Annual Report
30 June 2016
Clean TeQ Holdings Limited
(ABN 34 127 457 916)
Clean TeQ Holdings Limited
Corporate Directory
30 June 2016
DIRECTORS
Sam Riggall (Chairman and CEO)
Peter Voigt (Executive Director)
Roger Harley (Independent Non-Executive Director)
Ian Knight (Independent Non-Executive Director)
Eric Finlayson (Independent Non-Executive Director)
COMPANY SECRETARY
Melanie Leydin
PRINCIPAL PLACE OF BUSINESS & REGISTERED OFFICE
Unit 12, 21 Howleys Road
Notting Hill, Victoria, 3168
Tel: 61 (03) 9797 6700
Fax: 61 (03) 9706 8344
SHARE REGISTER
Computershare Investor Services Pty Limited
Yarra Falls, 452 Johnson Street
Abbottsford, Victoria, 3067
Tel: 61 (03) 9415 5000
Fax: 61 (03) 9473 2500
AUDITORS
KPMG
147 Collins Street
Melbourne, Victoria 3000
LEGAL ADVISORS
Baker & McKenzie
Level 19, 181 William Street
Melbourne, Victoria 3000
BANKERS
Commonwealth Bank of Australia
Ground Floor, Tower 1,
201 Sussex Street
Sydney, New South Wales 2000
STOCK EXCHANGE LISTING
Clean TeQ Holdings Limited shares are listed on the Australian Securities Exchange (ASX: CLQ)
WEBSITE
www.cleanteq.com
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Clean TeQ Holdings Limited
Contents
For the year ended 30 June 2016
Directors’ Report…………………………………………………………………………………………..……2
Independence declaration………………………………………………………………………………….....26
Statement of profit or loss and other comprehensive income……………………………………….…….27
Statement of financial position………………………………………………………………………………..29
Statement of changes in equity……………………………………………………………………………….30
Statement of cash flows……………………………………………………………………………………….31
Notes to the financial statements…………………………………………………………………………….32
Director’s declaration…………………………………………………………………………………………..91
Independent audit report to the members of Clean TeQ Holdings Limited……………………………...92
Shareholder information………………………..………………………..…………………………………....94
The company’s 2016 Corporate Governance Statement was released to the ASX on 18th August 2016
and is available at www.cleanteq.com/investors/asx-announcements/
3
Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
The directors present their report, together with the financial statements, on the Consolidated Entity
(referred to hereafter as the 'Consolidated Entity') consisting of Clean TeQ Holdings Limited (referred
to hereafter as the 'Parent Entity', 'the Company' or 'Clean TeQ') and the entities it controlled, for the
financial year ended 30 June 2016, and the auditor's report thereon.
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:
Sam Riggall (Chairman and CEO)
Peter Voigt (Executive Director)
Roger Harley (Independent Non-Executive Director)
Ian Knight (Independent Non-Executive Director)
Eric Finlayson (Independent Non-Executive Director - appointed 16 September 2015)
Principal activities
During the financial year the principal continuing activities of the Consolidated Entity consisted of:
The ongoing development and commercialisation of the Company’s proprietary Continuous
Ionic Filtration (‘CIF®’) and Macroporous Polymer Adsorption (‘MPA®’) resin technologies for
application in the purification and recycling of industrial and mining waste waters (‘Water
Division’); and,
The ongoing development and use of the Clean-iX® resin technology for application in the
extraction and purification of a range of resources in the mining industry including base
metals, precious metals and rare earth elements and through the development of the
Consolidated Entity’s Syerston Project in New South Wales (‘Metals Division’).
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.
Review of Operations
The loss for the Consolidated Entity after providing for income tax amounted to $6,423,000 (30 June
2015: loss after tax of $8,225,000).
During the financial year ended 30 June 2016, the Consolidated Entity’s revenue from continuing
operations increased to $1,454,000 (2015: $790,000) primarily due to an increase in ATO research
and development rebate income accrued in the current period. During the financial year, the
Consolidated Entity recorded a loss after tax from continuing operations of $6,423,000 compared to a
$9,155,000 loss after tax in the comparative 2015 period.
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Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
Revenues from continuing operations were low during the financial year due to the fact that the
Consolidated Entity’s technologies remain at the early stages of commercialisation and as a result of
the Syerston Project being at the pre-production development phase.
The key focus for the Metals Division was advancing the development of the Consolidated Entity’s
Syerston Project in New South Wales, the background of which is discussed further below. A
Feasibility Study for the Syerston Scandium Project is due for completion in September 2016. The
Feasibility Study will be used as the basis for a decision to proceed with project construction, subject
to obtaining offtake commitments and financing.
A key focus for the Consolidated Entity is securing offtake contracts to support the levels of scandium
oxide production proposed in the Feasibility Study. Clean TeQ marketing personnel are working with
a number of counterparties in the aerospace and solid oxide fuel cell industries with the aim of
securing scandium oxide offtake contracts. In addition to these opportunities, a number of offtake
opportunities are also being pursued in the automotive, marine and aerospace sectors using
aluminium-scandium sheet, welding wire, extruded parts and powder, which are expected to provide
other additional sources of offtake in the future.
During the financial year, the Company constructed and operated a scandium recovery and
purification demonstration plant in Perth. The demonstration plant simulated the scandium recovery
process which is proposed to be used at the Syerston Scandium Project. The demonstration plant
campaign, which included commissioning and operation of the entire leaching and extraction circuit,
processed approximately 12 tonnes of Syerston ore, to produce samples of high purity (99.9%)
scandium oxide. Potential offtake partners were provided with samples of scandium oxide and
confirmed the product met their quality specifications.
A 58-hole shallow vertical reverse circulation drill program was completed in November 2015 at the
Syerston Scandium Project. The drill program was primarily targeted at increasing the confidence
levels of the existing high grade scandium resource identified by the previously reported drill
programs. The assay results of the infill drilling were well correlated with the existing data, confirming
the high Scandium grades of the drilled zones. The data from the program was used to prepare an
updated scandium mineral resource, which formed the basis for the Syerston Scandium Project
Feasibility Study.
The updated Mineral Resource estimate (detailed below) confirmed the significant high-grade
scandium mineralisation present at shallow depths in the laterite soils.
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Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
The large volume of scandium contained within the Syerston resource provides Clean TeQ with the
opportunity to create a long life mining operation with the ability to scale up production in future years
to meet anticipated growth in demand for scandium oxide.
The updated Mineral Resource confirmed the very high grade of the deposit, with increases to the
grades of the global resource as well as the high grade (>600ppm scandium) portion. The very high
scandium grade in the Mineral Resource significantly increases the potential for Syerston to be one of
the lowest cost sources of primary mine production in the world.
The Water Division was focused on developing commercial opportunities for the Company’s
technology to treat waste waters, with an emphasis on opportunities in the large Chinese market.
During the financial year, Clean TeQ executed a binding agreement with Jinzhong Hoyo Municipal
Urban Investment & Construction Co., Ltd (‘Hoyo’) to form a Chinese incorporated joint venture (‘JV
Company’) which will pursue water treatment opportunities in China’s Shanxi Province utilising Clean
TeQ’s water purification technology.
Clean TeQ and Hoyo have also reached in-principle agreement on the terms on which the JV
Company will build, own and operate a Clean TeQ CIF® water treatment plant at an existing
wastewater treatment facility owned and operated by Qixian Hoyo Waste Water Treatment Co., Ltd
(‘Qixian’) in Shanxi Province.
Hoyo and Qixian are both members of the Nanjing Hoyo Municipal Utilities Investment Administration
Group (‘Hoyo Group’). Hoyo Group is a large diversified private Chinese conglomerate which is active
in a range of industries including pipeline construction, operation of urban sewage and waste water
treatment plants, construction, aviation and manufacturing of agricultural machinery.
The JV Company, Shanxi Hoyo Clean TeQ Environmental Company Ltd, is to be owned 50:50 by
Clean TeQ and Hoyo and will be capitalised through equity contributions of US$600,000 from each of
the parties. Clean TeQ will fund its share of the equity contributions from cash reserves currently on
hand. The start-up capital contributions are expected to be sufficient to build the first project and fund
modest overheads of the JV Company until it becomes cashflow positive.
A number of significant water purification project opportunities have been identified, both inside and
outside China, in a number of key markets with a focus on treatment of waste water from mining
operations.
Clean TeQ will continue working towards securing commercial contracts in the near future, and
anticipates both the Water and Metals Divisions to produce substantial revenues in the future.
The continuing development of the Syerston Project resulted in $4,657,000 of expenditure being
capitalised as an exploration and evaluation asset during the financial year. This expenditure, along
with the net cash outflows from operating activities of $2,333,000, was financed largely by capital
raisings totalling $12,139,000 after issue costs.
In August 2015, the Consolidated Entity made the final payment of $1,171,000 to Nippon Gas Co
Limited (‘NGC’) under the purchase agreement struck with NGC, for the Consolidated Entity to
purchase NGC’s 50% share of the Associated Water Joint Venture and NGC's 85% share of Clean
World Japan.
As a result of the above, the Consolidated Entity’s net assets increased during the financial year by
$7,955,000 to $22,725,000 (30 June 2015: $14,770,000). Working Capital, being current assets less
current liabilities, amounts to a surplus of $9,361,000 (30 June 2015: $2,820,000), with cash reserves
increasing from $3,313,000 to $7,226,000 during the financial year.
6
Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
Significant changes in the state of affairs
On 8 July 2015, the Company announced that Sam Riggall, Executive Chairman and Interim Chief
Executive Officer, was appointed Chairman and Chief Executive Officer, effective 1 July 2015.
On 27 August 2015, the Company announced the issue of a total of 36,876,574 new shares pursuant
to an underwritten non-renounceable pro rata entitlement offer on the basis of 1 new fully paid
ordinary share in the Company for every 10 shares at an issue price of $0.18 per new share
(‘Entitlement Offer’). The Company also issued a total of 12,362,164 new shares to certain nominees
of the underwriter at the same issue price as the Entitlement Offer (‘Top-Up Placement’). The
Entitlement Offer and Top-Up Placement raised total proceeds of $8,863,000 before issuance costs.
On 16 September 2015, the Company announced the appointment of Mr Eric Finlayson as a non-
executive independent director. Mr Finlayson is a geologist with over thirty years’ experience in
Australia and overseas. Mr Finlayson worked for 24 years with Rio Tinto including as regional
exploration manager for Canada, Director of Exploration for Australasia and Global Head of
Exploration for Rio Tinto based in London. Mr Finlayson is currently President of High Power
Exploration.
On 9 May 2016 the Company announced agreement of a private placement of 19,047,620 new
shares at an issue price of $0.21 per share to raise proceeds of $4,000,000. The shares were
subscribed for by two institutional investors based in Sydney and Hong Kong.
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
No matter or circumstance has arisen since 30 June 2016 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 the
Syerston Project as well as its suite of technology applications for the treatment of water for use by
the water, municipal, industrial and resources sectors. 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 Metals and Water Divisions.
The Consolidated Entity intends to fund its development through capital raisings as well as
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.
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.
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Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
Environmental regulation
The Consolidated Entity has an interest in the exploration license disclosed in note 17. The authorities
responsible for the granting of these licences require the tenement holder to comply with the terms
and conditions of the licence and all directions given to it by those authorities.
The terms and conditions of any exploration licence typically include certain environmental conditions,
covering such matters as Aboriginal cultural heritage, threatened species, habitat, heritage items,
trees and vegetation, roads and tracks, groundwater, streams and watercourses, erosion and
sediment controls, preventing and monitoring pollution, refuse, chemicals, fuels and waste materials,
transmission lines and pipelines, drilling, rehabilitation of the land, environmental reporting, and site
security. There have been no known breaches of the Consolidated Entity’s licence conditions or any
other environmental regulation during the financial year or up until the date of this report.
Information on directors
Name:
Title:
Qualifications:
Experience and
Expertise:
Mr Sam Riggall
Chairman & Chief Executive Officer
LLB (Hons), B.Com., MBA
Mr Riggall is a graduate in law and commerce from Melbourne University
and has an MBA from Melbourne Business School. He was previously
Executive Vice President of Business Development and Strategic
Planning at Ivanhoe Mines Ltd. Prior to that Mr Riggall worked in a variety
of roles in Rio Tinto for over a decade covering project generation and
evaluation, business development and capital market transactions. Mr
Riggall was appointed to the Clean TeQ Board and to the position of
Chairman on 4 June 2013. Mr Riggall was appointed Chairman and Chief
Executive Officer effective 1 July 2015.
Syrah Resources Limited
Other current
directorships:
Former directorships
(last 3 years):
Special responsibilities: Nil
Interests in shares:
Interests in options:
Nil
Interests in rights:
6,878,634 fully paid ordinary shares
8,000,000 unlisted options exercisable at $0.1574 (15.74 cents) per
option and 8,000,000 unlisted options exercisable at $0.2305 (23.05
cents) per option
480,000
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Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
Name:
Title:
Qualifications:
Experience and
Expertise:
Other current
directorships:
Former directorships
(last 3 years):
Special responsibilities: Nil
Interests in shares:
Interests in options:
Interests in rights:
Nil
Name:
Title:
Qualifications:
Experience and
Expertise:
Mr Peter Voigt
Executive Director
Mr Voigt has a Bachelor and Masters of Applied Science (Chemistry) from
the Royal Melbourne Institute of Technology
Mr Voigt established Clean TeQ in 1990 and, as Executive Director, is
currently involved in the delivery of strategic initiatives in the Water and
Metals Divisions. Mr Voigt became a Director of the Company in 2007 and
held the positions of Chief Technology Officer from 2007 to 2009 and Chief
Executive Officer from 2010 to 2013. Mr Voigt is a biochemist, with
extensive experience in technology development, commercialisation,
partnering and licensing globally. Prior to founding Clean TeQ, Mr Voigt
held a number of technical management positions with major food
companies and universities.
Nil
27,725,794 fully paid ordinary shares
2,000,000 unlisted options exercisable at $0.1450 (14.50 cents) per option
400,000
Mr Roger Harley
Independent Non-Executive Director
Mr Harley has a science degree from the University of Melbourne and is a
Fellow of the Australian Institute of Company Directors.
Mr Harley is a founder and principal of independent corporate advisory firm,
Fawkner Capital. Previously he worked for 11 years for Deutsche Bank,
and held positions including Director of Corporate Finance and Director of
Equity Capital Markets. His current roles also include Director of People
and Parks Foundation and Trustee of the Alfred Deakin Lecture Trust. Mr
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 a Director of Clean TeQ on 1 June
2010.
Nil
Other current
directorships:
Former directorships
(last 3 years):
Special responsibilities: Mr Harley is a member of the Audit Committee and Chair of the Nomination
Nil
Interests in shares:
Interests in options:
Interests in rights:
and Remuneration Committee.
1,830,812 fully paid ordinary shares (including 455,406 owned by spouse)
750,000 unlisted options exercisable at $0.2712 (27.12 cents) per option
Nil
9
Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
Name:
Title:
Qualifications:
Experience and
Expertise:
Mr Ian Knight
Independent Non-Executive Director
FCA, CPA
Mr Knight 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 extensive experience in strategising and implementing
mergers, acquisitions, divestments and capital raising initiatives. Mr Knight
was also formerly a Partner of KPMG where he held the position of Head of
Mergers and Acquisitions and Head of Private Equity for KPMG Corporate
Finance. Currently he is Managing Director of nem Corporate Pty Ltd and a
partner of nem Australasia Pty Ltd. He was appointed a director of Clean
TeQ on 8 July 2013.
Graziers’ Investment Company Limited (public unlisted company)
Other current
directorships:
Former directorships
(last 3 years):
Special responsibilities: Mr Knight is a member of the Nomination and Remuneration Committee
Nil
Interests in shares:
Interests in options:
Interests in rights:
and Chair of the Audit Committee.
1,025,557 fully paid ordinary shares
750,000 unlisted options exercisable at $0.2712 (27.12 cents) per option
Nil
Name:
Title:
Qualifications:
Experience and
Expertise:
Mr Eric Finlayson
Independent Non-Executive Director
BSc (Honours) in Applied Geology
Mr Finlayson is a geologist with over thirty years’ experience in Australia
and overseas. Over 24 years with Rio Tinto Mr Finlayson held a number of
key executive roles including regional exploration manager for Canada,
Director of Exploration for the Australasian region and 5 years as Global
Head of Exploration based in London. Mr Finlayson also served as CEO of
Rio Tinto Coal Mozambique following Rio Tinto’s takeover of Riversdale
Mining in 2011. Mr Finlayson is currently President of High Power
Exploration Australia. He was appointed a director of Clean TeQ on 16
September 2015.
Cordoba Minerals Corp. and Kaizen Discovery Inc.
Other current
directorships:
Former directorships
(last 3 years):
Special responsibilities: Mr Finlayson is a member of the Nomination and Remuneration Committee
Apollo Minerals Limited (resigned 7 July 2016)
Interests in shares:
Interests in options:
Interests in rights:
and Audit Committee
Nil
750,000 unlisted options exercisable at $0.2712 (27.12 cents) per option
Nil
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’ 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.
10
Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
Company Secretary
Ms Melanie Leydin was appointed to the position of Company Secretary on 7 July 2011. Ms Leydin is
a Chartered Accountant and principal of Leydin Freyer, a chartered accounting firm specializing in
accounting and company secretarial services. Ms Leydin has over 20 years’ experience in the
accounting profession and is company secretary for a number of junior mining, bioscience,
biotechnology and IT entities listed on ASX.
Meetings of Directors
The number of meetings of the Company's Board of Directors ('the Board') and of each Board
committee held during the financial year ended 30 June 2016, and the number of meetings attended
by each director were:
Sam Riggall
Peter Voigt
Roger Harley
Ian Knight
Eric Finlayson
Full Board Meeting
Audit Committee
Attended
11
11
11
11
7
Held
11
11
11
11
7
Attended
1
-
2
2
1
Held
1
-
2
2
1
Nomination and
Remuneration
Committee
Attended
-
-
2
2
2
Held
-
-
2
2
2
Held: represents the number of meetings held during the time the director held office or was a
member of the relevant committee.
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
F. Additional disclosures relating to key management personnel.
A. Principles used to determine the nature and amount of remuneration (audited)
The Board of Directors is 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
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Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
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.
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 above
are as follows:
Sam Riggall - Chairman and Chief Executive Officer (appointed 1 July 2015)
Roger Harley - Independent Non-Executive Director
Ian Knight - Independent Non-Executive Director
Eric Finlayson - Independent Non-Executive Director (appointed 17 September 2015)
Peter Voigt - Executive Director
Ben Stockdale - Chief Financial Officer (appointed 15 January 2015)
Cory Williams - Chief Executive Officer (resigned 18 November 2014)
Tony Panther - Chief Financial Officer (resigned 31 January 2015)
There were no other employees in the Consolidated Entity that met the definition of executive or key
management personnel in accordance with the Corporations Act 2001 or 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 2016 or 2015
financial years, however, the Nomination and Remuneration Subcommittee of the Board has
committed to undertake an independent remuneration benchmarking exercise for directors and key
employees during financial year 2017.
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 segment’s performance;
(i)
(ii)
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
compensation.
incentives within each key management person’s
(iii)
The directors’ and executives’ remuneration and incentive policies and practices are performance
based 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.
12
Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
In addition to their salaries, the Consolidated Entity also provides non-cash benefits to its directors
and key management personnel, and contributes to post-employment superannuation plans on their
behalf.
Fixed remuneration
Fixed compensation consists of base compensation (which is calculated on a total cost basis and
includes any fringe benefits tax charges related to employee benefits including motor vehicles), as
well as leave entitlements and 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 upon promotion.
Performance-linked remuneration
Performance-linked compensation, including both short-term and long-term incentives, 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, while the long-term
incentive (’LTI’) is provided as options and performance rights over ordinary shares of the Company
under the rules of the Employee Share Option Plan. The plans provide for Board discretion on the
provision of bonuses and options.
During the 2016 financial year the Board exercised its discretion and authorised the issue of options
and performance rights to selected key management personnel but no bonuses were paid. 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
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.
The financial performance objectives include performance compared to budgeted amounts. 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.
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 bonus amount is
awarded at the Board’s discretion and depending on results. No bonus is awarded where
performance falls below the minimum. There were no bonuses or incentives paid during the 2016
and 2015 financial years.
Long Term Incentive
The LTI consists of a grant of options to directors and key executives, administered under the
Company’s shareholder approved Employee Share Option Plan (‘ESOP’). The ESOP provides for
directors and key executives to receive, for no consideration, options over ordinary shares of the
Company at specified exercise prices as determined by the Board. The grant of options is intended to
align the interests of directors and key executives with other owners of the Company. The ability to
exercise the options is conditional upon each director and key executive’s ongoing employment by the
Company and other applicable performance hurdles determined by the Board from time to time.
13
Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
The LTI also consists of a grant of performance rights to employees, administered under the terms of
the ESOP. The grant of performance rights is intended to align the interests of employees with other
owners of the Company. Performance rights are granted at the discretion of the Board to employees
by way of issue at nil cost both at the time of grant and vesting. Performance rights are granted on an
annual basis, with the at-risk value of the annual grant over the 3 year vesting period representing a
percentage of the employee’s base salary, priced at the time of grant. Vesting is contingent on the
Consolidated Entity meeting or exceeding a performance hurdle over a 3 year performance period.
The performance hurdle involves an assessment of the Company’s total shareholder returns relative
to a comparator group of companies. Vesting is also subject to the continued employment of the
employee.
The ESOP, which was adopted on 24 September 2007, states that the total number of options issued
pursuant to the ESOP must not exceed 10% of the total number of issued shares in the Company.
The Nomination and Remuneration Committee, in conjunction with the Board, determines the number
of options and the terms and conditions associated with those options that may be issued to
employees each year. The criteria used to assess the number of options issued include the
Consolidated Entity’s 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 had previously adopted an Employee Tax Exempt Share Plan (‘the Share Plan’) which
allowed 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
was entitled to acquire the equivalent of $1,000 of shares per annum at zero cost. These shares
were 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. The Share Plan has been discontinued but
shares were issued to eligible employees during the year ended 30 June 2015 pursuant to the Share
Plan, although none were issued to key management personnel.
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 respect of attracting and retaining high
calibre employees.
In the current year the Consolidated Entity has achieved many of its operational targets, however,
financial results remained loss-making due to the fact that the Consolidated Entity’s technologies
remain at the early stages of commercialisation and as a result of the Syerston Project being at the
pre-production development phase. The Nomination and Remuneration Committee will conduct a
formal assessment of employee’s key performance indicators and the Consolidated Entity’s
performance as a whole during the 2017 financial year to determine if any STI bonus is to be awarded
in respect of the 2016 financial year.
Non-Executive Directors
The Company Constitution provides for Non-Executive Directors to 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.
Non-Executive Directors are 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.
14
Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
The Company determines the maximum amount for remuneration, including thresholds for share-
based remuneration, for Directors by resolution.
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 19 November 2015 Annual General Meeting
('AGM')
The Company received 89.4% of 'for' votes in relation to its remuneration report for the year ended 30
June 2015. The Company did not receive any specific feedback at the AGM regarding its
remuneration practices.
B. Details of remuneration (audited)
Details of the nature and amount of each major element of remuneration of the key management
personnel of the Consolidated Entity are set out in the following tables.
Short-term benefits
Cash
salary
and fees
Bonus
Non-
monetary
2016
Non-
Executive
Directors:
Roger
Harley
Ian Knight
Eric
Finlayson**
Executive
Directors:
Sam
Riggall*
Peter Voigt
Other
KMP:
Ben
Stockdale
$
$
45,872
50,000
36,315
185,841
200,001
250,001
768,030
-
-
-
-
-
-
-
Post-
employment
benefits
Super-
annuation
$
4,358
-
3,450
Long-term
benefits
Long
service
leave
$
-
-
-
Share based
payments
Equity-
settled
$
Total
$
62,325
62,325
112,555
112,325
62,325
102,090
$
-
-
-
-
152
14,460
19,000
3,053
3,352
688,149
210,724
891,503
433,229
152
23,750
65,018
4,190
10,595
191,142
469,083
1,276,990 2,120,785
* Sam Riggall was appointed to the position of CEO on 1 July 2015.
** Eric Finlayson was appointed as a Non-Executive Director on 16 September 2015.
15
Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
Cash
salary
and fees
$
45,872
50,000
137,300
200,001
371,476
125,867
104,167
1,034,683
2015
Non-
Executive
Directors:
Roger
Harley
Ian Knight
Executive
Directors:
Sam
Riggall****
Peter Voigt
Other KMP:
Cory
Williams*
Tony
Panther**
Ben
Stockdale***
$
-
-
-
-
-
-
-
-
Short-term benefits
Bonus
Non-
monetary
Post-
employment
benefits
Super-
annuation
$
Long-
term
benefits
Long
service
leave
$
Share
based
payments
Equity-
settled
$
Total
$
4,358
-
-
-
-
-
50,230
50,000
$
-
-
7,065
15,000
13,044
19,000
-
3,342
544,072
-
701,481
237,343
-
23,415
10,650
10,018
-
-
-
-
394,891
146,535
-
32,715
9,896
79,731
1,694
5,036
134,899
250,656
678,971 1,831,136
*Cory Williams resigned as Chief Executive Officer on 18 November 2014. His cash salary and fees
includes a termination payment of $250,000.
**Tony Panther resigned as Chief Financial Officer on 31 January 2015. His cash salary and fees
includes a termination payment of $14,583.
***Ben Stockdale was appointed as Chief Financial Officer on 15 January 2015.
****Sam Riggall was appointed to the position of Interim CEO on 18 November 2014.
16
Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
C. Service agreements (audited)
Remuneration and other terms of employment for key management personnel are formalised in
service agreements. Details of these agreements are as follows:
Mr Sam Riggall
Chairman and Chief Executive Officer
1 July 2015
No fixed term
Name:
Title:
Agreement commenced:
Term of agreement:
Experience and Expertise: Remuneration is set at a salary of $200,000 per annum, inclusive of
superannuation based on duties as Chairman and Chief Executive
Officer. The Company may terminate the agreement upon three months’
notice or payment in lieu of notice. Mr Riggall can terminate the
agreement upon three months’ 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.
Mr Peter Voigt
Executive Director
1 March 2015
No fixed term
Name:
Title:
Agreement commenced:
Term of agreement:
Experience and Expertise: Remuneration is set at a base salary of $200,000 per annum plus
superannuation of $19,000 based on duties as executive director. The
Company may terminate the agreement upon three months’ notice or
payment in lieu of notice. Mr Voigt can terminate the agreement upon
three months’ 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.
Mr Ben Stockdale
Chief Financial Officer
15 January 2015
No fixed term
Name:
Title:
Agreement commenced:
Term of agreement:
Experience and Expertise: Remuneration set at base salary of $250,000 per annum plus
superannuation of $23,750 based on duties as Chief Financial Officer.
The Company may terminate the agreement upon six months’ notice or
payment in lieu of notice. Mr Stockdale can terminate the agreement
upon three months’ 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.
17
Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
D. Share-based compensation (audited)
Issue of shares
There were no shares issued to directors and other key management personnel as part of
compensation during the year ended 30 June 2016.
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:
Grantee/Number of
Options/Grant Date
Vesting date &
exercisable date
Expiry Date
Exercise
Price
Fair value
per option at
grant date
Sam Riggall
4,000,000 options
20 November 2015
Sam Riggall
4,000,000 options
20 November 2015
Peter Voigt
2,000,000 options
20 November 2015
Roger Harley
750,000 options
20 November 2015
Ian Knight
750,000 options
20 November 2015
Eric Finlayson
750,000 options
20 November 2015
Ben Stockdale
1,000,000 options
16 May 2016
20 November 2015
30 June 2018
$0.2305
$0.085
31 December 2015
30 June 2018
$0.2305
$0.085
20 November 2015
31 March 2018
$0.1450
$0.102
20 November 2015
30 November 2018
$0.2712
$0.083
20 November 2015
30 November 2018
$0.2712
$0.083
20 November 2015
30 November 2018
$0.2712
$0.083
16 May 2016
16 May 2019
$0.2820
$0.177
Options granted carry no dividend or voting rights.
The number of options over ordinary shares granted to directors and other key management
personnel as part of compensation during the year ended 30 June 2016 is set out below:
18
Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
Number of options
granted during the
year
Name
Sam Riggall
Ben Stockdale
Peter Voigt
Roger Harley
Ian Knight
Eric Finlayson
2016
8,000,000
1,000,000
2,000,000
750,000
750,000
750,000
Number of
options
granted during
the year
2015
8,000,000
2,000,000
-
-
-
-
Number of
options vested
during the year
2016
12,000,000
1,000,000
2,000,000
750,000
750,000
750,000
Number of
options
vested during
the year
2015
4,000,000
2,000,000
-
-
-
-
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 2016 are set out
below:
Value of options
granted during
the year
Value of options
exercised during
the year
Name
Sam Riggall
Peter Voigt
Roger Harley
Ian Knight
Eric Finlayson
Ben Stockdale
$
680,800
204,600
62,325
62,325
62,325
177,500
$
-
-
-
-
-
-
Value of
options
lapsed during
the year
$
-
-
-
-
-
-
Remuneration
consisting of
options for the
year
%
76%
47%
55%
55%
61%
38%
Options vested in prior years and expired in the current year are disclosed in note 42 to the financial
statements.
19
Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
Performance Rights
The terms and conditions of each grant of performance rights over ordinary shares affecting
remuneration of directors and other key management personnel in this financial year or future
reporting years are as follows:
Grantee/Number of
Performance
Rights/Grant Date
Sam Riggall
480,000 rights
20 November 2015
Peter Voigt
400,000 rights
20 November 2015
Ben Stockdale
400,000 rights
8 July 2015
Ben Stockdale
468,606 rights
16 May 2016
Vesting date
Expiry Date
Exercise Price
1 July 2018
1 July 2018
1 July 2018
1 July 2018
1 July 2018
1 July 2018
1 July 2019
1 July 2019
Nil
Nil
Nil
Nil
Fair value per
performance
right at grant
date
$0.065
$0.065
$0.086
$0.126
Performance rights granted carry no dividend or voting rights.
The number of performance rights over ordinary shares granted to each key management personnel
as part of compensation during the year ended 30 June 2016 is set out below:
Number of rights
granted during
the year
2016
480,000
400,000
868,606
Number of rights
granted during
the year
2015
-
-
-
Number of rights
vested during the
year
2016
-
-
-
Number of rights
vested during the
year
2015
-
-
-
Name
Sam Riggall
Peter Voigt
Ben Stockdale
Values of performance rights over ordinary shares granted, exercised and lapsed key management
personnel as part of compensation during the year ended 30 June 2016 are set out below:
Value of rights
Value of rights
granted during the
year
2016
31,330
26,109
93,491
vesting during the
year
2015
-
-
-
Name
Sam Riggall
Peter Voigt
Ben Stockdale
Value of rights
Value of rights
vesting during
the year
2016
-
-
-
lapsed during the
year
2015
-
-
-
20
Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
Equity Instruments
During the course of the 2008 financial year the Company introduced an Employee Share Option Plan
for employees and Directors of the Company (‘ESOP’). All options refer to options and performance
rights over ordinary shares of Clean TeQ Holdings Limited, which are exercisable on a one-for-one
basis under the Plan. The broad details of the Plan are set out below:
a)
b)
c)
d)
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).
It is intended that the exercise price of options 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. Performance rights may be exercised
for zero consideration but only vest if certain performance hurdles are achieved.
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.
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 (audited)
In considering the Consolidated Entity's performance and benefits for shareholder wealth, the current
Nomination and Remuneration Committee have regard to the following profit or loss 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 2016 are summarised below:
Profit/(loss) after income tax
2012
$’000
1,248
2013
$’000
(4,631)
2014
$’000
(4,910)
2015
$’000
(8,225)
2016
$’000
(6,423)
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year end ($)
Movement in share price ($)
2012
0.13
0.09
2013
0.10
(0.03)
2014
0.05
(0.05)
2015
0.23
0.18
2016
0.43
0.20
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
21
Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
F. Key management personnel transactions (audited)
Movement in shares held
The number of shares in the Company 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:
Balance at
the start of
the year
Received as
part of
remuneration
Additions
Disposals/
other
Ordinary shares
Sam Riggall
Peter Voigt
Roger Harley
Ian Knight
Eric Finlayson*
Ben Stockdale
6,253,304
27,614,683
1,754,220
200,000
-
50,000
35,872,207
-
-
-
-
-
-
-
625,330
1,111,111
76,592
825,557
-
25,000
2,663,590
-
(1,000,000)
-
-
-
-
(1,000,000)
Balance at
end of the
year
6,878,634
27,725,794
1,830,812
1,025,557
-
75,000
37,535,797
*Eric Finlayson was appointed to the position of Non-Executive Director during the financial year.
Movement in options held
The number of options over ordinary shares in the Company 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:
Options over
ordinary shares
Sam Riggall
Peter Voigt
Roger Harley
Ian Knight
Eric Finlayson*
Ben Stockdale
Balance at
the start of
the year
Granted as
part of
remuneration
Exercised
Expired/
forfeited/
other
Balance at
end of the
year
8,000,000
1,000,000
500,000
-
-
2,000,000
11,500,000
8,000,000
2,000,000
750,000
750,000
750,000
1,000,000
13,250,000
-
-
-
-
-
-
-
-
(1,000,000)
(500,000)
-
-
-
(1,500,000)
16,000,000
2,000,000
750,000
750,000
750,000
3,000,000
23,250,000
*Eric Finlayson was appointed to the position of Non-Executive Director during the financial year.
22
Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
Movement in performance rights held
The number of performance rights over ordinary shares in the Company 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:
Balance at
the start of
the year
Granted as
part of
remuneration
Vested
Expired/
forfeited/
other
Balance at
end of the
year
Rights over
ordinary shares
Sam Riggall
Peter Voigt
Ben Stockdale
-
-
-
-
480,000
400,000
868,606
1,748,606
-
-
-
-
-
-
-
-
480,000
400,000
868,606
1,748,606
Other transactions with key management personnel
Details of other transactions with key management personnel are set out in notes 30 and 34.
This concludes the remuneration report, which has been audited.
Shares under option
Unissued ordinary shares of Clean TeQ Holdings Limited under option at the date of this report are as
follows:
Grant Date
19 December 2014
19 December 2014
25 February 2015
1 March 2015
6 July 2015
20 November 2015
20 November 2015
20 November 2015
16 May 2016
Expiry Date
19 June 2017
19 June 2017
25 February 2018
1 March 2018
30 June 2018
30 June 2018
31 March 2018
30 November 2018
16 May 2019
Exercise Price Number under Option
2,000,000
2,000,000
8,000,000
6,000,000
1,000,000
8,000,000
2,000,000
3,500,000
5,000,000
37,500,000
$0.1155
$0.1455
$0.1574
$0.1495
$0.3010
$0.2305
$0.1450
$0.2712
$0.2820
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 subject to performance rights
Unissued ordinary shares of Clean TeQ Holdings Limited subject to performance rights as at 30 June
2016 are as follows:
23
Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
Grant Date
8 July 2015
20 November 2015
16 May 2016
Vest Date
1 July 2018
1 July 2018
1 July 2019
Exercise Price
Nil
Nil
Nil
Number
1,594,416
880,000
1,756,281
4,230,697
Shares issued on the exercise of options or performance rights
There were no ordinary shares of Clean TeQ Holdings Limited issued on the exercise of options or
performance rights during the year ended 30 June 2016.
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 invoice from the Company’s insurers did not specify the amount of the premium paid for
insurance against an officer’s liability for legal costs.
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.
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 31 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 31 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
24
Clean TeQ Holdings Limited
Directors’ Report
For the year ended 30 June 2016
none of the services undermine the general principles relating to auditor independence as set
out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting
Professional and Ethical Standards Board, including reviewing or auditing the auditor's own
work, acting in a management or decision-making capacity for the Company, acting as
advocate for the Company or jointly sharing economic risks and rewards.
Officers of the Company who are former audit partners of KPMG
Ian Knight, appointed as a Non-Executive Director on 17 July 2013, 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 Instrument 2016/191, 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.
Lead auditor's independence declaration
A copy of the lead 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 2016.
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
________________________________
Sam Riggall
Chairman and Chief Executive Officer
19 August 2016
Melbourne
25
Clean TeQ Holdings Limited
Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2016
Revenue
Expenses
Inventory write downs
Raw materials and other direct costs
Employee benefits expenses
Impairment of license intangible asset
Depreciation and amortisation expenses
Legal and professional expenses
Occupancy expenses
Marketing expenses
Impairment of loan receivable
Other expenses
Finance costs
Loss before income tax benefit from continuing operations
Income tax expense
Loss after income tax benefit from continuing operations
Profit after income tax benefit from discontinued operations
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 attributable to the
owners of Clean TeQ Holdings Limited
Total comprehensive income for the year is attributable to:
Continuing operations
Discontinued operations:
Non-controlling interests
Owners of the company
2016
$’000
1,454
Consolidated
2015
$’000
790
Note
5
11
6
6
16
6
7
8
-
(61)
(4,291)
-
(704)
(543)
(361)
(544)
(326)
(773)
(274)
(6,423)
-
(6,423)
(85)
(561)
(2,609)
(2,751)
(1,199)
(623)
(278)
(396)
-
(728)
(715)
(9,155)
-
(9,155)
-
930
(6,423)
(8,225)
-
-
-
-
(6,423)
(8,225)
(6,423)
(9,155)
-
-
(6,423)
159
771
(8,225)
The above statement of profit or loss and other comprehensive income should be read in conjunction
with the accompanying notes.
27
Clean TeQ Holdings Limited
Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2016
Earnings per share for loss from continuing operations
attributable to the owners of Clean TeQ Holdings Limited
Basic earnings per share
Diluted earnings per share
Earnings per share for profit from discontinued operations
attributable to the owners of Clean TeQ Holdings Limited
Basic earnings per share
Diluted earnings per share
Earnings per share for loss attributable to the owners of Clean
TeQ Holdings Limited
Basic earnings per share
Diluted earnings per share
Consolidated
Note
2016
Cents
2015
Cents
41
41
41
41
41
41
(1.56)
(1.56)
(3.20)
(3.20)
0.00
0.00
0.33
0.33
(1.56)
(1.56)
(2.87)
(2.87)
The above statement of profit or loss and other comprehensive income should be read in conjunction
with the accompanying notes.
28
Clean TeQ Holdings Limited
Statement of Financial Position
As at 30 June 2016
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Other financial assets
Total current assets
Non-current assets
Other financial assets
Property, plant and equipment
Intangibles
Exploration and evaluation assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Employee benefits
Deferred revenue
Total current liabilities
Non-current liabilities
Deferred revenue
Notes payable
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
Consolidated
2015
$’000
2016
$’000
9
10
11
12
13
14
15
16
17
18
19
20
20
21
23
7,226
302
96
2,395
377
10,396
-
2,329
11,103
3,201
16,633
3,313
523
96
963
25
4,920
328
2,589
11,900
246
15,063
27,029
19,983
715
274
46
1,035
544
2,684
41
3,269
4,304
1,778
276
46
2,100
590
2,490
33
3,113
5,213
22,725
14,770
24
25
26
39,856
3,302
(20,433)
27,717
1,063
(14,010)
22,725
14,770
The above statement of financial position should be read in conjunction with the accompanying notes.
29
Clean TeQ Holdings Limited
Statement of Changes in Equity
For the year ending 30 June 2016
Consolidated
Balance at 1 July 2014
Loss after income tax benefit for the
financial year
Total comprehensive income for the
financial year
Transactions with owners in their
capacity as owners:
Equity contributions, net of
transaction costs (note 24)
Share-based payments (note 42)
Lapse of options
Total contribution and distribution:
Change in ownership interests:
Change in controlling interest without
a change in control (note 25)
Disposal of controlling interest in
subsidiary (note 8)
Disposal of subsidiary with NCI
Total changes in ownership interests:
Total transactions with owners of the
Company
Balance at 30 June 2015
Balance at 1 July 2015
Loss after income tax benefit for the
financial year
Total comprehensive income for the
financial year
Transactions with owners in their
capacity as owners:
Equity contributions, net of
transaction costs (note 24)
Share-based payments (note 42)
Lapse of options
Total contribution and distribution:
Change in ownership interests:
Change in controlling interest without
a change in control (note 25)
Disposal of controlling interest in
subsidiary (note 8)
Disposal of subsidiary with NCI
Total changes in ownership interests:
Total transactions with owners of the
Company
Balance at 30 June 2016
Contributed
Equity
Accumulated
Losses
Reserves
$’000
17,787
$’000
(6,905)
$’000
198
Non
Control
Interest
$’000
-
Total
Equity
$’000
11,080
-
-
(8,384)
(8,384)
-
-
159
(8,225)
159
(8,225)
9,930
-
-
9,930
-
-
-
-
-
-
-
-
-
1,023
(158)
865
-
-
-
-
9,930
1,023
(158)
10,795
-
1,120
-
1,120
1,120
159
1,279
(1,120)
-
-
(159)
-
-
-
(159)
1,120
9,930
27,717
1,279
(14,010)
865
1,063
(159)
-
11,915
14,770
27,717
(14,010)
1,063
-
-
(6,423)
(6,423)
-
-
12,139
-
-
12,139
-
-
-
-
-
-
-
-
-
-
-
-
-
2,239
-
2,239
-
-
-
-
12,139
39,856
-
(20,433)
2,239
3,302
-
-
-
-
-
-
-
-
-
-
-
-
-
14,770
(6,423)
(6,423)
12,139
2,239
-
14,378
-
-
-
-
14,378
22,725
The above statement of changes in equity should be read in conjunction with the accompanying
notes.
30
Clean TeQ Holdings Limited
Statement of Cash Flows
For the year ending 30 June 2016
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Cash used in operating activities
Interest received
Interest and other finance costs paid
Research and development tax incentive received
Consolidated
2015
$’000
2016
$’000
Note
681
(4,550)
(3,869)
7,229
(10,214)
(2,985)
110
(80)
1,506
66
(365)
-
Net cash used in operating activities
40
(2,333)
(3,284)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for exploration and evaluation assets
Development expenditure
Proceeds from sale of business, net of cash disposed
Net cash (used in)/from investing activities
Cash flows from financing activities
Proceeds from issue of shares, net of issuance costs
Payment of hire purchases
Cash on deposit for security over bank guarantees
Repayment of borrowings
Net cash from financing activities
15
17
8
(41)
(4,657)
-
-
(55)
(246)
(1,178)
1,922
(4,698)
443
12,139
-
(24)
(1,171)
3,793
(30)
-
(149)
10,944
3,614
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
3,913
3,313
773
2,540
Cash and cash equivalents at the end of the financial year
9
7,226
3,313
The above statement of cash flows should be read in conjunction with the accompanying notes.
31
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 1. General information
The financial statements cover the Clean TeQ Holdings Limited group as a Consolidated Entity
(‘Consolidated Entity’) consisting of Clean TeQ Holdings Limited (‘the Company’) and its subsidiaries.
The financial statements are presented in Australian dollars, which is the Consolidated Entity’s
functional and presentation currency.
Clean TeQ Holdings Limited is a for-profit listed public company limited by shares, incorporated and
domiciled in Australia. Its registered office and principal place of business is:
Unit 12, 21 Howleys Road
Notting Hill
Victoria Australia 3168
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 statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 19
August 2016. The directors have the power to amend and reissue the financial statements.
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.
(a) Change in accounting policies
Certain comparative amounts in the statement of profit or loss and other comprehensive income have
been reclassified as a result of discontinued operations in the previous financial year (see Note 8).
(b) 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 $6,423,000 (30 June 2015: loss of $9,155,000). We note there were no significant revenues from
continuing operations during the financial year. Operational revenues were more than offset by
business development and corporate overhead costs. Working capital, being current assets less
current liabilities, amounts to a $9,361,000 surplus (30 June 2015: $2,820,000 surplus), with cash
reserves increasing from $3,313,000 to $7,226,000 during the financial year. Net cash outflows from
operating activities were $2,333,000 for the financial year (30 June 2015: $3,284,000 outflow).
During the financial year, the following events have taken place to support the going concern basis of
preparation for the Consolidated Entity:
32
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 2. Significant accounting policies (continued)
(b) Going concern (continued)
The Consolidated Entity increased its available cash on hand as at 30 June 2016 to
$7,226,000;
During the financial year, the Consolidated Entity raised $12,139,000 in equity capital after
issue costs, indicating strong support from investors to invest in the Consolidated Entity and
its technologies;
The Consolidated Entity received a $1,506,000 cash rebate from the Australian Tax Office for
eligible research and development expenditure relating to the 2014 and 2015 financial years.
The Consolidated Entity anticipates that a significant proportion of the forecast 2016 financial
years’ development expenditure, including a large proportion of Syerston testwork and
feasibility study expenditure, will also be eligible for the refundable tax offset; and
The forecast cash flows for the Consolidated Entity indicate a positive cash position for at
least the period of 12 months to August 2017.
The Consolidated Entity expects that relationships with its major investors will also assist in widening
the Consolidated Entity’s opportunities for profitable commercialisation of its technologies in addition
to assisting in securing further funding required.
As set out in the financial report, during the financial year the Consolidated Entity made good
progress in respect of the commercialisation of its water and metals technologies. A number of
significant project opportunities have been identified in a number of key markets with a focus on
treatment of waste water from mining operations. The Consolidated Entity also made good progress
in respect of the ongoing development of the Syerston Project. The Consolidated Entity will continue
working towards securing commercial contracts in the near future, and anticipates both the Water and
Metals Divisions to produce substantial revenues in the future.
The directors are confident that the Consolidated Entity can continue to 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.
While the directors are confident in the Consolidated Entity's ability to continue as a going concern, in
the event the cashflow forecasts are adversely impacted and the agreements and commercial
opportunities described above do not eventuate as planned, including continued access to equity
funding which at the date of this report is uncertain, there is a material 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, beyond the 12 months from the
date the directors sign the financial report.
Consequently, material uncertainty exists as to whether the Consolidated Entity will continue as a
going concern and it may therefore 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
recorded in the statement of financial position and settle liabilities other than in the ordinary course of
business.
33
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 2. Significant accounting policies (continued)
(c) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian
Accounting Standards (“AASBs”) 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 (“IFRSs”) as issued
by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention unless otherwise
described in the accounting policies.
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.
(d) 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 35.
(e) Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Clean
TeQ Holdings Limited as at 30 June 2016 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 control. The Consolidated
Entity controls an entity when the Consolidated Entity is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns through its power to
direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the Consolidated Entity. They are de-consolidated from the date that control ceases.
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. Transaction costs are expensed as incurred, except if related to the
issue of debt or equity securities.
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.
34
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 2. Significant accounting policies (continued)
(e) Principles of consolidation (continued)
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.
Transactions eliminated on consolidation
Intercompany transactions, balances and any unrealised gains and losses on transactions between
entities in the Consolidated Entity are eliminated. 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 investee. Unrealised losses are also eliminated unless the transaction provides
evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Consolidated Entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change
in ownership interest, without the loss of control, is accounted for as an equity transaction, where the
difference between the consideration transferred and the book value of the share of the non-
controlling interest acquired is recognised directly in equity attributable to the Parent.
Loss of control
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.
35
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 2. Significant accounting policies (continued)
(e) Principles of consolidation (continued)
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 associate. Goodwill relating to the associate is
included in the carrying amount of the investment and is neither amortised nor individually tested for
impairment. Dividends received or receivable from associates reduce the carrying amount of the
investment.
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 joint arrangement whereby the parties that have joint control of the arrangement
have rights to the net assets of the arrangement. 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. Investments in joint ventures 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 joint
venture. Goodwill relating to the joint venture is included in the carrying amount of the investment and
is neither amortised nor individually tested for impairment. Income earned from joint venture entities
reduces the carrying amount of the investment.
(f) 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 Operating Decision
Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments
and assessing their performance.
(g) Revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the Consolidated
Entity and the revenue can be reliably measured. Revenue is measured at the fair value of the
consideration received or receivable.
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
36
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 2. Significant accounting policies (continued)
(g) Revenue recognition (continued)
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 and performance 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.
Sales of non-current assets
Gains or losses on sale of non-current assets are included as income or expenses 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 Consolidated Entity for
expenses incurred are recognised in profit or loss or other income on a systematic basis in the same
periods in which the expenses are recognised. Grants that compensate the Consolidated Entity for
expenditure capitalised are recognised as a reduction in the carrying value of the asset and grants
that compensate the Consolidated Entity for expenditure recognised in profit or loss is recognised as
government grant income.
37
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 2. Significant accounting policies (continued)
(h) 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 comprises the expected tax payable or receivable on the taxable income or loss for the
year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax
payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax
is not recognised for:
temporary differences on the initial recognition of assets or liabilities in a transaction that is not
a business combination and that affects neither accounting nor taxable profit or loss;
related
temporary differences
joint
arrangements to the extent that the Consolidated Entity is able to control the timing of the
reversal of the temporary differences and it is probable that they will not reverse in the
foreseeable future; and
in subsidiaries, associates and
investments
to
taxable temporary differences arising on the initial recognition of goodwill.
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 at 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.
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
entities which intend to settle simultaneously.
Clean TeQ Holdings Limited (the 'head Entity') and its wholly-owned Australian subsidiaries have
formed an income tax Consolidated group under the tax consolidation regime. The head Entity and
each subsidiary in the tax Consolidated group continue to account for their own current and deferred tax
amounts. The tax Consolidated group has applied the 'separate taxpayer within group' 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
38
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 2. Significant accounting policies (continued)
(h) Income tax (continued)
assumed from each subsidiary 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.
(i) Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-
current classification.
An asset is current when: it is expected to be realised or intended to be sold or consumed in the
normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised
within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted
from being exchanged or used to settle a liability for at least 12 months after the reporting period. All
other assets are classified as non-current.
A liability is current when: it is expected to be settled in the normal operating cycle; it is held primarily
for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is
no unconditional right to defer the settlement of the liability for at least 12 months after the reporting
period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
(j) Cash and cash equivalents
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.
(k) 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
39
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 2. Significant accounting policies (continued)
(k) Trade and other receivables (continued)
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.
(l) 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.
Work in progress is measured, for each project in progress, as the excess of revenue recognised for
the project, based on the project’s percentage of completion, over the revenue invoiced to date for
that project. For projects where the revenue recognised for a project is less than the revenue
invoiced to date for that project, the excess of revenue invoiced over revenue recognised is recorded
as a current liability, presented as deferred revenue.
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.
(m) 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. Land is not depreciated.
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. Depreciation is calculated 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. The estimated useful
lives of property, plant and equipment are as follows for the current and preceding financial year:
Plant and factory equipment
Office furniture and equipment
Capitalised leased equipment
Motor vehicles
Land
2.5 to 20 years (straight line and diminishing value)
2.5 to 20 years (straight line and diminishing value)
3-7 years (diminishing value)
5-6 years (diminishing value)
Indefinite
40
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 2. Significant accounting policies (continued)
(m) Property, plant and equipment (continued)
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.
(n) Other financial assets
Cash on deposit used as security for bank guarantees maturing within twelve months of each
reporting period is disclosed as a current other financial asset. Those deposits that mature in excess
of twelve months are disclosed as non-current other financial assets.
(o) Intangibles
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
de-recognition of intangible assets are measured as the difference between net disposal proceeds
and the carrying amount of the intangible asset. The method of determining 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.
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 an economic 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. Otherwise they are recognised in the profit or loss as incurred. Capitalised
development costs are amortised on a straight-line basis over the period of their expected economic
benefit, being between 4 and 20 years dependent on the project.
Mineral Licence Rights
Licence rights relating to mining tenements are amortised in the consolidated statement of profit or
loss and comprehensive income over the life of the relevant area of interest from the commencement
of commercial production. The mineral license rights intangible asset is subject to impairment testing
in accordance with the Consolidated Entity’s accounting policy for impairment of non-financial assets
as set out in note 2(p).
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.
41
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 2. Significant accounting policies (continued)
(o) Intangibles (continued)
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.
(p) Impairment of non-financial assets
At each reporting date, the Consolidated Entity reviews the carrying amounts of its non-financial
assets (other than inventories and deferred tax assets) to determine whether there is any indication of
impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill
is tested annually for impairment.
For impairment testing, assets are grouped together into the smallest group of assets that generates
cash inflows from continuing use that are largely independent of the cash inflows of other assets or
CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are
expected to benefit from the synergies of the combination.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less
costs to sell. Value in use is based on the estimated future cash flows, discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable
amount.
Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying
amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other
assets in the CGU on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is
reversed only to 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 loss had been
recognised.
(q) Leases
Determining whether an arrangement contains a lease
At inception of an arrangement, the Consolidated Entity determines whether such an arrangement is
or contains a lease.
At inception or on reassessment of an arrangement that contains a lease, the Consolidated Entity
separates payments and other consideration required by the arrangement into those for the lease and
those for other elements on the basis of their relative fair values. If the Consolidated Entity concludes
for a finance lease that it is impracticable to separate the payments reliably, then an asset and a
42
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 2. Significant accounting policies (continued)
(q) Leases (continued)
liability are recognised at an amount equal to the fair value of the underlying asset; subsequently, the
liability is reduced as payments are made and an imputed finance cost on the liability is recognised
using the Consolidated Entity’s incremental borrowing rate.
Leased assets
Assets held by the Consolidated Entity under leases that transfer to the Consolidated Entity
substantially all the risks and rewards of ownership are classified as finance leases. The leased asset
is measured initially at an amount equal to the lower of their fair value and the present value of the
minimum lease payments. Subsequent to initial recognition, the assets are accounted for in
accordance with the accounting policy applicable to that asset.
Assets held under other leases are classified as operating leases and are not recognised in the
Consolidated Entity’s statement of financial position.
Lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over
the term of the lease. Lease incentives received are recognised as an integral part of the total lease
expense, over the term of the lease.
Minimum lease payments made under finance leases are apportioned between the finance expense
and the reduction of the outstanding liability. The finance expense is allocated to each period during
the lease term so as to produce a constant periodic rate of interest on the remaining balance of the
liability. The Consolidated Entity derecognises the liabilities when its contractual obligations are
discharged, cancelled or expired.
(r) Trade and other payables
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. The amounts are unsecured and are usually paid within 30 days of recognition.
The Consolidated entity derecognises the liability when its contractual obligations are discharged,
cancelled or expired.
(s) Borrowings
Loans and borrowings, including promissory notes, 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.
Interest related to the financial liability component is recognised in profit or loss. On conversion, the
equity component of the financial liability is reclassified to equity and no gain or loss is recognised.
43
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 2. Significant accounting policies (continued)
(t) Finance income and costs
The Consolidated Entity’s finance income and finance costs include, as applicable:
interest income;
interest expense;
dividend income;
the net gain or loss on the disposal of available-for-sale financial assets;
the net gain or loss on financial assets at fair value through profit or loss;
the foreign currency gain or loss on financial assets and financial liabilities;
the fair value loss on contingent consideration classified as a financial liability;
impairment losses recognised on financial assets (other than trade receivables);
the net gain or loss on hedging instruments that are recognised in profit or loss; and
the reclassification of net gains previously recognised in other comprehensive income.
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.
Dividend income is recognised in profit or loss on the date that the Group’s right to receive payment is
established.
Interest expense is recognised using the effective interest method. Finance costs attributable to
qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the
period in which they are incurred, including:
interest on short-term and long-term borrowings;
interest on hire purchases.
(u) Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service
leave expected to be settled within 12 months of the reporting date are recognised in current liabilities
in respect of employees' services up to the reporting date and are measured at the amounts expected
to be paid when the liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the
reporting date are recognised in non-current liabilities, provided there is an unconditional right to defer
settlement of the liability. The liability is measured as the present value of expected future payments
to be made in respect of services provided by employees up to the reporting date using the projected
unit credit method. Consideration 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 Australian Corporate bonds with terms to maturity and currency that
match, as closely as possible, the estimated future cash outflows.
44
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 2. Significant accounting policies (continued)
(u) Employee benefits (continued)
Termination benefits
Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer
of those benefits and when the Group recognises costs for a restructuring. If benefits are not
expected to be settled wholly within 12 months of the end of the reporting period, then they are
discounted.
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 and cash-settled share-based compensation benefits are provided to employees. There
were no cash settled share-based payments during the financial year.
Equity-settled transactions are awards of shares, or options and performance rights 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 strike price of the option,
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 are not dependant on 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.
45
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 2. Significant accounting policies (continued)
(u) Employee benefits (continued)
Market conditions are taken into consideration in determining grant date 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.
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.
(v) Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or
disclosure purposes, the fair value is based on the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market participants at the measurement
date; and assumes that the transaction will take place either: in the principle market; or in the absence
of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the
asset or liability, assuming they act in their economic best interest. For non-financial assets, the fair
value measurement is based on its highest and best use. Valuation techniques that are appropriate in
the circumstances and for which sufficient data are available to measure fair value, are used,
maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value
hierarchy that reflects the significance of the inputs used in making the measurements.
Classifications are reviewed each reporting date and transfers between levels are determined based
on a reassessment of the lowest level input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal
expertise is either not available or when the valuation is deemed to be significant. External valuers are
selected based on market knowledge and reputation. Where there is a significant change in fair value
of an asset or liability from one period to another, an analysis is undertaken, which includes a
verification of the major inputs applied in the latest valuation and a comparison, where applicable, with
external sources of data.
46
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 2. Significant accounting policies (continued)
(w) 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.
(x) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the ordinary shareholders of
Clean TeQ Holdings Limited 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.
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.
(y) Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the
GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost
of the acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net
amount of GST recoverable from, or payable to, the tax authority is included in other receivables or
other payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing
or financing activities which are recoverable from, or payable to the tax authority, are presented as
operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or
payable to, the tax authority.
(z) Rounding of amounts
The Company is of a kind referred to in Instrument 2016/191, 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.
47
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 2. Significant accounting policies (continued)
(aa) Exploration and evaluation assets
Exploration, evaluation and feasibility expenditure
Exploration and evaluation expenditure is capitalised and carried forward in the financial statements,
in respect of areas of interest for which the rights of tenure are current and where such costs are
expected to be recouped through successful development and exploitation of the area of interest, or
alternatively, by its sale. Capitalised costs are deferred until commercial production commences from
the relevant area of interest, at which time they are amortised on a unit of production basis.
Exploration and evaluation expenditure consists of an accumulation of acquisition costs and direct
exploration and evaluation costs incurred.
Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists to determine
technical feasibility and commercial viability, and (ii) facts and circumstances suggest that the carrying
amount exceeds the recoverable amount (see impairment policy, Note 2(p)). For the purpose of
impairment testing, exploration and evaluation assets are allocated to cash-generating units to which
the exploration activity relates.
When an area of interest is abandoned, or the Directors determine it is not commercially viable to
pursue, accumulated costs in respect of that area are written off in the period the decision is made.
(ab) New standards and interpretations not yet adopted
A number of new standards and amendments to standards are effective for annual period beginning
after 1 July 2015, however, the Group has not applied the following new or amended standards in
preparing these consolidated financial statements.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 establishes a comprehensive framework for determining whether, how much and when
revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue,
IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes.
IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with early
adoption permitted.
IFRS 9 Financial Instruments
IFRS 9, published in July 2014, replaces the existing guidance in IAS 39 Financial Instruments:
Recognition and Measurement. IFRS 9 includes revised guidance on the classification and
measurement of financial instruments, including a new expected credit loss model for calculating
impairment on financial assets, and the new general hedge accounting requirements. It also carries
forward the guidance on recognition and de-recognition of financial instruments from IAS 39.
IFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018, with early
adoption permitted.
48
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 2. Significant accounting policies (continued)
(ab) New standards and interpretations not yet adopted (continued)
IFRS 16 Leases
IFRS 16 requires companies to bring most leases on-balance sheet from 2019. Companies with leases
will appear to be more asset-rich, but also more heavily indebted. IFRS 16 is effective for annual
reporting periods beginning on or after 1 January 2019, with early adoption permitted.
The adoption of these standards may have an impact on the Consolidated Entity’s financial assets, and
is not expected to have a significant impact on the Consolidated Entity’s financial liabilities.
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.
Estimation of useful lives of assets
The Consolidated Entity determines the estimated useful lives and related depreciation and amortisation
charges for its property, plant and equipment and finite life intangible assets. The useful lives could
change significantly as a result of technical innovations or some other event. The depreciation and
amortisation charge will increase where the useful lives are less than previously estimated lives, or
technically obsolete or non-strategic assets that have been abandoned or sold will be written off or
written down.
Exploration & Evaluation Assets
As set out in Note 2(aa) exploration and evaluation expenditure is capitalised for an area of interest for
which it is considered likely to be recoverable from future exploitation or sale. The accounting policy
requires management to make certain estimates and assumptions as to future events and
circumstances, in particular whether an economically viable extraction operation can be established.
These estimates and assumptions may change as new information becomes available.
49
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 3. Critical accounting judgements, estimates and assumptions (continued)
If, after having capitalised the expenditure under the accounting policy, a judgement is made that
recovery of the expenditure is unlikely, the relevant capitalised amount will be written off to the profit
or loss.
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 or 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 discounted cash flow modelling. Based on the impairment review at
30 June 2016, the directors determined that no impairment of the intangible assets be recognised
(2015: $2,751,000). Details of the review, and the assumptions and estimates used, are contained in
note 16.
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.
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.
50
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 4. Operating segments
Identification of reportable operating segments
The Consolidated Entity is organised into 3 operating segments: Air Purification, Water and Metals.
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*
The Company provided a full suite of air purification and odour elimination
solutions to municipal and statutory authorities and industrial companies.
Water
Metals
The Company’s suite of water technologies filter, separate and purify
polluted waters for drinking, agriculture, recreation or industrial use.
The Clean-iX® technology is at the core of this segment and aims to provide
cost effective extraction techniques for a range of resources, including base
metals, precious metals and radioactive elements (such as uranium). The
Metals segment is also progressing the development of the Syerston Project
in New South Wales.
*This division was sold effective 30 June 2015. See Note 8 Discontinued Operations for details.
Information regarding the results of each reportable segment is included below. Performance is
measured based on the net result before interest, depreciation, amortisation and tax, as included in
the internal management reports that are reviewed by the Consolidated Entity’s CEO. Each segment’s
net result before interest, depreciation, amortisation and tax 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. 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.
51
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 4. Operating segments (continued)
Major customers
Major revenue for the year ending 30 June 2016 is derived chiefly from rental income from the
Syerston properties and government grants.
Operating segment information
Air
Purification*
Metals
Water
Consolidated - 2016
$’000
$’000
$’000
Revenue
Sales to external customers
Rental income
Interest income
Other revenue
Total revenue
Reportable segment (loss)/profit
before interest, depreciation and
tax
Depreciation and amortisation
Impairment of assets
Finance costs
Profit on sale of investment (note 8)
Profit/(loss) before income tax
expense
Income tax expense
Loss after income tax expense
-
-
-
-
-
-
-
-
-
-
-
-
44
80
-
430
554
(1,332)
(18)
-
-
-
(1,350)
-
121
-
-
450
571
(2,212)
(663)
-
-
-
(2,875)
-
Intersegment
eliminations/
unallocated**
$’000
Total
$’000
44
-
110
175
329
209
80
110
1,055
1,454
(1,901)
(23)
-
(274)
-
(2,198)
-
(5,445)
(704)
-
(274)
-
(6,423)
-
(6,423)
52
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 4. Operating segments (continued)
Air
Purification*
Metals
Water
Consolidated - 2016
$’000
$’000
$’000
Intersegment
eliminations/
unallocated**
$’000
Total
$’000
Assets
Segment assets
Total assets
Total assets includes:
Additions of non-current assets
(including those acquired in a
business combination)
Liabilities
Segment liabilities
Total liabilities
-
13,603
5,191
8,235
27,029
27,029
-
-
2,955
2,684
-
-
-
2,955
1,620
4,304
4,304
* The change in segment assets and reportable segment profit/(loss) in the Air Purification segment
from the last reporting period is attributable to the sale of the Air Purification business as at 30 June
2015. Refer to note 8 – Discontinued Operations.
** The magnitude of the unallocated portion of the segment results is a result of the Consolidated
Entity incurring a significant amount of expenses that cannot be directly attributable on a reasonable
basis to any one segment.
Air
Purification*
Metals
Water
Consolidated - 2015
$’000
$’000
$’000
Intersegment
eliminations/
unallocated**
$’000
Total
$’000
Revenue
Sales to external customers
Rental income
Interest income
Other revenue
Total revenue
Reportable segment (loss)/profit
before interest, depreciation and
tax
Depreciation and amortisation
Impairment of assets
Finance costs
Profit on sale of investment (note
8)
Profit/(loss) before income tax
expense
Income tax expense
Loss after income tax expense
6,935
-
-
-
6,935
738
(25)
-
(24)
-
689
(97)
241
13
-
-
254
(15)
-
-
-
-
(15)
-
-
-
-
49
49
-
-
90
397
487
7,176
13
90
446
7,725
(256)
(200)
(2,751)
-
(4,219)
(999)
-
(715)
(3,752)
(1,224)
(2,751)
(739)
-
338
338
(3,207)
-
(5,595)
-
(8,128)
(97)
(8,225)
53
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 4. Operating segments (continued)
Air
Purification*
Metals
Water
Consolidated - 2015
$’000
$’000
$’000
Intersegment
eliminations/
unallocated**
$’000
Total
$’000
Assets
Segment assets
Total assets
Total assets includes:
Additions of non-current assets
(including those acquired in a
business combination)
Liabilities
Segment liabilities
Total liabilities
-
-
-
9,138
5,691
5,154 19,983
19,983
3,529
-
-
3,529
2,490
1,173
1,550
5,213
5,213
* The change in segment assets and reportable segment profit/(loss) in the Air Purification segment
from the last reporting period is primarily attributable to the sale of the Air Purification business as at
30 June 2015. Refer to note 8 – Discontinued Operations.
** The magnitude of the unallocated portion of the segment results is a result of the Consolidated
Entity incurring a significant amount of expenses that cannot be directly attributable on a reasonable
basis to any one segment.
54
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 5. Revenue
Sales revenue
Contract revenue
Government grants
Rental income
Other revenue
Interest
Other revenue
Revenue
Note 6. Expenses
Loss before income tax from continuing operations includes the following
specific expenses:
Cost of sales
Cost of sales
Depreciation
Motor vehicles under lease
Plant and factory equipment
Office equipment and furniture
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
Consolidated
2016
$’000
2015
$’000
209
883
80
1,172
110
172
282
1,454
231
35
13
279
90
421
511
790
Consolidated
2016
$’000
2015
$’000
61
561
5
278
18
12
324
37
301
373
368
35
592
234
403
826
704
1,199
1,590
1,326
1
175
76
160
55
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 6. Expenses (continued)
Equity settled share based payments
Other costs
Employee benefit expenses capitalised into development assets
Total employee benefit expenses
Rental expense relating to operating leases
Lease payments
Note 7. Income tax benefit
Income tax benefit:
Current tax
Deferred tax – origination and reversal of temporary differences
Aggregate income tax benefit
Deferred tax included in income tax benefit comprises:
Decrease in deferred tax liabilities (note 22)
Numerical reconciliation of income tax benefit and tax at the statutory rate
Loss before income tax benefit from continuing operations
Profit before income tax (expense)/benefit from discontinued operations
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable
income:
Entertainment expenses
Share-based payments
Interest expense on promissory note treated as non-deductible
Change in recognised deductible temporary difference
Impairment of asset treated as non-deductible
Tax losses (reinstated) / not brought to account
Non-assessable government grant income
Non-deductible R&D expense
R&D tax credit
Non-deductible amortisation expense
Income tax benefit
Consolidated
2016
$’000
2015
$’000
2,239
286
-
880
654
(487)
4,291
2,609
189
233
Consolidated
2016
$’000
2015
$’000
-
-
-
-
-
-
-
-
(6,423)
-
(9,155)
1,027
(6,423)
(8,128)
(1,927)
(2,438)
2
672
58
6
-
1,344
(265)
454
(454)
110
-
2
264
-
103
825
1,210
-
-
-
34
-
56
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 7. Income tax benefit (continued)
Tax losses not recognised:
Unused tax losses for which no deferred tax asset has been recognised,
including tax losses arising from a business combination*
Potential tax benefit @ 30%
Plus: Unrecognised benefit of carry forward non-refundable R&D tax offset
for which no deferred tax asset has been recognised, arising from a
business combination
Total potential tax benefit of carry forward tax losses and R&D tax offset for
which no deferred tax asset has been recognised
Temporary differences not brought to account
Consolidated
2016
$’000
2015
$’000
21,692
38,422
6,508
11,527
589
589
7,097
12,116
903
903
* The figure presented at 30 June 2015 included $27,651,000 of carry forward tax losses on the
acquisition of the Syerston Project from Ivanhoe Mines Ltd. Further analysis conducted within the 30
June 2016 financial year determined that those tax losses acquired from the Syerston Project would
not be able to be viably carried forward and used by the Consolidated Entity.
The above potential tax benefits for tax losses and R&D tax offset have not been recognised in the
statement of financial position. The 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. The R&D tax offset can
only be utilised in the future if sufficient tax liabilities can be generated against which the carry forward
R&D tax offset can be credited.
Note 8. Discontinued operations
Description
Effective 30 June 2015 the Consolidated Entity divested its remaining 59% shareholding in Clean
TeQ Aromatrix Pty Ltd to Australia Sunshine Holdings Limited for cash proceeds of $1,682,000.The
divestment allows the Company to focus exclusively on the Company’s Water and Metals businesses
which are both primarily driven by the Company’s proprietary continuous ion exchange technology.
In December 2014, the Consolidated Entity divested 41% of its shareholding in Clean TeQ Air Pty Ltd
(the predecessor company to Clean TeQ Aromatrix Pty Ltd) to Aromatrix Technologies (Hong Kong)
Ltd as a result of the Aromatrix business acquired (see note 36(i)) and to entities associated with staff
of Clean TeQ Air Pty Ltd. Cash proceeds of $345,000 were received on this transaction. The
Consolidated Entity recorded a gain on the divestment of $1,120,000 directly in equity.
Note that for the current financial year, the Consolidated Entity has not recorded any revenue and
expenses from this discontinued operation.
57
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 8. Discontinued operations (continued)
Financial performance information:
Revenue from sale of goods
Total revenue
Expenses
Inventory write downs
Raw materials and other direct costs
Employee benefits expenses
Depreciation and amortisation expenses
Legal and professional expenses
Occupancy expenses
Finance costs
Marketing expenses
Other expenses
Total expenses before tax
Income tax expense
Net profit after tax from discontinued operations
Gain on disposal after income tax expense
Profit after income tax from discontinued operations
Effects of disposal on the financial position of the Consolidated Entity:
Property, plant & equipment
Trade and other receivables
Inventories
Goodwill
Cash & cash equivalents disposed of
Trade and other payables
Deferred revenue
Employee entitlements
Income tax liability
Subtotal – (assets)/liabilities disposed of
Less: Non-controlling interests
Net (assets) and liabilities - total
Consolidated
2015
$’000
2016
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,935
6,935
(1)
(4,188)
(1,242)
(25)
(126)
(145)
(24)
(77)
(418)
(6,246)
(97)
592
338
930
Consolidated
2015
$’000
2016
$’000
-
-
-
-
-
-
-
-
-
-
-
-
(126)
(1,990)
(655)
(1,500)
(105)
1,152
822
149
97
2,156
(884)
1,272
58
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 8. Discontinued operations (continued)
Effects of disposal on the financial position of the Consolidated Entity:
Consideration received in cash – 59% residual interest
Cash & cash equivalents disposed of
Consideration received in cash for partial disposal – 8% interest
Total net cash inflow
Note 9. Current assets – cash and cash equivalents
Cash at bank
Cash on deposit
Cash on deposit used as security for bank guarantee and credit card
facilities - uncommitted
Consolidated
2015
$’000
2016
$’000
-
-
-
-
1,682
(105)
345
1,922
Consolidated
2016
$’000
7,226
-
2015
$’000
3,313
-
-
-
7,226
3,313
The effective interest rate on short-term bank deposits at 30 June 2016 was 1.60% (2015: 1.90%).
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.
Note 10. Current assets – trade and other receivables
Trade receivables
Other receivables
Consolidated
2016
$’000
2015
$’000
49
253
302
36
487
523
Past due but not impaired
Customers with balances past due but without provision for impairment of receivables amount to $nil
as at 30 June 2016 ($28,000 as at 30 June 2015).
The Consolidated Entity did not consider a credit risk on the aggregate balances after reviewing credit
terms of customers based on recent collection practices.
59
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 10. Current assets – trade and other receivables (continued)
The ageing of the past due but not impaired receivables are as follows:
31-60 days
60-90 days
90+days
Consolidated
2016
$’000
2015
$’000
-
-
-
-
28
-
-
28
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 2016 or 30 June 2015 and thus should not be provided for.
Note 11. Current assets – inventories
Raw materials - at net realisable value
Finished goods - at cost
Consolidated
2016
$’000
2015
$’000
10
86
96
10
86
96
Raw materials includes grape skin extract which was initially recognised at a cost of $598,000 when
first acquired pre-2007. At 30 June 2016 the carrying value of grape skin extract is $10,000 (2015:
$10,000). During the year ending 30 June 2016, management did not choose to write down the value
of finished goods (2015: $85,000).
60
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 12. Current assets – income tax receivable
Income tax receivable
Consolidated
2016
$’000
2015
$’000
2,395
963
Income tax receivable represents the refund due to the Consolidated Entity on expenditure during the
current financial year eligible for research and development tax concessions.
Note 13. Current assets – other financial assets
Cash on deposit used as security for bank guarantees
Note 14. Non-current assets – other financial assets
Cash on deposit used as security for bank guarantees
Consolidated
2016
$’000
2015
$’000
377
25
Consolidated
2016
$’000
2015
$’000
-
328
61
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 15. Non-current assets – property, 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
Leasehold improvements - at cost
Less: Accumulated amortisation
Land – at cost
Consolidated
2016
$’000
2015
$’000
156
(118)
38
156
(100)
56
86
(65)
21
737
(737)
-
41
-
41
86
(60)
26
737
(459)
278
-
-
-
2,229
2,229
2,229
2,229
2,329
2,589
The land was acquired from Ivanhoe Mines Ltd as part of the Consolidated Group’s acquisition of the
Syerston Project. The land was recorded at its deemed cost, being an approximate of its fair value as
at that date as determined by management, with reference to an independent valuation performed in
May 2013.
62
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 15. Non-current assets – property, plant and equipment (continued)
The acquisition of the Syerston project has been recognised as an asset acquisition in accordance
with Australian Accounting Standards.
Reconciliations of carrying amount
Reconciliations of the written down values at the beginning and end of the current and previous
financial year are set out below:
Consolidated
Balance as at 1 July 2014
Additions
Disposals
Write off of assets
Depreciation expense
Balance as at 30 June 2015
Additions
Disposals
Write off of assets
Depreciation expense
Balance as at 30 June 2016
Factory
Equipment
$’000
692
31
(97)
-
(348)
278
-
-
-
(278)
-
Note 16. Non-current assets – intangibles
Land
$’000
Office
Furniture &
Equipment
$’000
Leasehold
Improve-
ments
$’000
Motor
Vehicles
Total
$’000
$’000
-
2,229
-
-
-
2,229
-
-
-
-
2,229
94
1
(2)
-
(37)
56
-
-
-
(18)
38
-
-
-
-
-
-
41
-
-
-
41
65
-
(27)
-
(12)
26
-
-
-
(5)
21
851
2,261
(126)
-
(397)
2,589
41
-
-
(301)
2,329
Capitalised development costs - at cost
Less: Accumulated amortisation and impairments
Patents and trademarks - at cost
Less: Accumulated amortisation and impairments
Licence rights - at cost
Less: Accumulated amortisation and impairments
Consolidated
2016
$’000
2015
$’000
18,212
(8,941)
9,271
18,606
(8,570)
10,033
713
(302)
411
713
(267)
446
4,472
(3,051)
1,421
4,472
(3,051)
1,421
11,103
11,900
During the financial year, the Consolidated Entity transferred $394,000 (FY15: $nil) of intangibles to
Exploration & evaluation assets.
63
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 16. Non-current assets – intangibles (continued)
Reconciliation of carrying amount
Reconciliations of the carrying amounts at the beginning and end of the current and previous financial
year are set out below:
Consolidated
Balance as at 1 July 2014
Additions
Impairment charge
Amortisation expense
Balance as at 30 June 2015
Additions
Impairment charge
Transfer to Exploration Asset
Amortisation expense
Balance as at 30 June 2016
Capitalised
Development
Costs
$’000
License Patents and
Trademarks
Rights*
Total
$’000
$’000
$’000
9,959
666
-
(592)
10,033
-
-
(394)
(368)
9,271
3,072
1,300
(2,751)
(200)
1,421
-
-
-
-
1,421
480
-
-
(34)
446
-
-
-
(35)
411
13,511
1,966
(2,751)
(826)
11,900
-
(394)
(403)
11,103
*The licence rights acquired in the year ending 30 June 2015 relate to mining tenements acquired from Ivanhoe
Mines Ltd, as part of the Consolidated Group’s acquisition of the Syerston Project. The tenements were recorded
based on their deemed cost, being their estimated fair value calculated as at the date of acquisition of the assets
(refer to note 15).
Carrying values of Cash Generating Units
(CGUs)
Capitalised
Development
Costs
License Patents and
Trademarks
Rights*
Total
$’000
$’000
$’000
$’000
As at 30 June 2015:
Water
Metals
Air Purification*
As at 30 June 2016:
Water
Metals
Air Purification
5,205
4,828
-
10,033
4,836
4,435
-
9,271
121
1,300
-
1,421
121
1,300
-
1,421
223
223
-
446
205
206
-
411
5,549
6,351
-
11,900
5,162
5,941
-
11,103
*The Air Purification CGU was disposed of as at 30 June 2015. Refer to note 8 for further details.
The carrying amount of each CGU inclusive of assets other than intangible assets is $5,191,000
(2015: $5,691,000) for Water and $11,507,000 (2015: $9,138,000) for Metals.
64
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 16. Non-current assets – intangibles (continued)
Amortisation
The amortisation of patents and trademarks, licence rights and development costs are allocated to
expenses within the statement of profit or loss and other comprehensive income.
Recoverability of development costs
The carrying amount of the Consolidated Entity's development intangible assets that are yet to be
commercialised is reviewed at each reporting date for potential impairment. Impairment is now
assessed at a CGU level rather than based on individual intangible assets capitalised due to the
Consolidated Entity’s technologies being platform technologies where cash flows are inter-dependent.
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 determined by
discounted cash flow models, as set out below.
Impairment test
As a result of the impairment assessment at 30 June 2016, the directors and management of the
Consolidated Entity identified that no impairment charge be recognised (30 June 2015: impairment of
$2,751,000). The impairment loss was recognised in the statement of profit or loss and other
comprehensive income.
Impairment testing of significant CGUs
The Consolidated Entity's intangible assets are reviewed for impairment at a CGU level using
operating 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 expected to be incurred to commercialise the
development assets;
five to twenty year (Metals CGU) forecast revenues from commercialisation of the
development assets, including assumptions with respect to sales growth dependent upon
either the quantum of projects forecast to commence;
the risks attached to commercialising the asset, including any industry specific or regulatory
risk;
anticipated levels of competition; and
other general economic factors.
The discounted cash flows have been prepared using a variety of sourced data such as sales data
from Memoranda of Understanding signed, anticipated sales resulting from discussions with potential
customers and other market data to forecast future revenue. Forecast production and processing
results and capital and operating costs are estimated by appropriately qualified and competent
personnel engaged by the Consolidated Entity for both the Water and Metals CGUs. As there are no
guarantees that new projects will be awarded, 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% (2015: 15%) for all future cash flows for a 20 year period for the Metals CGU for the Water
Purification CGU. The discount rate was used in conjunction with a range of probability factors for
both CGUs to reflect the current assessment of the likelihood of success of the forecast cashflows.
65
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 16. Non-current assets – intangibles (continued)
Management note that reasonably possible changes in key assumptions include 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,
independent of each other, on the carrying values to be tested for impairment are as follows at 30
June 2016:
A reduction of 10% in the probability factors applied to forecast cash flows
A delay of six months in the commencement of forecast cash flows
A change of 2% in the weighted average cost of capital
An increase of 5% in operating expenditure
A reduction of 5% in commodity prices
A reduction of 5% in production yield
Consolidated
2016
$’000
-
-
-
-
-
-
2015
$’000
-
-
-
-
-
-
-
-
Management's conclusion is that these changes in key assumptions, while reducing the recoverable
amounts of the Consolidated Entity's technologies, would not, as at 30 June 2016, reduce the
recoverable amounts to the extent that the development intangible assets would be impaired.
Therefore, reasonably possible changes in key assumptions are unlikely to result in an impairment at
30 June 2016 (30 June 2015: nil).
Note 17. Non-current assets - Exploration & evaluation assets
At the beginning of the financial year
Transfer from intangibles
Additions
R&D incentive on exploration asset off-set
Disposals
At end of the financial year
Exploration tenement summary
Consolidated
2016
$’000
246
394
4,657
(2,096)
-
3,201
2015
$’000
-
-
246
-
-
246
License
Number
EL4573
Project Name
Location
Equity Interest
Equity Interest
Syerston
NSW
2016
100%
2015
100%
66
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 18. Current liabilities – trade and other payables
Trade payables
Deferred consideration payable
Other payables
Consolidated
2016
$’000
412
-
303
715
2015
$’000
282
1,171
325
1,778
Deferred consideration of $1,171,000 was paid to Nippon Gas Co Ltd for the acquisition of Associated
Water Pty Ltd and Clean World Japan.
Note 19. Current liabilities – employee benefits
Annual leave
Long service leave
Note 20. Deferred revenue
Current
Government grant*
Non-Current
Government grant*
Consolidated
2016
$’000
2015
$’000
135
139
274
129
147
276
Consolidated
2016
$’000
2015
$’000
46
46
544
590
590
636
*This relates to the Commonwealth government grant money received associated with the Climate
Ready project. This income is being recognised over 17 years, being the estimated useful life of the
related asset.
67
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 21. Notes payable
Notes payable
Consolidated
2016
$’000
2015
$’000
2,684
2,490
As part of the acquisition of the Syerston Project from Ivanhoe Mines Ltd on 31 March 2015, a
promissory note was issued by the Consolidated Entity with a face value of $3,000,000 payable in
three years’ time and carrying a zero coupon. This promissory note is secured by first ranking
mortgages against the real property of the Syerston Project. The promissory note is recognised at its
amortised cost of $2,684,000 (30 June 2015: amortised cost of $2,490,000).
Note 22. Non-current liabilities/assets – deferred tax
Consolidated
Balance as at 30 June 2016
Net Recognised
in profit
or loss
$’000
balance
1 July 2015
$’000
Recognised Deferred Deferred
tax
liabilities
$’000
directly
in equity
$’000
tax
assets
$’000
Deferred tax asset (liability)
comprises temporary differences
attributable to:
Amounts recognised in:
Intangible assets
Accrued expenses
Employee benefits
Transaction costs on share issues
Legal and consulting fees
Plant & equipment
Unused tax losses
Tax liabilities (assets) before set-
off
Set off deferred tax
assets/liabilities
Net tax liabilities (assets)
Movements 2016
Opening balance
Charges to profit or loss (note 7)
Closing balance
(2,854)
281
93
207
82
-
2,191
-
-
-
-
-
-
-
228
(93)
2
-
(71)
2
(120)
(52)
-
188
95
259
11
2
2,071
(2,626)
-
-
-
-
-
-
-
-
-
52
-
-
-
52
2,626
(2,626)
(2,626)
2,626
68
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 23. Non-current liabilities – employee benefits
Annual leave and long service leave
Note 24. Equity – issued capital
Consolidated
2016
$’000
2015
$’000
41
33
Ordinary shares – fully paid
437,052,097
368,765,739
39,856
27,717
2016
Shares
2015
Shares
2016
$’000
2015
$’000
Consolidated
Movements in ordinary share capital
Details
Date
Shares
Balance
Shares issued through private placement
Shares issued through private placement
Shares issued to employees
Shares issued through private placement
Capital raising costs
Shares issued as approved by the general
meeting
Shares issued as approved by the general
meeting
Shares issued as approved by the general
meeting
Shares issued through private placement
Convertible notes converted to equity
Balance
Shares issued as approved by the general
meeting
Shares issued through private placement
Capital raising costs
Balance
1 July 2014
4 September 2014
8 October 2014
19 December 2014
19 December 2014
241,670,775
2,000,000
18,685,714
241,965
37,500,000
-
Issue
Price
$0.05
$0.07
$0.06
$0.06
-
$’000
17,787
100
1,308
15
2,250
(141)
23 February 2015
1,666,667
$0.06
100
31 March 2015
7,373,053
$0.14
1,000
11 May 2015
15 May 2015
20 May 2015
30 June 2015
7,449,143
1,246,537
50,931,885
368,765,739
26 August 2015
12 May 2016
30 June 2016
49,238,738
19,047,620
-
437,052,097
$0.14
$0.14
$0.08
$0.18
$0.21
-
1,050
176
4,072
27,717
8,863
4,000
(724)
39,856
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. All ordinary shares rank equally with regard to the Consolidated Entity’s residual assets.
69
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 24. Equity – issued capital (continued)
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 2015 Annual
Report.
Note 25. Equity – reserves
Share based payments reserve
Consolidated
2016
$’000
3,302
3,302
2015
$’000
1,063
1,063
70
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 25. Equity – reserves (continued)
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Foreign
Currency
Reserve
$’000
Share
Change in
Based Ownership
Reserve
$’000
Payments
$’000
-
-
-
-
-
-
-
-
-
-
-
198
-
(158)
-
1,023
1,063
-
-
-
2,239
3,302
-
1,120
-
(1,120)
-
-
-
-
-
-
-
Total
$’000
198
1,120
(158)
(1,120)
1,023
1,063
-
-
-
2,239
3,302
Consolidated
Balance as at 1 July 2014
Gain on sale transactions with equity holders
Lapsed options
Transfer to accumulated losses
Share based payments
Balance as at 30 June 2015
Gain on sale transactions with equity holders
Lapsed options
Transfer to accumulated losses
Share based payments
Balance as at 30 June 2016
Note 26. Equity – accumulated losses
Accumulated losses at the beginning of the financial year
Loss after income tax expense for the year
Transfer from change of ownership reserve
Transfer from share based payments reserve
Consolidated
2016
$’000
2015
$’000
(14,010)
(6,423)
-
-
(20,433)
(6,905)
(8,225)
1,120
-
(14,010)
71
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 27. Equity – dividends
Dividends
There were no dividends paid, recommended or declared during the current or previous financial
year.
Franking credits
Consolidated
2016
$’000
2015
$’000
Franking credits available for subsequent financial years based on a tax rate of
30%
-
-
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; and
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 of $nil (2015: $nil).
Note 28. Financial instruments
Financial risk management objectives
The Consolidated Entity's activities expose it to a variety of financial risks: market risk (including
foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Consolidated
Entity's overall risk management program focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the financial performance of the Consolidated Entity.
The Consolidated Entity uses different methods to measure different types of risk to which it is
exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange
and other price risks, ageing analysis for credit risk and beta analysis in respect of investment
portfolios to determine market risk.
Risk management is carried out by senior finance executives under policies approved by the Board of
Directors. These policies include identification and analysis of the risk exposure of the Consolidated
Entity and appropriate procedures, controls and risk limits. Finance identifies, evaluates and manages
financial risks within the Consolidated Entity's operating units. The Company’s finance department
reports to the Board on a monthly basis.
The Consolidated Entity has exposure to the following risks from their use of financial instruments:
Market risk;
Credit risk; and
Liquidity risk.
72
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 28. Financial instruments (continued)
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.
Market risk
Market risk is the risk that changes in market prices – such as foreign exchange rates and interest
rates – will affect the Consolidated Entity’s income or the value of its holdings of financial instruments.
The objective of market risk management is to manage and control market risk exposures within
acceptable parameters, while optimising the return.
Foreign currency risk
The Consolidated Entity undertakes certain transactions denominated in foreign currency and is
exposed to foreign currency risk through foreign exchange rate fluctuations. There is no current
material exposure to foreign exchange 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.
Fair value sensitivity analysis for fixed-rate instruments
The Consolidated Entity does not account for any fixed-rate financial assets or liabilities at fair value
through profit or loss, and the Consolidated Entity does not designate derivatives (interest rate swaps)
as hedging instruments under a fair value hedge accounting model. Therefore a change in interest
rates at the reporting date would not affect profit or loss. A change of 100 basis points in interest rates
would have increased or decreased equity by approximately nil after tax (2015: $nil).
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. The carrying amount of financial assets represents
the maximum credit exposure.
Trade and other receivables
The Consolidated Entity’s exposure to credit risk relating to trade receivables of $49,000 (2015:
$36,000) 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. 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 on projects. 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 undertaken by the Consolidated Entity, which is greater than a predetermined
value, must be approved by the Board prior to the contract being signed.
73
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 28. Financial instruments (continued)
Many of the Consolidated Entity’s customers are typically large multinationals and government
organisations. Losses relating to recovery of amounts owing to the Consolidated Entity 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 Consolidated Entity’s trade and other receivables relate mainly to the Group’s
wholesale customers who are predominantly made up of public companies and government bodies.
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. From inception to the date of
this report, the Consolidated Entity has only ever had two minor trade bad debts. Refer to note 10 for
debtors aging analysis.
Guarantees
The Consolidated Entity's policy is to provide financial guarantees only to wholly-owned subsidiaries.
As at the reporting date, there are no outstanding guarantees.
Liquidity risk
Liquidity risk is the risk that the Consolidated Entity will not be able to meet its obligations associated
with its financial liabilities as they fall due. The Consolidated Entity’s approach to managing liquidity is
to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are
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 not less than 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.
74
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 28. Financial instruments (continued)
Exposure to liquidity risk
The following tables detail the Consolidated Entity's remaining contractual maturity for its financial
liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated
interest payments.
Contractual cash flows
Consolidated - 2016
Non–derivatives
Non-interest bearing
Trade payables
Other payables
Notes payable
Interest – bearing –fixed rate
Deferred consideration
payable
Carrying
amount
$’000
1 year or
Between 1 Between 2
less and 2 years and 5 years
$’000
$’000
$’000
Over 5
years
$’000
Total
$’000
412
303
2,684
412
303
-
-
-
3,000
-
-
-
-
-
-
-
-
-
-
-
-
412
303
3,000
-
-
3,715
Total non-derivatives
3,399
715
3,000
Contractual cash flows
Consolidated - 2015
Non–derivatives
Non-interest bearing
Trade payables
Other payables
Notes payable
Interest – bearing –fixed rate
Deferred consideration
payable
Total non-derivatives
Carrying
amount
$’000
1 year or
Between 1
less and 2 years
$’000
$’000
Between 2
and 5 years
$’000
Over 5
years
$’000
Total
$’000
282
325
2,490
282
325
-
1,171
4,268
1,203
1,810
-
-
-
-
-
-
-
3,000
-
3,000
-
-
-
-
-
282
325
3,000
1,203
4,810
The cash flows in the maturity analysis above are not expected to occur significantly earlier than
contractually disclosed above.
75
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 28. 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 note
29.
Note 29. Fair value measurement
Fair value hierarchy
The following tables show the carrying amounts and fair values of the Consolidated Entity's financial
assets and financial liabilities, measured or disclosed at fair value, using a three level hierarchy,
being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Entity
can access at the measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly
Level 3: Unobservable inputs for the asset or liability
Consolidated - 2016
Financial assets not measured at fair
value
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial liabilities not measured at
fair value
Trade and other payables
Other borrowings
Notes payable
Carrying
amount
$’000
7,226
302
377
7,905
(715)
-
(2,684)
(3,399)
Fair value
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,691)
(2,691)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,691)
(2,691)
76
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 29. Fair value measurement (continued)
Consolidated - 2015
Financial assets not measured at fair
value
Cash and cash equivalents
Trade and other receivables
Other financial assets
Financial liabilities not measured at
fair value
Trade and other payables
Other borrowings
Notes payable
Carrying
amount
$’000
3,313
523
353
4,189
(1,778)
-
(2,490)
(4,268)
Fair value
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,490)
(2,490)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,490)
(2,490)
There were no transfers between levels during the financial year.
The tables do not include fair value information for financial assets and financial liabilities not
measured at fair value if the carrying amount is a reasonable approximation of fair value.
Financial instruments measured at fair value – valuation technique
Type
Valuation technique
Promissory notes
Discounted cash flows
Significant unobservable
inputs
Risk adjusted discount rate
of 6.69% (2015: 6.82%)
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. The
carrying amounts of cash and cash equivalents, trade and other receivables and other financial
assets and trade and other payables are assumed to approximate their fair values due to their short-
term nature. The fair value of financial liabilities is estimated by discounting the remaining contractual
maturities at the current market interest rate that is available for similar financial instruments.
Compliance with the Consolidated Entity's standards is supported by a programme of periodic reviews
undertaken by management.
Note 30. Key management personnel disclosures
Directors
The following persons were directors of Clean TeQ Holdings Limited during the financial year:
Sam Riggall (Chairman and Chief Executive Officer)
Peter Voigt (Executive Director)
Roger Harley (Independent Non-Executive Director)
Ian Knight (Independent Non-Executive Director
77
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 30. Key management personnel disclosures (continued)
Ian Finlayson (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:
Ben Stockdale (Chief Financial Officer)
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
Termination benefits
Share-based payments
2016
$
Consolidated
2015
$
768,182
65,018
10,595
-
1,276,990
2,120,785
802,815
79,731
5,036
264,583
678,971
1,831,136
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 and note 34, 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.
Note 31. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by KPMG, the
auditor of the Company:
Audit services - KPMG
Audit or review of the financial statements
Audit-related services
Other services - KPMG
Advisory services
Taxation services
Consolidated
2016
$
2015
$
60,000
-
60,000
-
88,650
88,650
126,493
-
126,493
-
97,732
97,732
148,650
224,225
78
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 32. Contingent liabilities
The Consolidated Entity has a contingent liability, incurred in the previous financial year ended 30
June 2015, to pay a 2.5% gross revenue royalty on output mined from the Syerston Project. This
royalty is payable to Ivanhoe Mines, and is payable by Scandium 21 Pty Ltd, a company within the
consolidated group. This royalty was part of the consideration paid for the acquisition of the Syerston
Project from Ivanhoe Mines, on 31 March 2015.
Note 33. 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
Operating leases (non-cancellable)
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
More than five years
Consolidated
2016
$’000
2015
$’000
-
-
-
-
-
-
75
-
-
75
-
-
-
-
-
-
212
636
-
848
During the financial year, the Consolidated Entity has entered into a binding agreement with Jinzhong
Hoyo Municipal Urban Investment & Construction Co., Ltd (‘Hoyo’) to establish a Chinese
incorporated Joint Venture (‘JV Company’). The JV Company, Shanxi Hoyo Clean TeQ Environmental
Company, will pursue water treatment opportunities in China’s Shanxi Province utilising Clean TeQ’s
water purification technology.
The JV Company is committed to incur capital expenditure of USD$1,200,000 (2015: $nil), of which
the Consolidated Entity’s share is USD$600,000 (2015: $nil). These commitments are expected to be
settled by December 2016.
79
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 34. Related party disclosures
Parent Entity
Clean TeQ Holdings Limited is the Parent Entity.
Subsidiaries
Interests in subsidiaries are set out in note 37.
Key management personnel
Disclosures relating to key management personnel are set out in note 30 and the remuneration report
in the directors' report.
Transactions with related parties
The following transactions occurred with related parties:
Consulting fees paid to an entity associated with Ian Knight
These consulting fees were entered into on an arm’s length basis.
Consolidated
2016
$
2015
$
-
6,421
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous
reporting date.
Loans to/from related parties
There were no loans outstanding at the reporting date owed to related parties.
Note 35. Parent entity information
Set out below is the supplementary information about the Parent Entity.
Statement of profit or loss and other comprehensive income
Profit(loss) after income tax
Total comprehensive income/(loss)
Parent
2015
$’000
2016
$’000
(2,452)
(2,095)
(2,452)
(2,095)
80
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 35. Parent entity information (continued)
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
2016
$’000
Parent
2015
$’000
-
-
40,032
25,324
-
-
5,253
2,471
39,856
3,302
(8,379)
27,717
1,063
(5,927)
34,779
22,853
Guarantees entered into by the Parent Entity in relation to the debts of its subsidiaries
The Parent Entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2016
and 30 June 2015, other than the cross guarantee referred to elsewhere in these financial statements.
Contingent liabilities
The Parent Entity had no contingent liabilities as at 30 June 2016 and 30 June 2015.
Capital commitments - Property, plant and equipment
The Parent Entity had no capital commitments for property, plant and equipment at as 30 June 2016
and 30 June 2015, or since the end of the financial year.
81
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 35. Parent entity information (continued)
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.
Investments in associates are accounted for at cost, less any impairment, in the Parent Entity.
Dividends received from subsidiaries are recognised as other income by the Parent Entity and
its receipt may be an indicator of an impairment of the investment.
Note 36. Business combinations
(i) Australian Business of Aromatrix Technologies (Hong Kong) Ltd
As at 30 June 2015, Clean TeQ Holdings Limited had disposed of its interest in Clean TeQ Aromatrix
Pty Ltd and no longer exercised effective control of the subsidiary. Refer to Note 8 Discontinued
operations for further details.
Note 37. Interests in 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
Clean TeQ Limited
Clean TeQ Metals Pty Ltd
Clean TeQ Water Pty Ltd
Clean TeQ Air Pty Ltd*
Associated Water Pty Ltd
LiXiR Functional Foods Pty Ltd
Clean World Japan Co Ltd***
Scandium Holding Company Pty Ltd**
Scandium21 Pty Ltd**
Syerston Scandium Pty Ltd**
Uranium Development Pty Ltd**
CLQW HK Limited
Principal place of business/
Country of incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Japan
Australia
Australia
Australia
Australia
Hong Kong
Ownership interest
2015
%
100%
100%
100%
-%
100%
100%
100%
100%
100%
100%
100%
-%
2016
%
100%
100%
100%
-%
100%
100%
100%
100%
100%
100%
100%
100%
*This company changed its name to Clean Teq Aromatrix Pty Ltd in January 2015. The whole
shareholding in the company was sold as at 30 June 2015. Refer note 8 for details.
**These companies were acquired as part of the acquisition of the Syerston Project from a subsidiary
of Ivanhoe Mines Ltd effective 31 March 2015.
*** Liquidated on 9 February 2016
82
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 38. Deed of cross guarantee
The following entities are or were party to a deed of cross guarantee under which each company
guarantees the debts of the others:
Clean TeQ Holdings Limited
Clean TeQ Limited
By entering into the deed, the wholly-owned entities have been relieved from the requirement to
prepare financial statements and directors' report under Class Order 98/1418 (as amended) issued by
the Australian Securities and Investments Commission ('ASIC').
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
Other income
Profit on intra group disposal
Changes in finished goods and inventory write downs
Raw materials and other direct costs
Employee benefits expenses
Impairment of investment in subsidiary
Depreciation and amortisation expenses
Legal and professional expenses
Occupancy expenses
Marketing expenses
Impairment of loan
Other expenses
Finance costs
Loss before income tax (expense)/benefit
Income tax (expense)/benefit
Loss after income tax (expense)/benefit
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
2016
$’000
2015
$’000
1,183
-
-
-
(61)
(4,028)
-
(435)
(511)
(329)
(520)
(326)
(764)
(274)
777
-
338
(85)
(567)
(2,837)
(3,749)
(697)
(628)
(296)
(406)
-
(543)
(715)
(7,183)
-
(9,408)
(23)
(6,065)
(9,431)
-
-
(6,065)
(9,431)
83
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 38. Deed of cross guarantee (continued)
Equity – retained profits
Retained profits/(accumulated losses) at the beginning of the financial year
Loss after income tax (expense)/benefit
Transfer to Accumulated Losses
Transfer from options reserve
2016
$’000
2015
$’000
(14,700)
(6,065)
-
-
(6,389)
(9,431)
1,120
-
Accumulated losses at the end of the financial year
(20,765)
(14,700)
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
Other financial assets
Plant and equipment
Intangible assets
Investment in subsidiary company
Other
Total assets
Current liabilities
Trade and other payables
Employee benefits
Deferred revenue
2016
$’000
2015
$’000
7,192
972
96
2,395
377
11,032
7,222
-
75
9,805
253
-
17,355
3,283
414
96
963
25
4,781
2,973
329
107
10,600
251
248
14,508
28,387
19,289
2,405
274
46
2,725
1,774
276
46
2,096
84
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 38. Deed of cross guarantee (continued)
Statement of financial position (continued)
Non-current liabilities
Deferred revenue
Notes payable
Employee benefits
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
2016
$’000
2015
$’000
544
2,684
41
590
2,490
33
3,269
3,113
5,994
5,209
22,393
14,080
39,856
3,302
(20,765)
27,717
1,063
(14,700)
22,393
14,080
Note 39. Events after the reporting period
Apart from the matters referred to above, no other matter or circumstance has arisen since 30 June
2016 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.
85
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 40. Reconciliation of cash used in operating activities
Loss after income tax expense for the year
Adjustments for:
Depreciation, amortisation and impairment
Share-based payments
Impairment of loan
Gain on sale of discontinued operation
Write down of stock on hand
Non-cash finance costs
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease/(increase) in other assets
Decrease in inventories
Decrease/(increase) in income tax refund due net of
capitalised research and development
(Increase)/decrease in accrued revenue
Increase/(decrease) in trade and other payables
Increase/(decrease) in employee benefits
Increase/(decrease) in tax payable (discontinued operation)
Note
6
6
6
8
11
Consolidated
2016
$’000
2015
$’000
(6,423)
(8,225)
704
2,239
326
-
-
194
(105)
-
-
664
(46)
108
6
-
3,975
880
-
(338)
85
350
(1,724)
-
103
-
482
929
102
97
Net cash used in operating activities
(2,333)
(3,284)
Note 41. Earnings per share
Earnings per share for loss from continuing operations
Loss after income tax attributable to the owners of Clean TeQ Holdings
Limited
Consolidated
2016
$’000
2015
$’000
(6,423)
(9,155)
86
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 41. Earnings per share (continued)
Weighted average number of ordinary shares used in calculating basic
earnings per share
412,872,218
286,131,872
Weighted average number of ordinary shares used in calculating diluted
earnings per share
412,872,218
286,131,872
2016
Number
2015
Number
Basic earnings per share
Diluted earnings per share
Earnings per share for loss from discontinued operations
Profit after income tax attributable to the owners of Clean TeQ Holdings
Limited
2016
Cents
2015
Cents
(1.56)
(1.56)
(3.20)
(3.20)
2016
$’000
Consolidated
2015
$’000
-
930
2016
Number
2015
Number
Weighted average number of ordinary shares used in calculating basic
earnings per share
412,872,218
286,131,872
Weighted average number of ordinary shares used in calculating diluted
earnings per share
412,872,218
286,131,872
Basic earnings per share
Diluted earnings per share
2016
Cents
2015
Cents
0.00
0.00
0.33
0.33
87
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 41. Earnings per share (continued)
Earnings per share for loss
Profit after income tax attributable to the owners of Clean TeQ Holdings
Limited
Consolidated
2015
$’000
2016
$’000
(6,423)
(8,225)
2016
Number
2015
Number
Weighted average number of ordinary shares used in calculating basic
earnings per share
412,872,218
286,131,872
Weighted average number of ordinary shares used in calculating diluted
earnings per share
412,872,218
286,131,872
Basic earnings per share
Diluted earnings per share
2016
Cents
2015
Cents
(1.56)
(1.56)
(2.87)
(2.87)
Options have been classified as potential ordinary shares and are included in the determination of
diluted earnings per share, except where the potential ordinary shares are anti-dilutive.
The options and convertible notes on issue throughout the current financial year are not dilutive in
effect, as the Consolidated Entity recorded a net loss in the financial year.
Note 42. Share-based payments
On 24 September 2007 the Company introduced a share option plan for employees, directors and
service providers of the Consolidated Entity (‘the Plan‘). The Plan entitles key management
personnel, service providers and employees to receive shares and options in the Company.
Set out below are summaries of options granted under the Plan:
88
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 42. Share-based payments (continued)
2016
Grant
date
date
01/07/2010* 01/07/2015
30/06/2011* 30/06/2016
15/11/2012* 30/11/2015
19/12/2014 19/06/2017
19/12/2014 19/06/2017
25/02/2015 25/02/2018
01/03/2015 01/03/2018
06/07/2015 30/06/2018
20/11/2015 30/06/2018
20/11/2015 31/03/2018
20/11/2015 30/11/2018
16/05/2016 16/05/2019
Expiry Exercise
price
$0.3400
$0.3955
$0.1900
$0.1155
$0.1455
$0.1574
$0.1495
$0.3010
$0.2305
$0.1450
$0.2712
$0.2820
Balance at
the start of
the year
10,000
500,000
1,500,000
2,000,000
2,000,000
8,000,000
6,000,000
-
-
-
-
-
20,010,000
Granted
-
-
-
-
-
-
-
1,000,000
8,000,000
2,000,000
3,500,000
5,000,000
19,500,000
Exercised
-
(200,000)
-
-
-
-
-
-
-
-
-
-
(200,000)
Expired/ Balance at
forfeited/
the end of
other
the year
-
(10,000)
-
(300,000)
-
(1,500,000)
2,000,000
-
2,000,000
-
8,000,000
-
6,000,000
-
1,000,000
-
8,000,000
-
2,000,000
-
3,500,000
-
5,000,000
-
(1,810,000) 37,500,000
Weighted average exercise price:
$0.1581
$0.2459
$0.3955
$0.2249
$0.1993
*Denotes options expired during the year
The weighted average number of years for share options issued under the Plan is 2.83 years (2015:
2.73 years).
The options vest immediately at grant date to the holder, except for 4,000,000 options granted on 20
November 2015, with a vesting date of 31 December 2015.
For the options granted during the current financial period, a 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:
2016
Share
price
Grant
date
Expiry
date
at grant Exercise
price
date
Expected
volatility
Dividend
yield
Risk-free
Interest rate
06/07/2015 30/06/2018
20/11/2015 30/06/2018
20/11/2015 31/03/2018
20/11/2015 30/11/2018
16/05/2016 16/05/2019
$0.23
$0.18
$0.18
$0.18
$0.31
$0.30
$0.23
$0.15
$0.27
$0.28
81.57%
83.74%
83.10%
82.20%
84.40%
-%
-%
-%
-%
-%
1.93%
2.14%
2.14%
2.14%
2.28%
Fair value
at grant
date
$0.011
$0.085
$0.102
$0.083
$0.177
89
Clean TeQ Holdings Limited
Notes to the financial statements
For the year ending 30 June 2016
Note 42. Share-based payments (continued)
Set out below are summaries of performance rights granted under the Plan:
2016
Grant
date
Expiry Exercise
price
date
Balance at
the start of
the year Granted
Exercised
Expired/ Balance at
the end of
forfeited/
other
the year
08/07/2015 01/07/2018
20/11/2015 01/07/2018
16/05/2016 01/07/2019
$0.00
$0.00
$0.00
- 1,674,416
-
880,000
- 1,756,281
- 4,310,697
-
-
-
-
(80,000)*
-
-
1,594,416
880,000
1,756,281
(80,000)
4,230,697
*Performance rights forfeited as the employee ceased employment.
The performance rights have the following vesting conditions:
Rights vesting if the Company’s total shareholder return outperforms a comparator group of
12 ASX-listed and 1 Toronto listed companies over a three year period from the grant date;
and
Continuous service from Date of Grant to Vesting Date.
For the performance rights granted during the current financial period, a Binomial Option Valuation
model was used to value the performance rights. A probability adjustment for market vesting
conditions is then attached to the value of the performance rights. Each performance right, once
vested, entitles the performance right holder to receive one fully paid ordinary share in the Company
for zero consideration. The valuation model inputs used to determine the fair value at the grant date
are as follows:
2016
Grant
date
Expiry
date
08/07/2015 01/07/2018
20/11/2015 01/07/2018
16/05/2016 01/07/2019
Share
price
at grant
date
$0.23
$0.19
$0.35
Risk-free Expected
volatility
Interest rate
Dividend
Vesting
yield probability
2.07%
2.13%
1.56%
84.00%
83.50%
93.44%
-%
-%
-%
35.28%
35.28%
36.02%
Fair
value
at grant
date
$0.086
$0.065
$0.126
90
Clean TeQ Holdings Limited
Directors’ declaration
30 June 2016
In the directors' opinion:
the attached Consolidated financial statements and notes thereto, and the Remuneration
report in the Directors’ reports, comply with the Corporations Act 2001, the Australian
Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements;
the attached Consolidated financial statements and notes thereto, comply with International
Financial Reporting Standards as issued by the International Accounting Standards Board as
described in note 2(c) to the financial statements;
the attached Consolidated financial statements and notes thereto and the Remuneration
report in the Directors’ reports, give a true and fair view of the Consolidated Entity's financial
position as at 30 June 2016 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 38 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
________________________________
Sam Riggall
Chairman and Chief Executive Officer
19 August 2016
Melbourne
91
Clean TeQ Holdings Limited
Shareholder information
30 June 2016
The information below is current as at 31 July 2016.
Distribution of equity securities
Analysis of number of equity security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
The number of shareholders holding less than a
marketable parcel of ordinary shares:
Number of
holders of
ordinary
shares
Number of
holders of
options over
ordinary
shares
Number of
holders of
convertible
notes
-
-
-
1
15
16
-
-
-
-
-
-
120
527
455
1,379
385
2,866
135
94
Clean TeQ Holdings Limited
Shareholder information
30 June 2016
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of fully paid ordinary shares as at 31 July 2016 are
listed below:
Rank Name of Share Holder
Number of
Shares Held
85,161,596
23,272,144
J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
THIERVILLE PTY LTD
23,106,120
MR GREGORY LEONARD TOLL + MRS MARGARET
ESTELLE TOLL
DAK DRAFTING SERVICES PTY LTD
GASMERE PTY LTD
BRISPOT NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-
GSCO ECA
MR PETER JOHN DIAMOND + MRS DIANA ELIZABETH
DIAMOND
SALITTER PTY LTD
JEREMY'S HAVEN PTY LTD
MR DAVID NEVILLE COLBRAN
THREE ZEBRAS PTY LTD
MR RICHARD ARMSTRONG CALDOW
THIERVILLE PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED -
A/C 2
MAL CLARKE & ASSOCIATES PTY LTD
TT NICHOLLS PTY LTD
MR DAVID NEVILLE COLBRAN
ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD
14,017,765
13,500,000
8,311,888
7,866,598
7,735,326
7,500,000
6,253,304
5,690,310
5,364,950
5,000,000
4,850,000
4,550,801
4,313,104
4,029,985
3,786,000
3,695,050
3,148,122
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
% of Total
Shares
Issued
19.48
5.32
5.28
3.21
3.09
1.90
1.80
1.77
1.72
1.43
1.30
1.23
1.14
1.11
1.04
0.99
0.92
0.87
0.85
0.72
Total – Top 20 holders of Ordinary Fully Paid Shares
Total – Remaining Holders Balance
241,153,063
195,899,034
55.17
44.83
95
Clean TeQ Holdings Limited
Shareholder information
30 June 2016
(Unquoted equity securities)
Options over ordinary shares with various exercise prices and expiry dates
37,500,000
16
Number on
issue
Number
of holders
Substantial holders
Substantial holders in the Company are set out below:
Name of Share Holder
JP Morgan Nominees Australia Pty Ltd
Peter Voigt and Thierville Pty Ltd
Citicorp Nominees Pty Limited
Peter Diamond and Dak Drafting Services Pty Ltd (Peter Diamond Family A/C)
Voting rights
Ordinary Shares
% of total
shares
issued
19.48
6.34
5.32
4.81
Number
held
85,161,596
27,725,794
23,272,144
21,000,000
The voting rights attached to ordinary shares are set out below. Other classes of equity securities do
not have voting rights.
Ordinary shares
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.
96