met, provided all other conditions
are satisfied.
If equity-settled awards are modified, as a minimum
an expense is recognised as if the modification has
not been made. An additional expense is recognised,
over the remaining vesting period, for any modification
that increases the total fair value of the share-based
compensation benefit as at the date of modification.
Annual Report 2013 CleanTeQ | 55
notes to the financial statements for the year ended 30 june 2013 continued note 2. significant
accounting Policies continued
Employee benefits continued
If the non-vesting condition is within the control of
the consolidated entity or employee, the failure to
satisfy the condition is treated as a cancellation. If the
condition is not within the control of the consolidated
entity or employee and is not satisfied during the
vesting period, any remaining expense for the award
is recognised over the remaining vesting period,
unless the award is forfeited.
If equity-settled awards are cancelled, it is treated
as if it has vested on the date of cancellation, and
any remaining expense is recognised immediately.
If a new replacement award is substituted for the
cancelled award, the cancelled and new award is
treated as if they were a modification.
Issued capital
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.
Business combinations
The acquisition method of accounting is used to
account for business combinations regardless of
whether equity instruments or other assets are
acquired.
The consideration transferred is the sum of the
acquisition-date fair values of the assets transferred,
equity instruments issued or liabilities incurred by
the acquirer to former owners of the acquiree and
the amount of any non- controlling interest in the
acquiree. For each business combination, the non-
controlling interest in the acquiree is measured at
either fair value or at the proportionate share of the
acquiree’s identifiable net assets. All acquisition costs
are expensed as incurred to profit or loss.
On the acquisition of a business, the consolidated
entity assesses the financial assets acquired and
liabilities assumed for appropriate classification
and designation in accordance with the contractual
terms, economic conditions, the consolidated entity’s
operating or accounting policies and other pertinent
conditions in existence at the acquisition-date.
Where the business combination is achieved in
stages, the consolidated entity remeasures its
previously held equity interest in the acquiree at the
acquisition-date fair value and the difference between
the fair value and the previous carrying amount is
recognised in profit or loss.
Contingent consideration to be transferred by the
acquirer is recognised at the acquisition-date fair value.
Subsequent changes in the fair value of contingent
consideration classified as an asset or liability is
recognised in profit or loss. Contingent consideration
classified as equity is not remeasured and its
subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value
of assets acquired, liabilities assumed and any non-
controlling interest in the acquiree and the fair value of
the consideration transferred and the fair value of any
pre-existing investment in the acquiree is recognised
as goodwill. If the consideration transferred and the
pre-existing fair value is less than the fair value of
the identifiable net assets acquired, being a bargain
purchase to the acquirer, the difference is recognised
as a gain directly in profit or loss by the acquirer on
the acquisition-date, but only after a reassessment of
the identification and measurement of the net assets
acquired, the non-controlling interest in the acquiree,
if any, the consideration transferred and the acquirer’s
previously held equity interest in the acquirer.
Business combinations are initially accounted for on a
provisional basis. The acquirer retrospectively adjusts
the provisional amounts recognised and also recognises
additional assets or liabilities during the measurement
period, based on new information obtained about the
facts and circumstances that existed at the acquisition-
date. The measurement period ends on either the
earlier of (i) 12 months from the date of the acquisition
or (ii) when the acquirer receives all the information
possible to determine fair value.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing
the profit attributable to the owners of Clean TeQ
Holdings Limited, excluding any costs of servicing
equity other than ordinary shares, by the weighted
average number of ordinary shares outstanding during
the financial year, adjusted for bonus elements in
ordinary shares issued during the financial year.
56 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued Diluted earnings per share
Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take
into account the after income tax effect of interest
and other financing costs associated with dilutive
potential ordinary shares and the weighted average
number of shares assumed to have been issued
for no consideration in relation to dilutive potential
ordinary shares.
Comparatives
Deferred tax assets and deferred tax liabilities have
been offset in the current year to the extent that they
can be utilised in the same period by the consolidated
entity. To ensure the prior period statement of
financial position is accurate the deferred tax assets
and deferred tax liabilities have been offset to the
extent they can be utilised in the same period by the
consolidated entity. There is no impact on the result
or the net assets of the consolidated entity in the
prior period.
Certain comparative amounts in the consolidated
statement of profit or loss and other comprehensive
income have been reclassified to conform with the
current year’s presentation (see note 46). Any changes
made to comparative information has not impacted
results or net assets of the consolidated entity in the
prior period.
Rounding of amounts
The company is of a kind referred to in Class Order
98/100, issued by the Australian Securities and
Investments Commission, relating to ‘rounding-
off’. Amounts in this report have been rounded off
in accordance with that Class Order to the nearest
thousand dollars, or in certain cases, the nearest dollar.
New Accounting Standards and Interpretations
not yet mandatory or early adopted
Australian Accounting Standards and Interpretations
that have recently been issued or amended but are
not yet mandatory, have not been early adopted
by the consolidated entity for the annual reporting
period ended 30 June 2013. The consolidated entity’s
assessment of the impact of these new or amended
Accounting Standards and Interpretations, most
relevant to the consolidated entity, are set out below.
AASB 9 Financial Instruments, 2009-11 Amendments to
Australian Accounting Standards arising from AASB 9,
2010-7 Amendments to Australian Accounting Standards
arising from AASB 9 and 2012-6 Amendments to
Australian Accounting Standards arising from AASB 9
This standard and its consequential amendments
are applicable to annual reporting periods beginning
on or after 1 January 2015 and completes phase I
of the IASB’s project to replace IAS 39 (being the
international equivalent to AASB 139 ‘Financial
Instruments: Recognition and Measurement’).
This standard introduces new classification and
measurement models for financial assets, using a
single approach to determine whether a financial
asset is measured at amortised cost or fair value.
The accounting for financial liabilities continues to be
classified and measured in accordance with AASB
139, with one exception, being that the portion of a
change of fair value relating to the entity’s own credit
risk is to be presented in other comprehensive income
unless it would create an accounting mismatch.
The consolidated entity will adopt this standard from
1 July 2015 and the impact on the consolidated
entity’s financial statements has yet to be assessed.
AASB 10 Consolidated Financial Statements
This standard is applicable to annual reporting periods
beginning on or after 1 January 2013. The standard
has a new definition of ‘control’. Control exists when
the reporting entity is exposed, or has the rights, to
variable returns (e.g. dividends, remuneration, returns
that are not available to other interest holders including
losses) from its involvement with another entity and
has the ability to affect those returns through its
‘power’ over that other entity. A reporting entity has
power when it has rights (e.g. voting rights, potential
voting rights, rights to appoint key management,
decision making rights, kick out rights) that give it the
current ability to direct the activities that significantly
affect the investee’s returns (e.g. operating policies,
capital decisions, appointment of key management).
The consolidated entity will not only have to consider
its holdings and rights but also the holdings and rights
of other shareholders in order to determine whether it
has the necessary power for consolidation purposes.
The adoption of this standard from 1 July 2013 impacts
where the consolidated entity has a holding of less
than 50% in an entity, has de facto control, and is not
currently consolidating that entity. The consolidated
entity holds a 50% interest in Associated Water Pty
Ltd and does not consolidate this entity under current
accounting policies. The directors expect the adoption
of AASB 10 on 1 July 2013 will not impact this policy
significantly, as the consolidated entity does not
control Associated Water Pty Ltd.
Annual Report 2013 CleanTeQ | 57
notes to the financial statements for the year ended 30 june 2013 continued note 2. significant
accounting Policies continued
AASB 11 Joint Arrangements
This standard is applicable to annual reporting periods
beginning on or after 1 January 2013. The standard
defines which entities qualify as joint ventures and
removes the option to account for joint ventures using
proportional consolidation. Joint ventures, where the
parties to the agreement have the rights to the net
assets will use equity accounting. Joint operations,
where the parties to the agreements have the
rights to the assets and obligations for the liabilities
will account for the assets, liabilities, revenues
and expenses separately, using proportionate
consolidation. The adoption of this standard from
1 July 2013 is not expected to have a material impact
on the consolidated entity.
As noted above the company holds a 50% interest in
Associated Water Pty Ltd. The directors’ expect that
this investment will be accounted for in accordance
with AASB 11, and also expect that the investment
will continue to be equity accounted under AASB 11.
AASB 12 Disclosure of Interests in Other Entities
This standard is applicable to annual reporting periods
beginning on or after 1 January 2013. It contains
the entire disclosure requirement associated with
other entities, being subsidiaries, associates and
joint ventures. The disclosure requirements have
been significantly enhanced when compared to
the disclosures previously located in AASB 127
‘Consolidated and Separate Financial Statements’,
AASB 128 ‘Investments in Associates’, AASB 131
‘Interests in Joint Ventures’ and Interpretation 112
‘Consolidation - Special Purpose Entities’. The adoption
of this standard from 1 July 2013 will significantly
increase the amount of disclosures required to be
given by the consolidated entity such as significant
judgements and assumptions made in determining
whether it has a controlling or non-controlling interest
in another entity and the type of non-controlling
interest and the nature and risks involved.
the ‘exit price’ and it provides guidance on measuring
fair value when a market becomes less active. The
‘highest and best use’ approach would be used to
measure assets whereas liabilities would be based on
transfer value. As the standard does not introduce any
new requirements for the use of fair value, its impact
on adoption by the consolidated entity from 1 July 2013
should be minimal, although there will be increased
disclosures where fair value is used.
note 3. critical accounting
juDgeMents, estiMates
anD assuMPtions
The preparation of the financial statements requires
management to make judgements, estimates and
assumptions that affect the reported amounts in
the financial statements. Management continually
evaluates its judgements and estimates in relation
to assets, liabilities, contingent liabilities, revenue
and expenses. Management bases its judgements,
estimates and assumptions on historical experience
and on other various factors, including expectations of
future events, management believes to be reasonable
under the circumstances. The resulting accounting
judgements and estimates will seldom equal the
related actual results. The judgements, estimates and
assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets
and liabilities (refer to the respective notes) within the
next financial year are discussed below.
Share-based payment transactions
The consolidated entity measures the cost of equity-
settled transactions with employees by reference to
the fair value of the equity instruments at the date at
which they are granted. The fair value is determined by
using either the Binomial or Black-Scholes model taking
into account the terms and conditions upon which the
instruments were granted. The accounting estimates
and assumptions relating to equity-settled share-based
payments would have no impact on the carrying
amounts of assets and liabilities within the next annual
reporting period but may impact profit or loss and equity.
AASB 13 Fair Value Measurement and AASB 2011-
8 Amendments to Australian Accounting Standards
arising from AASB 13
This standard and its consequential amendments
are applicable to annual reporting periods beginning
on or after 1 January 2013. The standard provides a
single robust measurement framework, with clear
measurement objectives, for measuring fair value using
Estimation of useful lives of assets
The consolidated entity determines the estimated
useful lives and related depreciation and amortisation
charges for its property, plant and equipment and finite
life intangible assets. The useful lives could change
significantly as a result of technical innovations or
some other event. The depreciation and amortisation
charge will increase where the useful lives are less
58 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued than previously estimated lives, or technically obsolete
or non-strategic assets that have been abandoned or
sold will be written off or written down.
Intangible assets
The recoverable value of patents and trademarks
acquired is based on the cost of registering the
patents and trademarks, less any diminution in value
through amortisation and impairment. The recoverable
value of Development intangible assets is based
on discounted cash flows expected to be derived
from the use and eventual sale of the assets. At
each reporting date the directors and management
undertake an impairment review to determine their
value in use as derived from the discounted cash
flow modelling. Based on the impairment review
at 30 June 2013 the directors have determined an
impairment of the intangible assets of $1 million.
Details of the review, and the assumptions and
estimates used, are contained in note 19.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible
temporary differences only if the consolidated entity
considers it is probable that future taxable amounts
will be available to utilise those temporary differences
and losses.
Investment in equity accounted investments
The investment in the joint venture is assessed for
impairment at each reporting date by evaluating
whether indicators of impairment exist in relation to
the continued use of the asset by the consolidated
entity. The joint venture prepares accounts annually
and the carrying value of the investment is reviewed
with reference to these accounts.
Other non-derivative financial liabilities
Other non-derivative financial liabilities are measured
at fair value, at initial recognition and for disclosure
purposes, at each financial reporting date. Fair value
is calculated based on the present value of the future
principal and interest cash flows, discounted at the
market rate of interest at the measurement date. In
respect of the liability component of convertible notes,
the market rate of interest is determined with reference
to similar liabilities that do not have a conversion
option. For finance leases the market rate of interest is
determined by reference to similar lease agreements.
note 4. oPerating segMents
Identification of reportable operating segments
The consolidated entity is organised into 3 operating
segments: Air Purification, Water Purification and
Resource Recovery. These operating segments offer
different products and services, and are managed
separately because they require different technology
and marketing strategies. For each segment internal
reports are produced for review and use by the CEO,
who is the consolidated entity’s chief operating
decision maker (CODM), in assessing performance
and in determining the allocation of resources. There
is no aggregation of operating segments.
The CODM reviews gross profit for each operating
division. The accounting policies adopted for internal
reporting to the CODM are consistent with those
adopted in the financial statements. The information
reported to the CODM is on at least a monthly basis.
Types of products and services
The principal products and services of each of these
operating segments are as follows:
Air Purification
This has been the core business of the Company since
1990. Clean TeQ provides a full suite of air purification
and odour elimination solutions to municipal and
statutory authorities and industrial companies.
Water Purification
Clean TeQ’s suite of water technologies filter, separate
and purify polluted waters for drinking, agriculture,
recreation or industrial use. Clean TeQ is developing
technologies for use in the purification and recycling
of waste water and the desalination of brackish water.
Resource Recovery
The Clean-iX® Technology is at the core of this Division
and aims to provide cost effective extraction techniques
for a range of resources, including base metals, precious
metals and radioactive elements (such as uranium).
Information regarding the results of each reportable
segment is included below. Performance is measured
based on gross profit as included in the internal
management reports that are reviewed by the
consolidated entity’s CEO. Segment gross profit is used
to measure performance as management believes that
such information is the most relevant in evaluating the
results of certain segments relative to other entities
that operate within these industries. Inter-segment
pricing is determined on an arm’s length basis.
Annual Report 2013 CleanTeQ | 59
notes to the financial statements for the year ended 30 june 2013 continued note 4. oPerating segMents continued
The information relating to the performance of the identified segments includes revenues and directly attributable
costs and materials. The assets attributed to each division relates to revenue generating assets. All other assets
and liabilities are not allocated to specific segments.
Geographical segments
Geographically, the consolidated entity operates predominately in Australia.
Operating segment information
Consolidated
2013
Air
Resource
Water
Intersegment
eliminations/
unallocated
Total
$’000
$’000
$’000
$’000
$’000
REVENUE
Sales to external customers
Total sales revenue
Interest income
Other revenue
Total revenue
Reportable segment (loss)/profit
before interest, depreciation and tax
Depreciation and amortisation
Impairment of assets
Finance costs
Share of losses from joint venture
8,902
8,902
-
-
8,902
(173)
-
-
-
-
Profit/(loss) before income tax benefit
(173)
-
-
-
-
-
-
-
-
-
-
-
714
714
-
-
714
462
462
34
312
808
10,078
10,078
34
312
10,424
398
(4,378)
(4,153)
-
-
-
(161)
237
(568)
(568)
(1,000)
(1,000)
(96)
-
(96)
(161)
(6,042)
(5,978)
Income tax benefit
Loss after income tax benefit
Profit before income tax on disposal of
discontinued operation
Profit before income tax expense
Income tax expense
Profit after income tax expense
ASSETS
Segment assets
Total assets
Total assets includes:
Investments in associates
Acquisition of non-current assets
LIABILITIES
Segment liabilities
Total liabilities
60 | CleanTeQ Annual Report 2013
765
(5,213)
582
582
-
582
780
3,764
7,928
7,248
19,720
-
79
-
526
1,884
912
-
47
118
-
730
7,677
19,720
1,884
1,564
8,525
8,525
notes to the financial statements for the year ended 30 june 2013 continued Consolidated
2012
REVENUE
Sales to external customers
Sales to external customers –
discontinued operations
Total sales revenue
Interest income
Other revenue
Total revenue
Reportable segment (loss)/profit
before interest, depreciation and tax
Depreciation and amortisation
Impairment of assets
Finance costs
Share of losses from joint venture
Air
Resource
Water
Intersegment
eliminations/
unallocated
Total
$’000
$’000
$’000
$’000
$’000
6,037
-
6,037
-
-
6,037
1,684
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,290
2,213
7,503
-
-
7,503
533
11,860
-
533
60
115
708
2,213
14,073
60
115
14,248
5,251
(5,377)
1,558
-
-
-
(153)
5,098
(490)
(123)
(100)
-
(6,090)
Profit/(loss) before income tax benefit
1,684
Income tax benefit
Profit after income tax benefit
Profit before tax from
discontinued operations
Profit before income tax expense
Income tax expense
Profit after income tax expense
ASSETS
Segment assets
Total assets
Total assets includes:
Investments in associates
Acquisition of non-current assets
LIABILITIES
Segment liabilities
Total liabilities
1,094
4,191
8,880
6,010
-
102
-
-
221
612
2,045
732
-
3
266
776
Geographically, the consolidated entity operates predominantly in Australia.
(490)
(123)
(100)
(153)
692
308
1,000
280
280
(32)
248
20,175
20,175
2,048
1,321
3,040
4,428
Annual Report 2013 CleanTeQ | 61
notes to the financial statements for the year ended 30 june 2013 continued note 5. revenue
From continuing operations
SALES REVENUE
Contract revenue
Government grants
License fee income
OTHER REVENUE
Interest
Other revenue
Revenue from continuing operations
note 6. share of losses of joint ventures accounteD
for using the equity MethoD
Share of loss – joint ventures
See note 16 for details of joint venture operations.
Consolidated
2013
$’000
2012
$’000
9,886
9,840
23
169
20
2,000
10,078
11,860
34
312
346
60
115
175
10,424
12,035
Consolidated
2013
$’000
(161)
2012
$’000
(153)
62 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued note 7. exPenses
Profit/(loss) before income tax from continuing operations includes
the following specific expenses:
COST OF SALES
Cost of sales
DEPRECIATION
Motor vehicles under lease
Factory equipment
Office equipment and furniture
Capitalised leased assets
Total depreciation
AMORTISATION
Capitalised development costs
Other intangible assets
Total amortisation
Total depreciation and amortisation
EMPLOyEE BENEFIT EXPENSES
Wages and salaries
Employee entitlements expense including movements in provisions
for employee entitlements
Superannuation
Equity settled share based payments
Other costs
Employee benefit expenses capitalised into development assets
Total employee benefit expense
RENTAL EXPENSE RELATING TO OPERATING LEASES
Consolidated
2013
$’000
2012
$’000
9,643
6,045
17
47
53
-
117
374
77
451
568
12
34
38
2
86
277
127
404
490
2,869
1,989
3
277
97
379
(539)
3,086
43
189
22
364
-
2,607
Minimum lease payments
156
148
Annual Report 2013 CleanTeQ | 63
notes to the financial statements for the year ended 30 june 2013 continued note 8. incoMe tax benefit
INCOME TAX BENEFIT
Current tax
Deferred tax – origination and reversal of temporary differences
Aggregate income tax benefit
Income tax benefit is attributable to:
Loss from continuing operations
Profit from discontinued operations (note 9)
Aggregate income tax benefit
Deferred tax included in income tax benefit comprises:
Consolidated
2013
$’000
2012
$’000
(695)
(70)
(765)
(765)
-
(765)
(346)
70
(276)
(308)
32
(276)
Increase/(decrease) in deferred tax liabilities (note 26)
(70)
70
NUMERICAL RECONCILIATION OF INCOME TAX BENEFIT
AND TAX AT THE STATUTORy RATE
Profit/(loss) before income tax benefit from continuing operations
Profit before income tax expense from discontinued operations
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable)
in calculating taxable income:
Share-based payments
Non-deductible expenses
Tax losses (reinstated) / not brought to account
Concessional R&D deduction
Tax claim on licence fee
Deferred tax balances in relation to joint venture investment
Adjustment for capital gain
Income tax benefit
TAX LOSSES NOT RECOGNISED
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 30%
(5,978)
582
(5,396)
(1,619)
29
1
1,003
(227)
-
-
48
(765)
3,343
1,003
692
280
972
292
-
19
(447)
(140)
600
(600)
-
(276)
-
-
The above potential tax benefit for tax losses has not been recognised in the statement of financial position.
These tax losses can only be utilised in the future if the continuity of ownership test is passed, or failing that,
the same business test is passed.
64 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued note 9. DiscontinueD oPerations
Description
On 28 June 2012, the company executed a contract to sell 100% of its shares in UV Guard Australia Pty Ltd.
The contract was completed on 19 July 2012, with the sale effective from 1 July 2012. The company received
$1,350,000 plus inventory on hand as consideration for the sale. The sale consideration exceeds the net assets
of UV Guard Australia Pty Ltd at 30 June 2012 and as a result no impairment was recognised.
The decision was also made to close the operations of UV Guard New Zealand Limited. At 30 June 2012,
the only asset that the company held was cash, and for this reason no impairment was recognised.
Both UV Guard Pty Ltd and UV Guard New Zealand Limited formed part of the Water Purification business
segment in note 4 – Operating segments.
Consolidated
FINANCIAL PERFORMANCE INFORMATION
Sales of goods and services
Total revenue
Raw materials and consumables used
Administration expenses
Marketing expenses
Employee benefits expenses
Depreciation and amortisation expenses
Other expenses
Finance costs
Total expenses
Profit before income tax expense
Income tax expense
Profit after income tax expense
Gain on disposal before income tax
Income tax expense
Gain on disposal after income tax expense
Profit after income tax expense from discontinued operations
CASH FLOW INFORMATION
Net cash from operating activities
Net cash from/(used in) investing activities
Net cash used in financing activities
Net increase in cash and cash equivalents from discontinued operations
2013
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
582
-
582
582
-
1,373
-
1,373
2012
$’000
2,213
2,213
(882)
(114)
(6)
(819)
(9)
(99)
(4)
(1,933)
280
(32)
248
-
-
-
248
27
(6)
(7)
14
Annual Report 2013 CleanTeQ | 65
notes to the financial statements for the year ended 30 june 2013 continued note 9. DiscontinueD oPerations continued
DETAILS OF THE DISPOSAL
Total sale consideration
Carrying amount of net assets sold
Disposal costs
Gain on disposal before income tax
Income tax expense
Gain on disposal after income tax
note 10. current assets – cash anD cash equivalents
Cash at bank
Cash on deposit
Cash on deposit used as security for bank guarantees
Consolidated
2013
$’000
2012
$’000
1,800
(1,140)
(78)
582
-
582
-
-
-
-
-
-
Consolidated
2013
$’000
96
840
145
2012
$’000
1,233
43
178
1,081
1,454
Reconciliation to cash and cash equivalents at the end of the financial year
The above figures are reconciled to cash and cash equivalents at the end of the financial year as shown in the
statement of cash flows as follows:
Balances as above
Cash and cash equivalents – classified as held for sale (note 15)
Balance as per statement of cash flows
Consolidated
2013
$’000
1,081
-
1,081
2012
$’000
1,454
179
1,633
The effective interest rate on short-term bank deposits at 30 June 2013 was 3.70% (2012: 4.50%). These
deposits have a maximum maturity of 90 days of year end Any balances with maturities exceeding this have
been disclosed as other financial assets. Refer to note 25 for details of the used and unused bank guarantee
facility. At 30 June 2013 $290,000 was secured against guarantees (2012: $192,000).
66 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued note 11. current assets – traDe anD other receivables
Trade receivables
Other receivables
Past due but not impaired
Consolidated
2013
$’000
3,354
363
3,717
2012
$’000
1,965
63
2,028
Customers with balances past due but without provision for impairment of receivables amount to $415,000 as at
30 June 2013 ($346,000 as at 30 June 2012).
The consolidated entity did not consider a credit risk on the aggregate balances after reviewing credit terms of
customers based on recent collection practices.
The ageing of the past due but not impaired receivables are as follows:
31-60 days
60 -90 days
Consolidated
2013
$’000
243
172
415
2012
$’000
335
11
346
Normal trading terms are 30 days from month end. Amounts outstanding beyond normal trading terms do not
have a history of default and thus management is of the view that no debtors are impaired at 30 June 2013 or
30 June 2012 and thus should not be provided for.
note 12. current assets – inventories
Raw materials – at net realisable value
Work in progress – at cost
Finished goods – at cost
Consolidated
2013
$’000
412
958
255
1,625
2012
$’000
390
1,296
115
1,801
Raw materials includes grape skin extract which was initially recognised at a cost of $598,000 when first
acquired pre-2007. At 30 June 2013 the carrying value of grape skin extract is $294,000 (2012: $309,000), which
includes costs incurred to convert some of the liquid extract into powder.
Annual Report 2013 CleanTeQ | 67
notes to the financial statements for the year ended 30 june 2013 continued note 13. current assets – incoMe tax receivable
Income tax receivable
Consolidated
2013
$’000
683
2012
$’000
421
Income tax receivable represents the refund due to the consolidated entity on capitalised expenditure during the
current financial year as a result of research and development tax concessions.
note 14. current assets – other financial assets
Cash on deposit used as security for bank guarantees
Consolidated
2013
$’000
121
2012
$’000
75
note 15. current assets – assets of DisPosal grouPs classifieD
as helD for sale
Cash and cash equivalents
Trade and other receivables
Inventory
Plant and equipment
Deferred tax asset
Goodwill – at cost
Income tax refundable
Refer to note 9 – Discontinued Operations for further details.
Consolidated
2013
$’000
2012
$’000
-
-
-
-
-
-
-
-
179
463
684
28
15
405
16
1,790
68 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued note 16. non-current assets – investMents accounteD for using
the equity MethoD
Investment in joint venture
Refer to note 39 for further information on interests in joint ventures.
Consolidated
2013
$’000
1,884
2012
$’000
2,045
During the prior year, the company entered into a joint venture agreement with Nippon Gas Co Ltd, to provide
desalination facilities and services in the Australian coal seam gas industry. The joint venture is known as
Associated Water Pty Ltd. Both companies have a 50% equity interest. In the 2012 financial year CleanTeQ
Holdings Limited provided an exclusive licence to use its CIF technology with its 50% share valued at
$2,000,000.
The consolidated entity has recognised its share of after tax losses for the period totaling $161,000 (2012:
$153,000).
note 17. non-current assets – other financial assets
Cash on deposit used as security for bank guarantees
Consolidated
2013
$’000
169
2012
$’000
117
Annual Report 2013 CleanTeQ | 69
notes to the financial statements for the year ended 30 june 2013 continued note 18. non-current assets – Plant anD equiPMent
Office furniture and equipment – at cost
Less: Accumulated depreciation
Motor vehicles – at cost
Less: Accumulated depreciation
Factory equipment – at cost
Less: Accumulated depreciation
Capitalised leased equipment – at cost
Less: Accumulated depreciation
Consolidated
2013
$’000
423
(328)
95
154
(74)
80
321
(124)
197
-
-
-
372
2012
$’000
376
(275)
101
132
(47)
85
321
(77)
244
22
(10)
12
442
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are
set out below:
Factory
equipment
Office
furniture
and
equipment
Motor
vehicles
Capitalised
lease
equipment
Total
$’000
$’000
$’000
$’000
$’000
154
123
-
(33)
244
-
-
(47)
197
76
72
(6)
(41)
101
47
-
(53)
95
90
36
(22)
(19)
85
-
12
(17)
80
13
1
-
(2)
12
-
(12)
-
-
333
232
(28)
(95)
442
47
-
(117)
372
CONSOLIDATED
Balance at 1 July 2011
Additions
Classified as held for sale
Depreciation expense
Balance at 30 June 2012
Additions
Transfers in/(out)
Depreciation expense
Balance at 30 June 2013
70 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued note 19. non-current assets – intangibles
Development – at cost
Less: Accumulated amortisation and impairment
Patents and trademarks – at cost
Less: Accumulated amortisation
Licenses – at cost
Less: Accumulated amortisation
Consolidated
2013
$’000
2012
$’000
17,568
16,051
(8,206)
(6,832)
9,362
712
(198)
514
460
(268)
192
9,219
712
(163)
549
460
(226)
234
10,068
10,002
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are
set out below:
CONSOLIDATED
Balance at 1 July 2011
Additions
Impairment of assets
Write off of assets
Amortisation expense
Balance at 30 June 2012
Additions
Impairment of assets
Amortisation expense
Balance at 30 June 2013
Capitalised
development
Licence
Patents and
trademarks
Total
$’000
$’000
$’000
$’000
8,564
1,055
(123)
-
(277)
9,219
1,517
(1,000)
(374)
9,362
387
-
-
(60)
(93)
234
-
-
(42)
192
549
34
-
-
(34)
549
-
-
(35)
514
9,500
1,089
(123)
(60)
(404)
10,002
1,517
(1,000)
(451)
10,068
Annual Report 2013 CleanTeQ | 71
notes to the financial statements for the year ended 30 june 2013 continued Whilst changes may occur in the future, the
consolidated entity is currently focussing on its
core projects: Clean-IX for Uranium Extraction
and Purification, Clean-IX for Gold Extraction and
Purification, Clean-IX for secondary Effluent Treatment
for Water and Continuous Ion Exchange Treatment
for Clean-IX.
The discounted cash flows have been prepared
using a variety of sourced data such as sales data
from Memorandum’s of Understanding (MOU’s)
signed, anticipated sales resulting from discussions
with potential customers and other market data to
forecast future revenue. As there are no guarantees
that new projects will be given regulatory approval
where such approval is required or be commercialized
within planned timeframes, there is an inherent risk
attached to the discounted cash flows that is factored
into the key assumptions by way of probability factor
adjustments. In generating the forecast cash flows,
the consolidated entity has used a post-tax discount
rate of 15% (2012: 15%) for all future cash flows for a
5 year period.
In addition, whilst the underlying technologies are
still current, some of the developments undertaken
were not currently being pursued by the consolidated
entity, the most significant identifiable project revenue
is identified as commencing in 2015 and an annual
growth rate for revenue of 2.5% is estimated.
The commercialisation of the consolidated entities
technologies have been recently impacted by
commodity prices and regulatory matters within
sectors in which the consolidated entity operates,
unrelated to the consolidated entity’s technology.
As a result lead times have extended and project
commencement dates revised and, consequently,
anticipated cash inflows have been deferred to later
years with consequential adjustments made to key
assumption inputs into the related discounted cash
flows models to account for changes in risks attached
to the projects, which has given rise to the impairment
expense recorded in the current year.
note 19. non-current
assets – intangibles continued
The amortisation of patents, trademarks and
development costs is allocated to expenses within
profit or loss. The impairment charge is expensed
through profit or loss.
Recoverability of development costs and
impairment loss
The carrying amount of the consolidated entity’s
Development intangible assets that are yet to be
commercialised are reviewed at each reporting date
for potential impairment. The review consists of a
comparison of the carrying value with the expected
recoverable amount of the Development intangible
assets based on the estimated value in use, which is
based on a discounted cash flow model. As a result
of the impairment assessment at 30 June 2013,
the directors and management of the consolidated
entity identified that the recoverable amount of the
Development intangible assets as estimated from the
discounted cash flows resulted in an impairment of
the Development intangible assets of $1 million.
The consolidated entity’s Development intangible
assets are reviewed for impairment in total and on
an individual basis, using segments and individually
identifiable projects to develop appropriate discounted
cash flow models. The discounted cash flow models
take into account a range of factors including:
•
•
the status of an individual project with regard to
its stage of project development;
the extent of any incremental costs are expected
to be incurred to commercialise the development
assets;
• five or six year forecast revenues from
commercialisation of the development assets,
including assumptions with respect to market
penetration rates, with sales growth dependent
upon either the quantum of projects forecast to
commence or global market penetration rates for
specific segments which vary from less than 1%
increasing to over 5% over the forecast period;
•
the risks attached to commercialising the asset,
including any industry specific or regulatory risk;
•
anticipated levels of competition; and
• other general economic factors.
72 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued Management note that reasonably possible changes in key assumptions, include changes to the discount rate,
changes to probability factors applied to forecast cash flows, changes in the timing of cash flows and changes to
assumed rates of market penetration. The most significant potential changes and their impact are as follows at
30 June 2013:
A reduction of 10% in the probability factors applied to forecast cash flows
A reduction of 25% to the consolidated entity’s assumed market penetration rates
note 20. current liabilities – traDe anD other Payables
Incremental
Impairment
2013
$’000
572
540
Trade payables
Other payables
Refer to note 31 for further information on financial instruments.
note 21. current liabilities – borrowings
Convertible notes payable
Loans
Hire purchase
Consolidated
2013
$’000
3,449
350
3,799
2012
$’000
1,976
436
2,412
Consolidated
2013
$’000
1,841
1,700
32
3,573
2012
$’000
-
-
24
24
See note 31 Financial Instruments and note 36 Related party transactions for details of loans received during
the year.
On 21 May 2013 the consolidated entity issued 18,406,116 unlisted convertible notes at $0.10 (10 cents) each
providing proceeds of $1,841,000. Transaction costs of $19,000 were billed separately during the year. The notes
were issued with an interest rate of 10% and a maturity date of 20 May 2016. The notes are convertible at any
time prior to the maturity date at the request of the note holder at $0.10 (10 cents) per share.
Annual Report 2013 CleanTeQ | 73
notes to the financial statements for the year ended 30 june 2013 continued note 22. current liabilities – eMPloyee benefits
Annual leave
Long service leave
note 23. current liabilities – other
Deferred revenue
Consolidated
2013
$’000
144
115
259
2012
$’000
139
143
282
Consolidated
2013
$’000
848
2012
$’000
1,389
The deferred income balance at 30 June 2013 consists of $118,000 (2012: $613,000) which relates to Air
Pollution Control sales contracts. Income had been received for projects that were incomplete at the end of the
financial year. Commonwealth government grant money received associated with the Climate Ready project of
$730,000 (2012: $776,000) has also been recognised as deferred income. This income is being recognised over
17 years, being the useful life of the related asset.
note 24. current liabilities – liabilities Directly associateD with
assets classifieD as helD for sale
Trade payables
Accrued expenses
Employee provisions
Provision for income tax
Hire purchase
Refer to note 9 – Discontinued Operations for further details.
Consolidated
2013
$’000
2012
$’000
-
-
-
-
-
-
75
13
50
8
26
172
74 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued note 25. non-current liabilities – borrowings
Hire purchase
Refer to note 31 for further information on financial instruments.
Total secured liabilities
The total secured liabilities (current and non-current) are as follows:
Hire purchase
Financing arrangements
Unrestricted access was available at the reporting date to the following lines of credit:
Total facilities
Bank overdraft
Guarantees against work in progress
Finance lease and hire purchase facilities
Used at the reporting date
Bank overdraft
Guarantees against work in progress
Finance lease and hire purchase facilities
Unused at the reporting date
Bank overdraft
Guarantees against work in progress
Finance lease and hire purchase facilities
* Prior period facilities include those relating to liabilities classified as held for sale in 2012.
Consolidated
2013
$’000
17
2012
$’000
49
Consolidated
2013
$’000
49
2012
$’000
73
Consolidated
2013
$’000
-
370
49
419
-
329
49
378
-
41
-
41
2012
$’000
750
413
99
1,262
370
99
469
750
43
-
793
Annual Report 2013 CleanTeQ | 75
notes to the financial statements for the year ended 30 june 2013 continued note 26. non-current liabilities – DeferreD tax
Deferred tax liability comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Intangible assets
Government grant
Unearned interest
Accrued expenses
Acquisition costs
Employee benefits
Software development costs
Investment in Associated Water Pty Ltd
Deferred capital gain on disposal of subsidiary
Legal and consulting fees
Unused tax losses
Amounts recognised in equity:
Transaction costs on share issues
Deferred tax liability
Movements:
Opening balance
Charged/(credited) to profit or loss (note 8)
Closing balance
note 27. non-current liabilities – eMPloyee benefits
Long service leave
note 28. equity – issueD caPital
Consolidated
2013
$’000
2012
$’000
2,772
2,730
7
1
(199)
-
(119)
(1)
(682)
-
(72)
-
3
(230)
(1)
(111)
(2)
(646)
(100)
(72)
(1,642)
(1,420)
65
151
(65)
-
70
(70)
-
(81)
70
-
70
70
Consolidated
2013
$’000
29
2012
$’000
30
Ordinary shares – fully paid
143,793,514
143,651,853
13,149
13,151
Consolidated
Consolidated
2013
Shares
2012
Shares
2013
$’000
2012
$’000
76 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued Movements in ordinary share capital
Details
Balance
Employee share issue
Entitlement issue
Date
1 July 2011
11 July 2011
29 September 2011
27,367,478
Shares issued to UV Guard
11 November 2011
Shares issued to Corp 8
6 February 2012
Placement to Nippon Gas Co. Ltd
19 March 2012
2,604,826
2,000,000
14,000,000
Cost of capital raising
Balance
Shares issued as a result of the
Employee Tax Exempt Share Plan
Cost of issuing convertible notes
30 June 2012
143,651,853
13 August 2012
141,661
$0.120
Balance
30 June 2013
143,793,514
No. of
shares
Issue
price
97,078,465
601,084
$0.037
$0.037
$0.036
$0.055
$0.146
$’000
10,059
22
1,013
94
110
2,044
(191)
13,151
17
(19)
13,149
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company
in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par
value and the company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a
poll each share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence
and to sustain future development of the business. The Board of Directors monitors the return on capital, which
the consolidated entity defines as net operating income divided by total shareholders’ equity. The Board of
Directors also monitors the level of dividends likely to be proposed and paid to ordinary shareholders.
The Board’s target is for employees of the consolidated entity, excluding the founders, to hold 10 percent of the
Company’s ordinary shares in due course. At present assuming that all outstanding share options vest and/ or are
exercised, significantly less than this amount of the shares would be held by the consolidated entity’s employees.
The Board ultimately seeks to maintain a balance between the higher returns that might be possible with higher
levels of borrowings, new share issues and the issuing of convertible notes and the advantages and security
afforded by a sound capital position. The consolidated entity may increase its debt levels if and when required in
order to achieve increased returns for shareholders.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
The capital risk management policy remains unchanged from the 30 June 2012 Annual Report.
Annual Report 2013 CleanTeQ | 77
notes to the financial statements for the year ended 30 june 2013 continued note 29. equity – reserves
Foreign currency reserve
Share-based payments reserve
CONSOLIDATED
Balance at 1 July 2011
Foreign currency translation
Lapsed options transferred to retained earnings
Share based payments
Balance at 30 June 2012
Foreign currency translation
Lapsed options transferred to retained earnings
Share based payments
Balance at 30 June 2013
Foreign currency reserve
Consolidated
2013
$’000
-
91
91
Foreign
currency
Share
based
payments
2012
$’000
(1)
191
190
Total
$’000
$’000
$’000
-
(1)
-
-
(1)
1
-
-
-
82
-
(47)
156
191
-
82
(1)
(47)
156
190
1
(180)
(180)
80
91
80
91
The reserve is used to recognise exchange differences arising from translation of the financial statements
of foreign operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net
investments in foreign operations.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
note 30. equity – DiviDenDs
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Franking credits
Franking credits available for subsequent financial years based on a tax rate of 30%
Consolidated
2013
$’000
572
2012
$’000
572
78 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued The above amounts represent the balance of the
franking account as at the end of the financial year,
adjusted for:
•
•
•
franking credits that will arise from the payment
of the amount of the provision for income tax at
the reporting date
franking debits that will arise from the payment
of dividends recognised as a liability at the
reporting date
franking credits that will arise from the receipt
of dividends recognised as receivables at the
reporting date
The ability to utilise the franking credits is dependent
upon there being sufficient available profits to declare
dividends. In accordance with the tax consolidation
legislation, the Company as the head entity in the
tax consolidated entity has assumed the benefit of
franking credits in the current financial year $572,000
(2012: $572,000).
note 31. financial instruMents
Financial risk management objectives
The consolidated entity has exposure to the following
risks from their use of financial instruments:
• market risk;
•
•
credit risk; and
liquidity risk;
This note presents information about the consolidated
entity’s exposure to each of the above risks, their
objectives, policies and processes for measuring and
managing risk and the management of capital. Further
quantitative disclosures are included throughout this
financial report.
The Board of Directors has overall responsibility
for the establishment and oversight of the risk
management framework. The Board is responsible for
developing and monitoring risk management policies.
Risk management policies are established to identify
and analyse the risks faced by the consolidated
entity, to set appropriate risk limits and controls
and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed
regularly to reflect changes in market conditions and
the consolidated entity’s activities. The consolidated
entity, through their experience and management
standards and procedures, aim to develop a disciplined
and constructive control environment in which all
employees understand their roles and obligations.
The Board oversees how management monitors
compliance with the consolidated entity’s risk
management policies and procedures and reviews
the adequacy of the risk management framework in
relation to the risks faced by the consolidated entity.
The Board is assisted in its oversight role by the
Audit Committee and executive management team.
Executive management undertakes both regular and
ad hoc reviews of risk management controls and
procedures, the results of which are reported to the
Board and the Audit Committee.
Market Risk
Market Risk is the risk arising from economic factors
outside of the control of the consolidated entity on the
financial instruments of the consolidated entity. The
most common market risks are foreign currency risk,
price risk and interest rate risk.
Foreign currency risk
The consolidated entity undertakes certain
transactions denominated in foreign currency and
are exposed to foreign currency risk through foreign
exchange rate fluctuations. There is no current
material exposure to foreign exchange risk.
Price risk
The consolidated entity is not exposed to any
significant price risk.
Interest rate risk
The consolidated entity currently has no significant
debt subject to variable interest rates. Accordingly the
consolidated entity has limited exposure to interest
rate movements. The consolidated entity has a term
deposit facility used as security for bank guarantees.
All borrowings are at fixed rates of interest and
therefore not subject to interest rate risk.
Credit risk
Credit risk is the risk of financial loss to the
consolidated entity if a customer or counterparty to
a financial instrument fails to meet its contractual
obligations and arises principally from the consolidated
entity’s receivables from customers. At the reporting
date the maximum exposure to credit risk for the
consolidated entity was $5,771,000 (2012: $4,095,000),
made up of trade receivables of $3,354,000 (2012:
$1,965,000) cash and cash equivalents of $1,081,000
(2012: $1,454,000) income tax receivable of $683,000
(2012: $421,000), bank deposits in respect of
guarantees of $290,000 (2012: $192,000) and other
debtors of $363,000 (2012: $63,000).
Annual Report 2013 CleanTeQ | 79
notes to the financial statements for the year ended 30 june 2013 continued note 31. financial
instruMents continued
Trade and other receivables
The consolidated entity’s exposure to credit risk
relating to trade receivables of $3,354,000 (2012
$1,965,000) is influenced mainly by the individual
characteristics of each customer. The demographics
of the consolidated entity’s customer base, including
the default risk of the industry and country in which
customers operate, has less of an influence on credit
risk. The majority of the consolidated entity’s sales
transactions are evenly spread across a large number
of customers. Geographically there is an Australian
concentration of credit risk.
The consolidated entity is exposed to significant
concentrations of credit risk in relation to project
revenue, due to the high values of progress invoicing
on a number of projects. At 30 June 2013 the
consolidated entity had individual debtors with
balances in excess of $1 million resulting from project
billings. Neither of the balances were considered to
be impaired. The Board has established a credit policy
under which each new significant customer is analysed
individually for creditworthiness before the consolidated
entity’s standard payment and delivery terms and
conditions are offered. Each new contract of works
to be under taken by the consolidated entity, which is
greater than a predetermined level, must be approved
by the Board prior to the contract being signed.
Many of the consolidated entity’s customers are
large multinationals and government organisations
who have been transacting with the consolidated
entity for a number of years. Losses have occurred
very infrequently since the inception of the business.
The majority of sales transactions undertaken by the
consolidated entity require the customer to make
payments as contract milestones are achieved. Failure
of the customer to make payment by the due date
will result in the further supply of goods and services
being put on hold until such time as payment is
received by the consolidated entity.
In monitoring customer credit risk, customers are
grouped according to their credit characteristics,
including whether they are an individual or legal
entity, whether they are a wholesale, retail or end-
user customer, geographic location, industry, aging
profile, maturity and existence of previous financial
difficulties. The Group’s trade and other receivables
relate mainly to the Group’s wholesale customers who
are predominantly made up of public companies and
government bodies.
80 | CleanTeQ Annual Report 2013
Customers that are graded as “high risk” are placed
on a restricted customer list, and future sales are
made on a prepayment basis with approval of
executive management. To date the Group has only
ever had two minor trade bad debts. Refer to note 11
for debtors aging analysis.
Guarantees
The consolidated entity’s policy is to provide financial
guarantees only to wholly-owned subsidiaries. Details
of outstanding guarantees are provided in note 40.
The consolidated entity provides guarantees for
work performed on each project contracts. These
guarantees are put in place at the commencement of
the contract and remain in place until approximately
12 months after the completion of the contract. These
guarantees are issued under the Company’s guarantee
facility (refer note 25).
Liquidity risk
Liquidity risk is the risk that the consolidated entity
will not be able to meet its financial obligations as
they fall due. The consolidated entity’s approach to
managing liquidity is to ensure, as far as possible,
that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed
conditions, without incurring unacceptable losses or
risking damage to the consolidated entity’s reputation.
The consolidated entity adopts milestone and
progress invoicing, which assists it in monitoring cash
flow requirements and optimising its cash return
on investments. Typically the consolidated entity
ensures that it has sufficient cash on demand to meet
expected operational expenses for a period of 90
days, including the servicing of financial obligations;
this excludes the potential impact of extreme
circumstances that cannot reasonably be predicted,
such as natural disasters. In addition, the consolidated
entity maintains the following lines of credit:
Financing arrangements
Unused borrowing facilities at the reporting date:
Bank overdraft
Guarantees against
work in progress
Consolidated
2013
$’000
-
41
41
2012
$’000
750
43
793
notes to the financial statements for the year ended 30 june 2013 continued Remaining contractual maturities
The following tables detail the consolidated entity’s remaining contractual maturity for its financial instrument
liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on
the earliest date on which the financial liabilities are required to be paid. The tables include both interest and
principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their
carrying amount in the statement of financial position.
Weighted
average
interest
rate
1 year
or less
Between
1 and 2
years
Between
2 and 5
years
Over
5 years
Remaining
contractual
maturities
%
$’000
$’000
$’000
$’000
$’000
-
-
3,449
350
9.08
10.00
8.64
1,700
1,841
32
7,372
-
-
-
-
17
17
-
-
-
-
-
-
-
-
-
-
-
-
3,449
350
1,700
1,841
49
7,389
Weighted
average
interest
rate
1 year
or less
Between
1 and 2
years
Between
2 and 5
years
Over
5 years
Remaining
contractual
maturities
%
$’000
$’000
$’000
$’000
$’000
Consolidated
2013
NON-DERIVATIVES
Non-interest bearing
Trade payables
Other payables
Interest-bearing - fixed rate
Other loans
Convertible notes payable
Hire purchase
Total non-derivatives
Consolidated
2012
NON-DERIVATIVES
Non-interest bearing
Trade payables
Other payables
Interest-bearing - fixed rate
Hire purchase
8.64
Total non-derivatives
24
2,436
-
-
1,976
436
-
-
49
49
-
-
-
-
-
-
-
-
1,976
436
73
2,485
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually
disclosed above.
Annual Report 2013 CleanTeQ | 81
notes to the financial statements for the year ended 30 june 2013 continued note 31. financial instruMents continued
Fair value of financial instruments
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost
using the effective interest rate method, less any provision for impairment. Trade and other payables are measured
at fair value on recognition and at amortised cost using the effective interest rate method subsequently. Due to
their short term nature neither trade and other receivables or trade and other payables are discounted.
Borrowings are recognised at fair value of consideration received, net of transaction costs, and subsequently
measured at amortised cost using the effective interest rate method. In estimating amortised cost the
consolidated entity takes into account its borrowing capacity and the source of its borrowings. The categorisation
of the borrowings based on the fair value hierarchy is detailed in the table below.
The following tables detail the consolidated entity’s fair values of financial instruments categorised by the
following levels:
•
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 (as prices) or indirectly (derived from prices).
• Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Consolidated
2013
LIABILITIES
Loans
Convertible Notes
Total liabilities
Level 1
Level 2
Level 3
$’000
$’000
$’000
-
-
-
-
-
-
1,700
1,841
3,541
Total
$’000
1,700
1,841
3,541
There were no transfers between levels during the financial year.
Movements in level 3 financial instruments
Movements in level 3 financial instruments during the current and previous financial year are set out below:
CONSOLIDATED
Balance at 1 July 2011
Balance at 30 June 2012
Transfers into level 3
Balance at 30 June 2013
Loans Convertible
notes
Total
$’000
$’000
$’000
-
-
1,700
1,700
-
-
1,841
1,841
-
-
3,541
3,541
Changing one or more inputs would not significantly change the fair value of level 3 financial instruments.
82 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. The carrying
amounts of trade receivables and trade payables are assumed to approximate their fair values due to their short-
term nature. The fair value of financial liabilities is estimated by discounting the remaining contractual maturities
at the current market interest rate that is available for similar financial instruments.
Compliance with the consolidated entity’s standards is supported by a programme of periodic reviews
undertaken by management.
note 32. key ManageMent Personnel Disclosures
Directors
The following persons were directors of Clean TeQ Holdings Limited during the financial year:
• Sam Riggall (Chairman and Non-Executive Director) – appointed 4 June 2013
• Peter Voigt (Executive Director and Chief Executive Officer)
• Greg Toll (Executive Director, previously Chairman)
• Bob Cleary (Independent Non Executive Director) – retired 6 June 2013
• Roger Harley (Independent Non Executive Director)
Other key management personnel
The following persons also had the authority and responsibility for planning, directing and controlling the major
activities of the consolidated entity, directly or indirectly, during the financial year:
• Melanie Leydin (Company Secretary – appointed 7 July 2011)
• Tony Panther (Chief Financial Officer – appointed 10 January 2013)
Compensation
The aggregate compensation made to directors and other members of key management personnel of the
consolidated entity is set out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Consolidated
2013
$
2012
$
661,392
719,665
46,759
59,173
3,115
81,500
8,344
4,000
792,766
791,182
The key management personnel receive no compensation in relation to the management of the company. Key
management personnel are compensated for management of the consolidated entity.
Information regarding individual directors and executives’ compensation and some equity instruments
disclosures as permitted by Corporations Regulations 2M.3.03 are provided in the Remuneration Report section
of the Directors’ Report.
Apart from the details disclosed in this note or note 36, no director has entered into a material contract with the
consolidated entity since the end of the previous financial year and there were no material contracts involving
directors’ interests existing at the year end.
Annual Report 2013 CleanTeQ | 83
notes to the financial statements for the year ended 30 june 2013 continued note 32. key ManageMent Personnel Disclosures continued
Shareholding
The number of shares in the parent entity held during the financial year by each director and other members of
key management personnel of the consolidated entity, including their personally related parties, is set out below:
2013
ORDINARy SHARES
Peter Voigt**
Greg Toll
Roger Harley**
Ross Dive*
Balance
at the start
of the year
Received
as part of
remuneration
Additions Disposals/
other
Balance
at the end
of the year
25,823,263
13,061,896
1,551,718
1,342,413
8,333
8,333
-
-
-
-
-
-
-
-
-
25,831,596
13,070,229
1,551,718
(1,342,413)
-
41,779,290
16,666
-
(1,342,413)
40,453,543
* Ross Dive is a director of UV Guard Australia Pty Ltd. The consolidated entity disposed of its interest in UV Guard Australia Pty Ltd in
July 2012.
** Amount disclosed includes amounts held by associates.
2012
ORDINARy SHARES
Greg Toll**
Peter Voigt**
Marc Lichtenstein*
Ross Dive
Roger Harley**
Balance
at the start
of the year
Received
as part of
remuneration
Additions Disposals/
other
Balance
at the end
of the year
8,783,151
27,322
4,251,423
19,744,565
27,322
6,051,376
-
-
13,061,896
25,823,263
137,135
40,000
-
-
-
-
-
(137,135)
-
1,302,413
1,551,718
-
-
1,342,413
1,551,718
28,704,851
54,644 13,156,930
(137,135)
41,779,290
* Marc Lichtenstein resigned during the 2012 financial year.
** Amount disclosed includes amounts held by associates.
84 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued Option holding
The number of options over ordinary shares in the parent entity held during the financial year by each director
and other members of key management personnel of the consolidated entity, including their personally related
parties, is set out below:
2013
Balance at
the start
of the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
OPTIONS OVER ORDINARy SHARES
Peter Voigt
Greg Toll
Roger Harley
Bob Cleary**
Ross Dive*
195,000
1,000,000
195,000
1,000,000
-
-
500,000
500,000
150,000
-
-
-
-
-
-
(195,000)
1,000,000
(195,000)
1,000,000
-
500,000
(500,000)
(150,000)
-
-
540,000
3,000,000
-
(1,040,000)
2,500,000
* Ross Dive is a director of UV Guard Australia Pty Ltd. The consolidated entity disposed of its interest in UV Guard Australia Pty Ltd in
July 2012.
** Bob Cleary retired as a director on 6 June 2013.
2013
OPTIONS OVER ORDINARy SHARES
Peter Voigt
Greg Toll
Roger Harley
Bob Cleary
2012
OPTIONS OVER ORDINARy SHARES
Greg Toll
Peter Voigt
Marc Lichtenstein*
Ross Dive
Vested and
exercisable
Vested and
unexercisable
Vested at
the end of
the year
1,000,000
1,000,000
500,000
500,000
3,000,000
-
-
-
-
-
1,000,000
1,000,000
500,000
500,000
3,000,000
Balance at
the start
of the year
390,000
390,000
375,000
150,000
1,305,000
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
-
-
-
-
-
-
-
(195,000)
195,000
(195,000)
195,000
(375,000)
-
-
150,000
(765,000)
540,000
* Marc Lichtenstein resigned during the 2012 financial year.
Annual Report 2013 CleanTeQ | 85
notes to the financial statements for the year ended 30 june 2013 continued note 32. key ManageMent Personnel Disclosures continued
2012
OPTIONS OVER ORDINARy SHARES
Greg Toll
Peter Voigt
Ross Dive
Vested and
exercisable
Vested and
unexercisable
Vested at
the end of
the year
195,000
195,000
150,000
540,000
-
-
-
-
195,000
195,000
150,000
540,000
In accordance with the remuneration policy described in the Remuneration Report, options granted as
remuneration are subject to continuing service with the Company. Options granted as remuneration are valued
at grant date in accordance with AASB 2 Share-based Payment. Options previously granted as remuneration that
lapsed or have been exercised during the year are detailed in the Remuneration Report.
Related party transactions
Related party transactions are set out in note 36. The consolidated entity received a loan from Toll Associates Pty
Ltd during the year and it remains outstanding at 30 June 2013.
note 33. reMuneration of auDitors
During the financial year the following fees were paid or payable for services provided by KPMG, the auditor of
the company, and unrelated firms:
AUDIT SERVICES – KPMG
Audit or review of the financial statements
OTHER SERVICES – KPMG
Advisory services
Taxation services
AUDIT SERVICES – PITCHER PARTNERS
Audit or review of the financial statements
OTHER SERVICES – PITCHER PARTNERS
Accounting standard interpretation advice
Taxation services
Consolidated
2013
$
2012
$
95,000
15,000
10,000
25,000
120,000
-
-
-
-
-
-
142,000
-
-
-
-
21,000
77,000
98,000
240,000
KPMG were appointed as auditor at the company AGM on 15 November 2012, upon the resignation of Pitcher
Partners.
86 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued note 34. contingent liabilities
The consolidated entity had no contingent liabilities at 30 June 2013 or 30 June 2012.
note 35. coMMitMents
HIRE PURCHASES
Committed at the reporting date and recognised as liabilities, payable:
Within one year
One to five years
Total commitment
Less: Future finance charges
Net commitment recognised as liabilities
Representing:
Current hire purchase liability (note 21) and current hire
purchase liability classified as held for sale (note 24)
Non- current hire purchase liability (note 25)
OPERATING LEASES (NON-CANCELLABLE)
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Consolidated
2013
$’000
2012
$’000
35
19
54
(5)
49
32
17
49
158
158
316
39
73
112
(13)
99
50
49
99
153
308
461
The finance leases were settled in full during the current financial year.
During the current financial year the consolidated entity entered into one hire purchase for a vehicle, expiring
in January 2015. No new hire purchase agreements were entered into in the prior year. The comparative hire
purchase liability relates to three motor vehicle leases which expire within 3 years. The interest rates on hire
purchases vary from 7.21% to 10.24%.
The operating property lease is a non-cancellable lease with a five year term, with rent payable monthly in
advance. Rental provisions within the lease arrangement require that the minimum lease payments shall be
increased by 3.5% per annum and building outgoings by 3% per annum.
An option exists to renew the lease at the end of the five year term for an additional term of five years. The lease
allows for subletting of all lease areas with the Landlord’s consent. The current lease term commenced on
20 June 2010 and ends on 19 June 2015.
Annual Report 2013 CleanTeQ | 87
notes to the financial statements for the year ended 30 june 2013 continued note 36. relateD Party transactions
Parent entity
Clean TeQ Holdings Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 38.
Joint ventures
Interests in joint ventures are set out in note 39.
Key management personnel
Disclosures relating to key management personnel are set out in note 32 and the remuneration report in the
directors’ report.
Transactions with related parties
The following transactions occurred with related parties:
SALE OF GOODS AND SERVICES
Sale of technology license to Associated Water Pty Ltd
Provision of management, labour and administration
Consolidated
2013
$
2012
$
-
2,000,000
498,037
205,000
These fees are charged on normal commercial terms and conditions in accordance with the consultancy services
and administration services agreements.
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
CURRENT RECEIVABLES
Trade receivables from Associated Water Pty Ltd
25,437
63,000
Consolidated
2013
$
2012
$
88 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued Loans to/from related parties
The following balances are outstanding at the reporting date in relation to loans with related parties:
CURRENT BORROWINGS
Loan from Associated Water Pty Ltd
Loan from Toll Associates Pty Ltd
Consolidated
2013
$
2012
$
1,000,000
700,000
-
-
Associated Water Pty Ltd is a company in which CleanTeQ is a Joint Venture partner. Both Greg Toll and Peter
Voigt are directors of Associated Water Pty Ltd.
Toll Associates Pty Ltd is a company in which Greg Toll, a director of CleanTeQ is an owner and director.
Terms and conditions
The loan advanced by Associated Water is a short term unsecured loan, with an interest rate of 9.08%. The loan
from Toll Associates Pty Ltd is also a short term unsecured loan, with an interest rate of 9.08%. All transactions
were made on normal commercial terms and conditions and at market rates. All loans are payable within one year.
note 37. Parent entity inforMation
Set out below is the supplementary information about the parent entity.
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Profit after income tax
Total comprehensive income
STATEMENT OF FINANCIAL POSITION
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
2013
$’000
887
887
Parent
2012
$’000
450
450
281
814
12,686
11,626
1,864
1,864
1,769
1,769
13,149
13,151
91
190
(2,418)
10,822
(3,484)
9,857
Annual Report 2013 CleanTeQ | 89
notes to the financial statements for the year ended 30 june 2013 continued note 37. Parent entity inforMation continued
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
Refer to note 40 for details of guarantees provided by the parent entity.
Statement of comprehensive income
The parent entity made a profit in the current year of $887,000 mainly as a result of the disposal of its interests in
UV Guard Australia Pty Ltd.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2013 and 30 June 2012. The parent entity is party to
a deed of cross guarantee. See note 40 for details.
Capital commitments – Property, plant and equipment
The parent entity does not have any contractual commitments for the acquisition of property, plant or equipment
at 30 June 2013 or since the end of the financial year.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in
note 2, except for the following:
•
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
note 38. subsiDiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 2:
Name of entity
Country of incorporation
Clean TeQ Limited
Resix Pty Ltd
CT Global Holdings Pty Ltd
LiXiR Functional Foods Pty Ltd
Clean TeQ Water Pty Ltd
Clean TeQ Resin Production Pty Ltd**
UV Guard Australia Pty Ltd*
Australia
Australia
Australia
Australia
Australia
Australia
Australia
UV-Guard New Zealand Limited*
New Zealand
Equity holding
2013
%
100.00
100.00
100.00
100.00
100.00
90.00
-
-
2012
%
100.00
100.00
100.00
100.00
100.00
90.00
100.00
100.00
* UV Guard Australia Pty Ltd and UV-Guard New Zealand Limited were disposed of in July 2012.
** Clean TeQ Resin Production Pty Ltd was deregistered on 31 July 2013, following a board resolution made on 15 May 2013.
The company did not trade during the current or prior period.
90 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued note 39. interests in joint ventures
Interests in joint ventures are accounted for using the equity method of accounting. Information relating to joint
ventures is set out below:
Joint venture
Principal activities
Associated Water Pty Ltd
Water purification
The reporting date for Associated Water Pty Ltd is 30 June.
Information relating to the joint venture is set out below.
SHARE OF ASSETS AND LIABILITIES
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
SHARE OF REVENUE, EXPENSES AND RESULTS
Revenue
Expenses
Loss before income tax
Income tax benefit
Loss after income tax
Consolidated % interest
2013
%
50.00
2012
%
50.00
Consolidated
2013
$’000
572
3,216
3,788
98
4
102
2012
$’000
1,807
2,128
3,935
85
3
88
3,686
3,847
67
(616)
(549)
388
(161)
31
(249)
(218)
65
(153)
The financial report for Associated Water Pty Ltd covers the year ended 30 June 2013.
note 40. DeeD of cross guarantee
The following entities are party to a deed of cross guarantee under which each company guarantees the debts of
the others:
• Clean TeQ Limited
• Resix Limited
Annual Report 2013 CleanTeQ | 91
notes to the financial statements for the year ended 30 june 2013 continued note 40. DeeD of cross guarantee continued
By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare a
financial report and directors’ report under Class Order 98/1418 (as amended) issued by the Australian Securities
and Investments Commission (‘ASIC’). It is a condition of the Class Order that the Company and each of its
subsidiaries enter into a Deed of Cross Guarantee. The effect of the Deed is that the Company guarantees to
each creditor payment in full of any debt in the event of winding up of any of the subsidiaries under certain
provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the Act, the Company
will only be liable in the event that after six months any creditor has not been paid in full. The subsidiaries have
also given similar guarantees in the event that the Company is wound up.
The above companies represent a ‘Closed Group’ for the purposes of the Class Order, and as there are no other
parties to the Deed of Cross Guarantee that are controlled by Clean TeQ Holdings Limited, they also represent
the ‘Extended Closed Group’.
Set out below is a consolidated statement of profit or loss and other comprehensive income and statement of
financial position of the ‘Closed Group’.
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Revenue from continuing operations
10,424
12,095
2013
$’000
2012
$’000
Share of losses of joint ventures accounted for using the equity method
Gain on disposal of investment
Changes in finished goods
Raw materials and other direct costs
Employee benefits expenses
Impairment of capitalised development costs
Depreciation and amortisation expenses
Legal and professional expenses
Occupancy expenses
Marketing expenses
Other expenses
Finance costs
Profit/(loss) before income tax benefit
Income tax benefit
Profit/(loss) after income tax benefit
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
EQUITy – RETAINED PROFITS/(ACCUMULATED LOSSES)
Retained profits at the beginning of the financial year
Profit/(loss) after income tax benefit
Transfer from options reserve
(161)
1,383
140
(9,783)
(3,086)
(1,000)
(519)
(701)
(239)
(271)
(633)
(96)
(4,542)
751
(153)
-
(653)
(5,392)
(2,607)
(123)
(397)
(821)
(212)
(204)
(560)
(100)
873
272
(3,791)
1,145
-
-
(3,791)
1,145
1,756
(3,791)
180
611
1,145
-
Retained profits/(accumulated losses) at the end of the financial year
(1,855)
1,756
92 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued STATEMENT OF FINANCIAL POSITION
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Other financial assets
Non-current assets
Receivables
Investments accounted for using the equity method
Other financial assets
Plant and equipment
Intangibles
Total assets
Current liabilities
Trade and other payables
Borrowings
Employee benefits
Other
Non-current liabilities
Borrowings
Deferred tax
Employee benefits
Total liabilities
Net assets
Equity
Issued capital
Reserves
Retained profits/(accumulated losses)
Total equity
2013
$’000
2012
$’000
1,081
3,717
1,625
683
121
1,454
2,559
1,801
421
75
7,227
6,310
304
1,884
169
372
-
2,045
667
442
9,998
9,889
12,727
13,043
19,954
19,353
3,799
3,573
259
848
8,479
17
44
29
90
2,412
24
282
1,353
4,071
49
106
30
185
8,569
4,256
11,385
15,097
13,149
13,151
91
(1,855)
190
1,756
11,385
15,097
Annual Report 2013 CleanTeQ | 93
notes to the financial statements for the year ended 30 june 2013 continued note 41. events after the rePorting PerioD
On 2 August 2013 the consolidated entity issued 17,317,866 unlisted convertible notes, with a conversion price
of $0.10 (10 cents) per share, interest rate of 10% per annum and a maturity date of 1 August 2016. The price of
each convertible note was $0.10 (10 cents), and the issue raised a total of $1,731,787 before costs.
No other matter or circumstance has arisen since 30 June 2013 that has significantly affected, or may
significantly affect the consolidated entity’s operations, the results of those operations, or the consolidated
entity’s state of affairs in future financial years.
note 42. reconciliation of Profit/(loss) after incoMe tax
to net cash useD in oPerating activities
Profit/(loss) after income tax benefit for the year
Adjustments for:
Depreciation and amortisation
Impairment of intangibles
Share-based payments
Non-cash license fee income
Share of associate losses
Cash re-classified as financing as held on security for bank guarantees
Earnout paid through share issue
Profit on disposal of discontinued operations
Hire purchase interest charges
Change in operating assets and liabilities:
Increase in trade and other receivables
Decrease/(increase) in inventories
Increase in income tax refund due
Decrease/(increase) in deferred tax assets
Increase in trade and other payables
Increase/(decrease) in employee benefits
Increase/(decrease) in other operating liabilities
Net cash used in operating activities
note 43. non-cash investing anD financing activities
Issue of shares in lieu of services
94 | CleanTeQ Annual Report 2013
Consolidated
2013
$’000
(4,631)
568
1,000
97
-
161
-
-
(582)
6
2012
$’000
1,248
499
123
22
(2,000)
153
192
94
-
-
(1,226)
(1,296)
860
(683)
(55)
(760)
(436)
63
1,325
1,326
(74)
(541)
24
373
(3,775)
(375)
Consolidated
2013
$’000
96
2012
$’000
204
notes to the financial statements for the year ended 30 june 2013 continued note 44. earnings Per share
EARNINGS PER SHARE FROM CONTINUING OPERATIONS
Profit/(loss) after income tax attributable to the owners of
Clean TeQ Holdings Limited
Weighted average number of ordinary shares used in calculating
basic earnings per share
Adjustments for calculation of diluted earnings per share:
Options
Weighted average number of ordinary shares used in calculating
diluted earnings per share
Basic earnings per share
Diluted earnings per share
EARNINGS PER SHARE FROM DISCONTINUED OPERATIONS
Profit after income tax attributable to the owners of
Clean TeQ Holdings Limited
Weighted average number of ordinary shares used in calculating
basic earnings per share
Adjustments for calculation of diluted earnings per share:
Options
Weighted average number of ordinary shares used in calculating
diluted earnings per share
Basic earnings per share
Diluted earnings per share
Consolidated
2013
$’000
2012
$’000
(5,213)
1,000
Number
Number
143,776,779
122,618,795
-
4,726,396
143,776,779
127,345,191
Cents
(3.626)
(3.626)
Cents
0.816
0.785
Consolidated
2013
$’000
2012
$’000
582
248
Number
Number
143,776,779
122,618,795
-
4,726,396
143,776,779
127,345,191
Cents
0.405
0.405
Cents
0.202
0.195
Annual Report 2013 CleanTeQ | 95
notes to the financial statements for the year ended 30 june 2013 continued note 44. earnings Per share continued
Earnings per share for profit/(loss)
Profit/(loss) after income tax attributable to the owners of
Clean TeQ Holdings Limited
Weighted average number of ordinary shares used in calculating
basic earnings per share
Adjustments for calculation of diluted earnings per share:
Consolidated
2013
$’000
2012
$’000
(4,631)
1,248
Number
Number
143,776,779
122,618,795
Options
-
4,726,396
Weighted average number of ordinary shares used in calculating
diluted earnings per share
143,776,779
127,345,191
Basic earnings per share
Diluted earnings per share
Cents
(3.221)
(3.221)
Cents
1.018
0.980
The options have been classified as potential ordinary shares and are included in the determination of diluted
earnings per share, except where the consolidated entity has generated a loss.
The options on issue throughout the current financial year are not dilutive in effect, as the consolidated entity
recorded a net loss in the year.
note 45. share-baseD PayMents
On 24 September 2007 the Company introduced a share option plan for employees, directors and service
providers of Clean TeQ (“the Plan”). The Plan entitles key management personnel, service providers and
employees to purchase shares in the Company.
At the AGM on 15 November 2012, the shareholders approved the issue of 3 million unlisted share options to the
directors of the consolidated entity. The options had an exercise price of 25% above Volume Weighted Average
Price (‘VWAP’) on the date of issue, being $0.1935 (19.35 cents), and vested upon issue and are exercisable by
30 November 2015.
96 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued Set out below are summaries of options granted under the plan:
2013
Grant date
Expiry date
Exercise
price
Granted Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
09/11/07
24/04/08
20/05/08
01/07/08
01/04/09
01/04/09
22/06/09
22/06/09
05/03/10
04/03/10
01/07/10
01/07/10
01/07/10
30/06/11
30/06/11
30/06/11
16/02/12
16/02/12
15/11/12
09/11/12*
24/04/13*
20/05/13**
01/07/12*
01/04/13**
01/04/14**
22/06/13**
22/06/14**
05/03/13*
04/03/13***
01/07/13
01/07/14
01/07/15
30/06/14
30/06/15
30/06/16
16/02/15**
16/02/15**
30/11/15
Balance at
the start
of the year
535,000
10,000
10,000
75,000
10,000
10,000
10,000
10,000
582,011
125,000
115,000
115,000
115,000
$0.600
$0.410
$0.500
$0.360
$0.210
$0.230
$0.360
$0.400
$0.600
$0.345
$0.280
$0.310
$0.340
$0.080
1,000,000
$0.250
$0.400
500,000
500,000
$0.175
1,000,000
500,000
$0.250
$0.194
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(535,000)
(10,000)
(10,000)
(75,000)
(10,000)
(10,000)
(10,000)
(10,000)
(582,011)
(125,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
115,000
115,000
115,000
1,000,000
500,000
(125,000)
375,000
(1,000,000)
(500,000)
-
-
-
3,000,000
- 3,000,000
5,222,011 3,000,000
-
(3,002,011)
5,220,000
* Options expired during the year.
** Options lapsed as employee ceased employment.
*** 110,000 options expired, 15,000 options lapsed as employee ceased employment.
**** Options lapsed as consultancy was terminated.
The weighted average number of years for share options issued under the Plan is 2.08 years (2012: 2 years).
On 15 November 2012 3,000,000 share options were granted to the directors of the Company and vested
immediately. The share options were issued with an exercise price of $0.1935 (19.35 cents) and expire on
30 November 2015.
Annual Report 2013 CleanTeQ | 97
notes to the financial statements for the year ended 30 june 2013 continued note 45. share-baseD PayMents
2012
Grant date
Expiry date
09/11/07
24/04/08
20/05/08
01/07/08
01/04/09
01/04/09
22/06/09
22/06/09
05/03/10
04/03/10
01/07/10
01/07/10
01/07/10
30/06/11
30/06/11
30/06/11
16/02/12
16/02/12
09/11/12
24/04/13
20/05/13
01/07/12
01/04/13
01/04/14
22/06/13
22/06/14
05/03/13
04/03/13
01/07/13
01/07/14
01/07/15
30/06/14
30/06/15
30/06/16
16/02/15
16/02/15
Exercise
price
$0.600
$0.410
$0.500
$0.360
$0.210
$0.230
$0.360
$0.400
$0.600
$0.345
$0.280
$0.310
$0.340
Balance at
the start
of the year
535,000
10,000
10,000
75,000
10,000
10,000
10,000
10,000
582,011
125,000
115,000
115,000
115,000
$0.080
1,000,000
Granted Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
535,000
10,000
10,000
75,000
10,000
10,000
10,000
10,000
582,011
125,000
115,000
115,000
115,000
1,000,000
500,000
500,000
1,000,000
500,000
5,222,011
$0.250
$0.400
$0.175
$0.250
500,000
500,000
- 1,000,000
-
500,000
3,722,011 1,500,000
On 16 February 2012, the company issued 1,500,000 to a consultant with a three year term to maturity. The
exercise price in relation to 1,000,000 of these options was $0.175 (17.5 cents) and $0.25 (25 cents) in relation to
the other 500,000.
For the options granted during the current financial year, the Black Scholes pricing model was used to value the
options. The valuation model inputs used to determine the fair value at the grant date, are as follows:
Grant date
Expiry date
Share price
at grant date
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
interest rate
Fair value at
grant date
15/11/12
30/11/15
$0.152
$0.194
30.00%
0.00%
4.50%
$0.2650
note 46. change in classification
During the current year the consolidated entity modified the statement of profit or loss and other comprehensive
income classification of administration expenses to better reflect the nature of certain significant expenses.
Comparative amounts in the consolidated statement of profit or loss and other comprehensive income were
reclassified for consistency, which resulted in $1.364 million being reclassified into legal and professional
expenses ($0.821 million), occupancy expenses ($0.212 million), marketing expenses ($0.084 million) and other
expenses ($0.247 million).
Since the amounts are reclassified within operating activities in the consolidated statement of profit or loss and
other comprehensive income, this reclassification did not have any impact on the consolidated statement of
financial position.
98 | CleanTeQ Annual Report 2013
notes to the financial statements for the year ended 30 june 2013 continued Directors’ DeclArAtion
In the directors’ opinion:
•
•
•
•
•
the attached consolidated financial statements, notes thereto and the Remuneration Report comply with the
Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements;
the attached consolidated financial statement, notes thereto and the Remuneration Report comply with
International Financial Reporting Standards as issued by the International Accounting Standards Board as
described in note 2 to the financial statements;
the attached consolidated financial statements, notes thereto and Remuneration Report give a true and fair
view of the consolidated entity’s financial position as at 30 June 2013 and of its performance for the financial
year ended on that date;
there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable; and
at the date of this declaration, there are reasonable grounds to believe that the members of the Extended
Closed Group will be able to meet any obligations or liabilities to which they are, or may become, subject by
virtue of the deed of cross guarantee described in note 40 to the financial statements.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
Peter Voigt
Director
6 September 2013
Melbourne
Annual Report 2013 CleanTeQ | 99
notes to the financial statements for the year ended 30 june 2013 continued inDepenDent AuDitor’s report
100 | CleanTeQ Annual Report 2013
Annual Report 2013 CleanTeQ | 101
shAreholDer inFormAtion
The shareholder information set out below was applicable as at 22 September 2013.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Holding less than a marketable parcel
Equity security holders
Twenty largest quoted equity security holders
Number of holders
of ordinary shares
20
117
115
352
106
710
148
The names of the twenty largest security holders of quoted equity securities are listed below:
Wasabi Energy Limited
Thierville Pty Ltd
Nippon Gas Co Ltd
Mr Gregory L Toll + Mrs Margaret E Toll
Aqua Guardian Group Limited
Jeremy's Haven Pty Ltd
Thierville Pty Ltd
Leymar International Pty Ltd
Graeme Michael Alun Hespe
Ambello Bacteria Cultures Pty Ltd
Mal Clarke & Associates Pty Ltd
Mr David Neville Colbran
Mr Nikolia Zontov
Corp8 Inc
Bell Potter Nominees Ltd
HSBC Custody Nominees (Australia) Pty Ltd
yieldhi Enterprises Limited
Arcourt Resources NL
Mr Emil Tchernych
Healey Super Pty Ltd
102 | CleanTeQ Annual Report 2013
Ordinary shares
Number
held
% of total
shares issued
22,526,127
21,193,207
14,000,000
12,540,720
9,968,581
5,690,310
4,550,801
1,900,000
1,636,683
1,555,683
1,550,000
1,500,000
1,316,534
1,200,000
1,147,822
1,056,385
983,288
930,038
900,000
852,000
15.66
14.74
9.74
8.72
6.93
3.96
3.16
1.32
1.14
1.08
1.08
1.04
0.92
0.83
0.80
0.73
0.68
0.65
0.63
0.59
106,998,179
74.40
Unquoted equity securities
The Company currently has the following unquoted securities:
Options over ordinary shares with various exercise prices and expiry dates
Convertible Notes with a face value of $0.10 (10 cents) and maturity date
of 20 May 2016 with interest payable at a rate of 10%
Convertible Notes with a face value of $0.10 (10 cents) and maturity date
of 1 August 2016 with interest payable at a rate of 10%
Substantial holders
Substantial holders in the company are set out below:
Thierville Pty Ltd
Wasabi Energy Limited
Nippon Gas Co Ltd
Mr Gregory L Toll + Mrs Margaret E Toll
Aqua Guardian Group Limited
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
5,365,000
18,406,116
17,317,866
Ordinary shares
Number
held
% of total
shares issued
25,744,008
22,526,127
14,000,000
12,540,720
9,968,581
17.90
15.66
9.74
8.72
6.93
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a
poll each share shall have one vote.
There are no other classes of equity securities.
Annual Report 2013 CleanTeQ | 103
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corporate directory
company
The registered office of the company is:
Clean TeQ Holdings Limited
Melbourne – Head Office
270-280 Hammond Road
Dandenong South, Victoria 3175
Australia
Ph: +61 3 9797 6700
Fax: +61 3 9706 8344
www.cleanteq.com
DIrectors
Sam Riggall (Chairman and Non-Executive Director)
Peter Voigt
(Executive Director and
Chief Executive Officer)
Greg Toll
(Executive Director)
Roger Harley (Non-Executive Director)
Ian Knight
(Non-Executive Director)
company secretary
Melanie Leydin
auDItor
KPMG
147 Collins Street
Melbourne, Victoria 3000
bankers
BankWest
6th Floor, Bourke Place
600 Bourke Street
Melbourne, Victoria 3000
Lawyers
Minter Ellison
Level 23 South, Rialto Towers
525 Collins Street
Melbourne, Victoria 3000
share regIstry
Computershare Investor Services Pty Limited
Yarra Falls, 452 Johnston Street
Abbotsford, Victoria 3067
Ph: +61 3 9415 5000
Fax: +61 3 9473 2500
annuaL generaL meetIng
stock eXchange LIstIng
Clean TeQ Holdings Limited is listed on
the Australian Stock Exchange (Code: CLQ)
21 November 2013 at 10.00am (AEDT)
The Institute of Chartered Accountants
Level 3, 600 Bourke Street
Melbourne, Victoria 3000
Designed and produced by motivo
CleanTeQ Holdings Ltd
ABn 34 127 457 916
270-280 Hammond Road
Dandenong South VIC 3175
P +61 3 9797 6700
F +61 3 9706 8344
www.cleanteq.com
ASX code: ClQ
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