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2018 ReportPeers and competitors of Clean TeQ Holdings:
Casella Waste SystemsAnnual Report 2018
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Eds_p13a 24 August 2018 12:12 PM
Contents
Highlights of FY2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Messages from the Co-Chairmen . . . . . . . . . . . . . . . . 4
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Message from the Chief Executive Officer . . . . . . 5
Corporate governance . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Clean TeQ Sunrise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Financial report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Clean TeQ Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Corporate directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IBC
Technology development . . . . . . . . . . . . . . . . . . . . . . . . 12
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Eds_p13a 24 August 2018 12:12 PM
1
OUR VISION AND VALUES
Clean TeQ’s vision is to empower the clean revolution .
We apply our proprietary technologies to find better ways to solve
planet earth’s most pressing environmental problems .
INVESTED
We achieve positive outcomes
for all our stakeholders.
We are committed to
creating and sustaining
value from Clean TeQ’s
core technologies.
EMPOWER
THE CLEAN
REVOLUTION
CONNECTED
We actively interact to
leverage our combined
capabilities and create
mutually beneficial outcomes.
PREPARED TO BE
DIFFERENT
We have the courage to pursue
excellence and are prepared to
do things differently to add
value, while managing the
risks in our business.
Clean TeQ Holdings Limited Annual Report 2018 COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Eds_p13a 24 August 2018 12:12 PM
2
Highlights of the Year
The 2018 Financial Year has been one of significant advancement for Clean TeQ.
With many notable achievements over the year, we are well positioned to deliver
on our vision to empower the clean revolution.
SIGNIFICANTLY ADVANCED DEVELOPMENT
OF CLEAN TEQ SUNRISE
Outstanding progress made on engineering,
design, technical studies, permitting and
government and community engagement
SECURED FUNDING TO ACCELERATE
PROJECT DEVELOPMENT
A$155 million capital raising completed in
March 2018 to fund the Project’s early works
and detailed engineering
COMPLETED CLEAN TEQ SUNRISE
DEFINITIVE FEASIBILITY STUDY
A key Project milestone, completed in June 2018,
which demonstrated the Project’s outstanding
technical and economic outcomes
MAIDEN PRODUCT OFFTAKE
AGREEMENT SIGNED
Binding product offtake agreement with
Beijing Easpring for nickel and cobalt sulphate
in August 2017
STRONG PROGRESS ON DELIVERY OF
MULTIPLE PROJECTS BY CLEAN TEQ WATER
Completed construction of Oman Project;
Fosterville Gold and DRC projects well advanced
PIPELINE OF OPPORTUNITIES
DEVELOPED FOR NEW WATER PROJECTS
Several feasibility studies and pilot programs
underway
EXPANDED STRATEGIC PARTNERSHIPS
Agreements with Chinalco and Chongqing
University for scandium alloy development added
to existing partnerships with Airbus and UAC
INCREASED MARKET RECOGNITION
Successful Toronto Stock Exchange
Listing and inclusion in the S&P/ASX 200
All Australian Index
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Eds_p13a 24 August 2018 12:12 PM
3
Looking ahead…
As we look to the future, Clean TeQ is focused on several key
milestones which will position the business for future success
and generate strong returns for our stakeholders.
FINALISE PRODUCT OFFTAKE AGREEMENTS
AND COMPLETE FINANCING FOR
CLEAN TEQ SUNRISE PROJECT
COMPLETE EARLY WORKS AND FRONT-END
ENGINEERING AND DESIGN (FEED) BEFORE
COMMENCING CONSTRUCTION IN 2019
FINALISE COMMISSIONING AND HANDOVER
OF VARIOUS CLEAN TEQ WATER PROJECTS
WHILE CONTINUING TO DEVELOP THE PIPELINE
OF NEW OPPORTUNITIES
CONTINUE DELIVERING ON OUR
COMMITMENT TO OUR PEOPLE, THE
COMMUNITY AND THE ENVIRONMENT
Clean TeQ Holdings Limited Annual Report 2018 COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Eds_p13a 24 August 2018 12:12 PM
4
Messages from the Co-Chairmen
Mr Jiang Zhaobai
Co-Chairman
Mr Robert Friedland
Co-Chairman
It has been a great pleasure to see the Clean TeQ business
evolve over the last year as it has built a solid foundation for
future success and prosperity.
As our shareholders, partners, other stakeholders and followers
will know and appreciate, Clean TeQ has achieved headline-
making progress in its principal businesses during the past year.
During the year, our Company has demonstrated Clean
TeQ Sunrise’s strategic importance for the rapidly growing
electric vehicle market. The increasing adoption of electric
vehicles represents a revolution in global transport. This will
have a profound and transformative impact on air quality in
our cities and lead to improved environmental and health
outcomes worldwide. This is particularly the case in China
where demand for zero emission electric vehicles continues
to rise as the country transitions away from fossil fuels.
This revolution is having a significant impact on raw material
demand, particularly for metals required for the lithium-ion
batteries that power these vehicles. The Clean TeQ Sunrise
Project is rapidly progressing towards development and
will become a major supplier of nickel sulphate and cobalt
sulphate to this important market.
Projects like Clean TeQ Sunrise are rare and must be
developed to allow the electric vehicle and renewable energy
storage markets to grow in tandem with global demand.
I look forward to another exciting and prosperous year ahead
as the development of Clean TeQ Sunrise enters a new phase.
董事会联席主席的致辞
董事会联席主席姜照柏先生
我很荣幸地看到CLQ公司业务在过去一年里不断发展，这为
公司未来的成功和繁荣奠定了坚实的基础。
过去的一年，我们验证了CLQ桑瑞斯项目对电动汽车市场快
速发展具有的重要战略性意义。随着电动汽车使用的不断扩
大，全球交通运输的革新日益显现。这将对我们城市的空气
质量产生深远而变革性的影响，同时将为我们带来全球范围
内环境和健康水平的提高。中国尤其如此，随着国家逐步从
化石燃料转型，其对零排放电动汽车的需求正在日益提升。
这场变革正在对原材料需求产生重大影响，特别是针对那些
为车辆供电的锂离子电池所需的金属元素。CLQ桑瑞项目正
在迅速推进，将成为这个重要市场里硫酸镍和硫酸钴的主要
供应商。
像CLQ桑瑞斯这样的项目并不多见，而我们必须要全力以赴
发展这个项目，从而使得电动汽车和可再生能源储能市场与
国际需求同步增长。
我对下一个令人兴奋和繁荣兴旺的一年满怀期待，CLQ桑瑞
斯项目的发展进入一个新的阶段。
Mr. Jiang Zhaobai
Co-Chairman
姜照柏先生
董事会联席主席
The advancement of our Clean TeQ Sunrise nickel-cobalt-
scandium Project and our Clean TeQ Water business is
further confirmation that our company remains firmly on
course to achieve our fundamental business objectives.
We are dedicated to playing a responsive, leadership role in
contributing to the alleviation of impacts on the environment and
on human-health that are linked to what has been a traditional,
urban dependence on fossil fuels. We also are delivering
solutions to treat wastewater, recycle water used in industrial
processes and provide safe drinking water.
The challenges, of course, are immense; but the opportunities
are unprecedented. Clean TeQ’s resources and technologies
now have recognized and respected roles in contributing to
the building of a better world.
Clean TeQ Sunrise is set to become a globally significant
source of high-purity nickel and cobalt sulphate – essential
raw materials for the lithium-ion battery market. The demand
for these commodities continues to grow as sales of electric
vehicles accelerate – exceeding one million units last year
for the first time. Now, market watchers and forecasters
are predicting that consumer demand for electric vehicles
will overtake sales of conventional gasoline- and diesel-
powered vehicles within about two decades.
Completion of the Definitive Feasibility Study for Clean
TeQ Sunrise in June this year represented a very important
achievement. With this study concluded, we are well positioned
to secure the offtake agreements and the funding to enable
construction of the Project to proceed in 2019. The market
interest in Clean TeQ Sunrise’s remarkable store of mineral
resources is exceptionally strong, as is the Project’s potential
to generate substantial returns for Clean TeQ’s shareholders.
Clean TeQ Water had a successful year in 2017/18 and is
positioned to demonstrate the value of its technology in a number
of international projects – some already under construction, with
additional opportunities in the development pipeline.
We are committed to seizing the opportunities ahead of us as
a producing miner and technology developer and implementer.
Members of the Board of Directors are confident that senior
management, under the leadership of Chief Executive Officer
Sam Riggall, and the women and men of Clean TeQ will
continue to build and deliver significant value for
our stakeholders.
Mr Robert Friedland
Co-Chairman
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Eds_p13a 24 August 2018 12:12 PM
5
Message from the Chief Executive Officer
Sam Riggall
Chief Executive Officer
The 2018 financial year was important for Clean TeQ.
We achieved several milestones, which take us closer
to development of our Clean TeQ Sunrise Project in
New South Wales. We also made good progress with
Clean TeQ Water, delivering on contracts and building a
pipeline of new opportunities. Both these businesses bring
a unique value proposition to the industries in which they
operate, utilising our proprietary technologies to empower the
clean revolution that is at the heart of our mission statement.
At Clean TeQ Sunrise, the key achievement was completion
of the Definitive Feasibility Study in June. The Study highlighted
the Project’s outstanding technical and economic merit and
confirmed that Clean TeQ Sunrise is a globally significant
source of nickel, cobalt and scandium. Once developed,
the Project will be a major supplier of critical raw materials
to the lithium ion battery market.
The Definitive Feasibility Study confirmed that Clean TeQ Sunrise
can deliver large volumes of critical battery raw materials while
generating outstanding financial returns over many decades.
The Project is forecast to deliver over US$14 billion in revenue
and average annual EBITDA of US$344 million over the first
25 years of operations. Average C1 cash costs of negative
US$1.46/lb of nickel (net of by-product credits) positions
Clean TeQ Sunrise in the lowest cost quartile, while a Net
Present Value of US$1.392 billion (A$1.856 billion) supports
a post-tax Internal Rate of Return (IRR) of 19.1%. The economic
fundamentals of the Project are very strong.
Importantly, during the year the Company signed its first product
off-take agreement with Beijing Easpring. The agreement covers
annual tonnages representing approximately 20% of Clean TeQ
Sunrise production over the first five years, with pricing linked to
spot commodity prices. Beijing Easpring is one of the world’s
preeminent cathode companies, with a reputation for high-
quality products and rapid innovation. Clean TeQ is delighted
to have partnered with such a strong business.
In parallel to the Definitive Feasibility Study, we have progressed
other components of the Project that will allow its development
to be undertaken as quickly as possible including:
• the acquisition of two autoclaves, critical long lead
components for the Project;
• the purchase of an accommodation facility for our
construction workforce;
• re-estimated the Clean TeQ Sunrise mineral resource, which
resulted in an increase in the cobalt grade of the resource;
• securing Mining Leases over the Project area;
• securing a number of key permit modifications.
With the DFS now complete, early works and long-lead item
procurement commencing and a strong implementation team
in place, we are focused on progressing the Project into formal
construction over the coming year. Financing and offtake
discussions are well advanced with a range of counterparties.
Once complete, this will allow us to consider a Final Investment
Decision in early 2019 with construction expected to
commence shortly thereafter.
It has also been a highly successful year for the Clean TeQ
Water business. New projects have been secured in Oman,
the Democratic Republic of Congo and Australia, while our
work towards developing projects in China is well advanced.
At the end of June 2018, Clean TeQ Water had four key
projects under construction, all of which are expected to be
commissioned and delivered to their respective customers in
the coming financial year. The completion of these contracts
are important milestones for Clean TeQ Water and will
provide impetus for future growth.
Clean TeQ has also continued its commitment to developing
new technologies which are targeted to improve or complement
our existing suite of technology solutions. During the year, a
significant investment was made in advancing our Continuous
Ionic Filtration (CIF®) technology. Work is also underway to
develop graphene oxide membranes for the next generation
of water purification processes and encapsulated bacteria to
treat nutrient issues in wastewater.
As a business, Clean TeQ has never been stronger. Over the last
12 months we have expanded our capabilities and grown our
team to ensure we can deliver on our pipeline of opportunities.
The expertise and experience we have within Clean TeQ puts
us in a strong position to deliver on our strategy.
In March 2018, the Company successfully raised A$155 million
from a range of international and institutional investors and
a share purchase plan, thereby expanding our share register
and providing a strong capital base from which to fund an
accelerated work program for Clean TeQ Sunrise.
The year ahead is one of huge opportunity as we put our
financing plan in place, commence construction of Clean
TeQ Sunrise and pursue various projects within Clean TeQ
Water. I would like to thank our staff for their hard work and
commitment to our shared objectives, and our shareholders
for their ongoing support. I look forward to providing regular
updates as we achieve our key milestones throughout the year.
Sam Riggall
Chief Executive Officer
Clean TeQ Holdings Limited Annual Report 2018 COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Eds_p13a 24 August 2018 12:12 PM
6
Clean TeQ Sunrise is the Company’s flagship
nickel, cobalt & scandium project located in
New South Wales, Australia which is rapidly
progressing toward full-scale development.
The Project is a globally significant mineral resource which,
once developed, will become a major supplier of high
purity raw materials which are critical to the lithium ion
battery industry. The Project is also one of the highest grade
scandium deposits in the world, with production destined to
underpin development of the next generation of lightweight
aluminium alloys for key transportation markets.
The Definitive Feasibility Study (DFS), completed in June 2018,
represented a significant milestone for the Project. The Study
demonstrated the Project’s strong technical foundations and
its ability to generate substantial value for all our stakeholders.
The Project will be developed using Clean TeQ’s proprietary
Clean-iX® technology which will enable highly efficient, low
cost production of nickel sulphate and cobalt sulphate – the
key raw materials required for lithium ion battery cathodes.
Clean TeQ Sunrise is development ready with a defined
mineral resource underpinning a 40+ year mine life, secure
freehold tenure, and key approvals, permits and mining
leases in place.
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Eds_p13a 24 August 2018 12:12 PM
7
Key achievements of the year:
Completed Definitive Feasibility Study
Completion of the Definitive Feasibility Study, a major
milestone for the Project, was achieved in June 2018 and
demonstrated the Project’s strong technical credentials and
outstanding financial outcomes.
Acquired critical long-lead items
During the year Clean TeQ acquired two autoclaves,
key pieces of equipment for the processing plant, and an
accommodation facility. Acquisition of these will allow the
Project’s development to be significantly fast-tracked.
Continued to proactively engage with the community
Throughout the year, Clean TeQ maintained a close and
active connection with the local communities in the Shires
of Parkes, Forbes and Lachlan. This engagement forms
an important part of our commitment to ensure the Project’s
success is shared by all our stakeholders.
Maiden offtake agreement signed with Beijing Easpring
A binding five-year offtake agreement for annual tonnages
representing approximately 20% of cobalt and nickel sulphate
production was signed with Beijing Easpring in August 2017.
Beijing Easpring is one of the world’s largest producers of high
quality cathode material for the lithium ion battery industry and
is an important partner for Clean TeQ.
Completed a significant mineral resource update
The Project’s exceptional potential to produce high volumes
of cobalt was highlighted with a resource update in October
2017 that demonstrated a 30% increase in cobalt ore grades
and 16% increase in contained cobalt metal compared to the
2016 resource estimate.
Appointed Mandated Lead Arrangers
for a project debt facility
The Project attracted strong banking support with Industrial
Commercial Bank of China (ICBC), Société Générale,
National Australia Bank and Natixis appointed as mandated
lead arrangers (MLAs) to make best efforts to provide
US$500 million of a project debt facility.
Successfully completed raising to accelerate
Project development
Completion of a A$155 million institutional Placement and
Share Purchase Plan to enable development of the Project
to be accelerated. The capital raising was well supported
by international and Australian institutional investors, and will
fund early works, detailed engineering and long lead item
acquisition prior to a final investment decision.
Mining Leases granted
In early 2018, Mining Leases were granted over the Project
area providing security of tenure and the ability to commence
operations once a final investment decision has been made.
Clean TeQ Holdings Limited Annual Report 2018 COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Eds_p13a 24 August 2018 12:12 PM
8
CLEAN TEQ SUNRISE DEFINITIVE FEASIBILITY STUDY HIGHLIGHTS
STRONG ANNUAL
PRODUCTION
NICKEL: 19,620 TONNES PER ANNUM
COBALT: 4,420 TONNES PER ANNUM
AVERAGE OVER FIRST 10 YEARS
EXCELLENT PROJECT
ECONOMICS
NPV OF US$1.39 BILLION
IRR OF 19.1%
FIRST QUARTILE
OPERATING COSTS
NEGATIVE US$1.46/LB NI
AFTER BY-PRODUCT CREDITS
PRODUCTION OF HIGH
PURITY BATTERY GRADE
MATERIALS
• NICKEL SULPHATE
• COBALT SULPHATE
PLUS SCANDIUM OXIDE FOR
AUTOMOTIVE & AEROSPACE
APPLICATIONS
EXCEPTIONAL CASH FLOWS
LIFE OF MINE REVENUE: +US$14 BILLION
LOM EBITDA: ~US$8.60 BILLION
AVERAGE EBITDA: US$344 MILLION
PER ANNUM
CAPITAL COST ESTIMATE
US$1.49 BILLION INCLUDING
$165 MILLION CONTINGENCY
“The prospects of creating extremely substantial
value for all of our stakeholders is apparent
from the results of the Definitive Feasibility Study.
We are truly excited to see the Sunrise Project
move into the next stage of development.”
Mr Robert Friedland
Co-Chairman
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Eds_p13a 24 August 2018 12:12 PM
9
COMMUNITY BENEFITS
Clean TeQ is committed to working with
our host communities to ensure the benefits
generated by the Project are enjoyed by all
of our stakeholders. Over the life of the mine,
Clean TeQ Sunrise is set to deliver substantial
financial returns for the community through
employment opportunities, royalties, taxes
and infrastructure upgrades.
Outcomes of the June 2018 Definitive Feasibility Study
included estimates as follows:
Employment Opportunities: A peak construction workforce
of 1,000 people and a steadystate operations workforce
of 300 people (plus mining and logistics contractors and
ancillary services).
Employee Salaries/Wages: A$1.9 billion (estimate includes
mining contractor wages but excludes logistics contractors
and ancillary services).
State Royalties and payroll tax: A$630 million over
first 25 years.
Taxes (corporate tax): A$2.2 billion over first 25 years.
Local Community Contributions: This will cover payments
to compensate communities for local project impacts
(principally road upgrades and maintenance), council
rates and additional ongoing local community
enhancement initiatives.
Local Supply Opportunities: Benefits are also expected
for local businesses as suppliers of goods and services
to Clean TeQ Sunrise.
“When it comes to community investment and
development, our approach seeks to recognise
the importance of consulting the community
about how it wants to grow and thrive.
“We are committed to working together with our
host communities as we seek to maximise the
benefits of our presence, manage any impacts
through leading environmental practices and
show respect and care for people as we go
about our business.”
Sam Riggall
Chief Executive Officer
Clean TeQ Holdings Limited Annual Report 2018 COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Eds_p13a 24 August 2018 12:12 PM
10
Clean TeQ Water aspires to provide solutions
to the world’s most challenging water
treatment problems and become a world
leader in the treatment and reuse
of freshwater resources.
Clean TeQ Water’s technologies are environmentally and
economically sustainable, providing innovative solutions to
the municipal and industrial waste water sectors.
Our technology suite includes a range of proprietary filtration
and separation processes for primary separation including
continuous ion exchange and membrane technologies. In
addition, by-product management processes include membrane
filtration, biological degradation, evaporation and crystallisation.
CIF ®
Continuous
Ionic Filtration
NEX
Natural Evaporation
Crystallisation
DeSALx®
CIF ® based
Desalination
Clean-Bio®
Biocatalysts
Nitrification &
Denirification
Clean TeQ
Technology Suite
Clean-Mem
Membrane Filtration
HiROx®
High Recovery
Reverse Osmosis
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11
AUSTRALIA – Mine waste water treatment project
Clean TeQ is also delivering a DeSALx® water treatment
plant for the Fosterville Gold Mine in Victoria, Australia.
The treatment plant will have a capacity of two million litres
per day and will treat mine process water to a level of quality
which will allow it to be reused in mining operations.
Status: Procurement and manufacturing of components are
well progressed with construction expected to commence
before the end of 2018.
AFRICA – Mine process treatment plant
In Africa, Clean TeQ is executing a project to design, supply
and commission a plant using Continuous Ion Exchange
processing technology at a base metals processing plant
in the Democratic Republic of Congo.
Status: Procurement and manufacturing of components are
well progressed with construction expected to commence
before the end of 2018.
Clean TeQ Water continued its transition from
technology development to commercialisation,
with a number of Projects approaching
completion and a strong pipeline of new
opportunities.
CHINA – Municipal waste water treatment project
Joint Venture with Jinzhong Hoyo Municipal Urban
Investment & Construction Co. Ltd for the construction of
a 13,000 tonne per day municipal waste water treatment
plant. The Project will utilise Clean TeQ’s Continuous Ionic
Filtration (CIF®) technology.
Status: Design and engineering underway with construction
expected to commence in early 2019.
OMAN – Industrial waste water treatment project
Clean TeQ is designing, procuring and commissioning a
Clean TeQ CIF® wastewater treatment solution at a minerals
processing plant currently under construction in Oman.
The plant will remove toxic pollutants, sulphates, antimony
and arsenic to treat flue gas desulphurisation scrubber
wastewater.
Status: Construction complete, with commissioning due
during the third quarter of 2018.
Fresh water scarcity is a critical global issue.
Only 0.3% of available water is classified as
fresh water.
9
Clean TeQ Holdings Limited Annual Report 2018 COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Eds_p13a 24 August 2018 12:12 PM
12
Technology Development
A commitment to investing in research and
development is at the core of Clean TeQ,
and an important part of the Company’s
strategy. Clean TeQ’s focus during FY2018
was on the development of graphene
oxide membranes, encapsulated bacteria
and further development of Clean TeQ’s
Continuous Ion Filtration (CIF®) technology.
Graphene Oxide Membranes
Graphene and graphene oxide are the world’s thinnest,
strongest and most conductive materials yet discovered with
huge potential for industrial applications. In water treatment
applications, graphene oxide membranes have the potential to
deliver significant benefits due to their high water flux, tunability
and non-fouling properties. The advantages of the membrane
can be seen in increased flow, better water recovery and
lower energy costs.
Clean TeQ is collaborating with Monash University and
Ionic Industries to manufacture and apply graphene oxide
membranes to water treatment applications, thereby
expanding Clean TeQ’s already strong capability in
the water treatment sector.
Continuous Ionic Filtration (CIF®)
Clean TeQ is continuing to develop the proprietary CIF®
technology, with a focus on developing methods of dealing
with brine by-products in tertiary wastewater treatment
applications. Clean TeQ’s technology, using hybrid resins, are
showing strong efficacy in removal of nutrients such as nitrogen
and phosphorous from waste water. High nutrient levels in
waste waters represent a significant issue as they can cause
algal blooms when discharged into waterways.
Clean Bio® Encapsulated Bacteria Technology
Clean TeQ is also actively progressing its encapsulated
bacterial technology, Clean Bio®, which can effectively
manage the concentrated by-products from CIF® treated waste
water. Encapsulated bacterial technology provides a way of
converting residual nutrients such as ammonia and nitrate to
harmless nitrogen gas. Clean Bio® can be used as a standalone
technology or in conjunction with the CIF® technology to provide
a complete solution for nutrient reduction.
COLLIER CREATIVE 03 9088 2470
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Sustainability
Clean TeQ is committed to creating a sustainable, value-creating
business through positive innovation and disruptive change.
Our commitment to sustainability is reflected across the areas
of safety, environment, community engagement and diversity.
• Building a strong and positive safety culture
• Implementing robust management systems across our businesses
• Focusing on hazard identification and the proactive management of risks
• Operating in a manner that mitigates or removes environmental impacts, whilst improving energy
and natural resource management
• Delivering the highest possible quality products and services
• Building relationships based on mutual respect, open and transparent dealings and lasting commitment
• Sharing our values, fostering value creation and helping our host communities thrive beyond us
• Providing equal opportunity and creating a diverse work environment
Clean TeQ Sunrise is positioned to be a
modern and sustainable mining operation
producing products which are critical to the
clean energy revolution.
The global environmental issues caused by the
unconstrained burning of fossil fuels in the world’s
transport sector are profound. Being part of the
solution is a core objective of Clean TeQ and a
driver of our strategy to develop Sunrise.
Clean TeQ Holdings Limited Annual Report 2018 COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Eds_p13a 24 August 2018 1:08 PM
14
Board of Directors
Mr Sam Riggall
Managing Director &
Chief Executive Officer
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.
Mr Riggall resigned as
Chairman and assumed the
role of Managing Director
effective 24 April 2017.
Mr Li Binghan
Non‑Executive Director
Member of the
Sustainability and
Risk Committee
Mr Li is a lawyer with more
than 20 years’ experience.
He is currently the Director
of the Risk Control and
Legal Department of Pengxin
Mining. He commenced his
career with Henan Province
Judicial Bureau in 1996.
After five years in the Judicial
Bureau, Mr Li began his legal
career with Shanghai Pudong
Law firm in 2003, focusing on
foreign direct investment and
mergers and acquisitions. In
2012 Mr Li joined Shanghai
Co-effort Law Firm, working
in the field of intellectual
property law. Mr Li joined
Pengxin Mining in 2015. He
was appointed a Director of
Clean TeQ on 24 April 2017.
Mr Jiang Zhaobai
Co‑Chairman and
Non‑Executive Director
Mr Jiang took part in
numerous engineering and
construction projects following
graduation from university
in the 1980’s. He later
founded his own real estate
development company in
1988. In 1997, Shanghai
Pengxin Group Co., Ltd. was
established with Mr Jiang
as founding Chairman and
he remains in that role to
this date. Under Mr Jiang’s
leadership, Shanghai Pengxin
Group has successfully
developed a number of
significant property projects,
amounting to a total of six
million square meters. Starting
from real estate development
including both residential
and commercial as well as
hotel industry, the group
has diversified into a range
of other sectors including
modern agriculture, mining,
environmental science and
technology and financial
investment. The group is now
a diversified conglomerate
with controlling interests in four
listed companies in China. He
was appointed a Director of
Clean TeQ on 24 April 2017.
Mr Robert Friedland
Co‑Chairman and
Non‑Executive Director
During the past 20 years
of his career, Mr. Friedland
has founded and led two
prominent, international mining
entities under the Ivanhoe
Mines banner. He is Executive
Chairman and a director of
the present Ivanhoe Mines Ltd.,
which has three major mine
development projects including
construction of two new
mines on world-scale mineral
discoveries in South Africa and
the Democratic Republic of
Congo. The original Ivanhoe
Mines, founded in 1994,
had extensive mining and
exploration interests in the Asia
Pacific Region. Mr. Friedland
was Executive Chairman and
Chief Executive Officer of
the initial Ivanhoe Mines until
2012, and was President from
2003 to 2008. He directed
Ivanhoe Mines’ portfolio of
interests in several countries
over 16 years and led the
company’s discoveries and
initial development of the
Oyu Tolgoi copper-gold-
silver deposits in southern
Mongolia. Mr. Friedland also
is Chairman and President of
Ivanhoe Capital Corporation,
his family’s private, Singapore-
based company that specializes
in providing venture capital,
project financing and related
services for international
business enterprises,
predominantly in the minerals,
energy and communications
technologies sectors. He was
inducted into the Canadian
Mining Hall of Fame in
2016. He was appointed
a director of Clean TeQ
on 8 September 2018.
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15
Mr Eric Finlayson
Non-Executive Director
Member of the Nomination,
Remuneration and
Governance Committee
Member of the Audit and
Finance Committee
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. He was
appointed a director of Clean
TeQ on 16 September 2015.
Mr Ian Knight
Independent
Non-Executive Director
Ms Stefanie Loader
Independent
Non-Executive Director
Mr Mike Spreadborough
Independent
Non-Executive Director
Chair of the Sustainability
and Risk Committee
Member of the Audit and
Finance Committee
Mr Spreadborough is
a mining engineer with
extensive experience in the
development and operation
of mineral resources
projects spanning a range
of commodities including
copper, gold, uranium,
lead, zinc and iron ore.
Over the past 20 years
Mr Spreadborough has held
senior executive roles with a
number of mining companies
including Chief Operating
Officer of Sandfire Resources
and Inova Resources Ltd
(formerly Ivanhoe Australia),
General Manager – Coastal
Operations for Rio Tinto and
General Manager – Mining
for WMC and later Vice
President – Mining for BHP
Billiton at the world-class
Olympic Dam mine in South
Australia. He was appointed
a director of Clean TeQ on
8 December 2016.
Member of the Nomination,
Remuneration and
Governance Committee
Chair of the Nomination,
Remuneration and
Governance Committee
Chair of the Audit and
Finance Committee
Mr Knight is a graduate
in Business Studies and is
also a fellow of the Institute
of Chartered 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
Axsia Group and a partner of
Axsia Corporate Pty Ltd. He
was appointed a director of
Clean TeQ on 8 July 2013.
Member of the
Sustainability and Risk
Committee and the Audit
and Finance Committee
Ms Stefanie (Stef) Loader is
a mining industry executive
with broad international
experience having worked in
exploration, project evaluation
and development, mining and
corporate roles across seven
countries and four continents.
Residing in Central West
NSW, Ms Loader was most
recently Managing Director of
Northparkes Copper and Gold
Mine for CMOC International.
A geologist and statistician by
training, Ms Loader began
her career with Rio Tinto as
an exploration geologist in
Western Australia and was
then part of the discovery
team for the Khanong copper
deposit at Sepon in Laos. After
exploration and evaluation roles
in the Americas, Ms Loader
was assigned to the office of
Rio Tinto Chief Executive in
London where she then worked
on global exploration strategy
and prioritisation as Exploration
Executive. Ms Loader also led
the development of the Bunder
diamond project in India for
four years, including the signing
of a landmark development
agreement with the State of
Madhya Pradesh in support
of the project. Ms Loader
was appointed a Director of
Clean TeQ on 28 June 2017,
with effect from 1 July 2017.
Clean TeQ Holdings Limited Annual Report 2018 16
Contents
Directors’ Report
Auditor’s Independence Declaration
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
lndependent Auditor’s Report
Shareholder Information
Corporate Directory
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17
44
45
46
47
48
49
92
93
97
IBC
The Company’s 2018 Corporate Governance Statement was released to the ASX on 27 August 2018 and is available at
www.cleanteq.com
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Clean TeQ Holdings Limited Annual Report 2018
17
Directors’ Report
For the year ended 30 June 2018
The directors present their report, together with the financial
statements, for 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
(referred to hereafter as the ‘Consolidated Entity’), for the
financial year ended 30 June 2018, and the auditor’s
report thereon.
Directors
The following persons were directors of the Company during
the whole of the financial year and up to the date of this
report, unless otherwise stated:
Robert Friedland (Co‑Chairman and Non‑Executive Director)
Jiang Zhaobai (Co‑Chairman and Non‑Executive Director)
Sam Riggall (Managing Director and CEO)
Li Binghan (Non‑Executive Director)
Eric Finlayson (Non‑Executive Director)
Roger Harley (Independent Non‑Executive Director
– retired as director effective 1 November 2017)
Ian Knight (Independent Non‑Executive Director)
Stefanie Loader (Independent Non‑Executive Director)
Michael Spreadborough (Independent Non‑Executive Director)
Principal activities
During the financial year the principal continuing activities
of the Consolidated Entity consisted of:
• 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
Clean TeQ Sunrise Project in New South Wales
(‘Metals Division’); and
• 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’).
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
During the financial year ended 30 June 2018, the loss after
tax for the Consolidated Entity amounted to $16,012,000
(2017: loss after tax of $12,184,000).
The Consolidated Entity’s revenue from continuing operations
increased to $5,966,000 (2017: $1,612,000) primarily due
to an increase in contract income and interest income received
in the period.
The continuing development of the Sunrise Project resulted
in $60,413,000 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 $6,998,000, was financed largely by equity
capital raisings totalling $151,776,000 after issue costs.
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 Sunrise Project being at the
pre‑production development phase.
The Consolidated Entity’s net assets increased during
the financial year by $138,772,000 to $252,156,000
(2017: $113,384,000). Working capital, being current assets
less current liabilities, amounts to a surplus of $146,576,000
(2017: $85,671,000), with cash and cash equivalents
increasing from $88,863,000 to $152,637,000 during
the financial year.
Metals Division
During the financial year, the Consolidated Entity announced
that its wholly owned Syerston Nickel Cobalt Scandium Project
in New South Wales would be renamed to the Clean TeQ
Sunrise Project (‘Project’). The new name signifies the change
in focus of the Project as an emerging global source of cobalt
sulphate, nickel sulphate and scandium, and provides a strong
connection to the local area. Sunrise is the name of a property
located to the south‑west of the Project area which is owned
by Clean TeQ.
The key focus for the Metals Division remains advancing the
development of the Consolidated Entity’s Sunrise Project, with
excellent progress being made towards its development during
the financial year.
The Consolidated Entity completed a Mineral Resource
Update during the year, in preparation for a review of the
Ore Reserve estimate which was conducted in conjunction
with the Definitive Feasibility Study (‘DFS’).
18
Directors’ Report continued
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The updated resource (see Table 1 below) was announced
during the year and highlighted a 30% increase in cobalt
grades compared to the resource estimate completed in 2016.
For full details of the 2017 Resource Update please see the
ASX announcement dated 9 October 2017.
Table 1: Syerston Cobalt/Nickel Mineral Resource Estimate (0.06% Co cut-off)
Classification
Category
Measured
Indicated
Measured + Indicated
Inferred
Total
Tonnage
(Mt)
Ni Grade
%
Co Grade
%
40
47
87
14
101
0.75
0.55
0.64
0.24
0.59
0.15
0.12
0.13
0.11
0.13
Ni Metal
Tonnes
299,000
259,000
558,000
35,000
Co Metal
Tonnes
59,000
58,000
116,000
16,000
593,000
132,000
Note: Any apparent arithmetic discrepancies in the table above are due to rounding.
The updated Mineral Resource Estimate was released to the
Australian Securities Exchange (ASX) under the guidelines of
the JORC Code (2012 edition) in October 2017 and was also
published in a technical report titled, ‘Sunrise Nickel Cobalt
Project, New South Wales, Australia NI 43‑101 Technical
Report’ with an effective date of October 30, 2017, prepared
in accordance with Canadian National Instrument 43‑101 (NI
43‑101), which is available via the SEDAR profile of Clean
TeQ Holdings Limited at www.sedar.com or on the Clean
TeQ Holdings Limited website at www.cleanteq.com.
The updated Mineral Resource estimate confirmed a 30%
increase in cobalt grade compared to the 2016 Pre‑Feasibility
Study (‘PFS’). The PFS resource based on a 0.6% Ni equivalent
cut‑off grade and the 2017 Updated Mineral Resource is
based on a 0.06% Co cut‑off grade, 300 ppm Sc cut‑off
grade and 0.15 g/t Pt cut‑off grade.
The updated Mineral Resource estimate also resulted in an
increase in both scandium and platinum resources at Sunrise.
The scandium Mineral Resource for the Project increased
significantly to 45.7 Mt @ 420 ppm Sc for 19,222 tonnes
of contained metal using a 300ppm cut‑off. Of this total
resource, 27% is in the Measured and Indicated categories.
The platinum in the Mineral Resource for the Project also
increased significantly to 103 Mt @ 0.33 g/t Pt for 1,076,170
ounces, using a 0.15 g/t cut‑off. Of this total resource, 94%
(metal content) is in the Measured and Indicated categories.
In June 2018, the Consolidated Entity completed the Clean
TeQ Sunrise Definitive Feasibility Study (‘DFS’), which marked
a significant milestone for the Project. Finalisation of the DFS
will underpin the next phase of the Project’s development
which includes finalisation of product offtake agreements,
completion of project financing and commencement of
construction subject to a final investment decision.
The results from the DFS confirmed Clean TeQ Sunrise’s status
as a globally significant cobalt, nickel and scandium resource
which, once developed, will become a major supplier of
critical raw materials to the lithium‑ion battery market. The DFS
modelled the first 25 years of production, however the Project
has sufficient resources for a mine life of more than 40 years.
Highlights of the DFS outcomes included forecast:
• Strong cash flow generation supporting a post‑tax Net
Present Value1 (NPV) of US$1.392 billion (A$1.856 billion2)
and post‑tax Internal Rate of Return (IRR) of 19.1%.
• Average C13 operating costs of negative US$1.46/lb
nickel after byproduct credits4 and US$4.68/lb nickel
before credits4.
• Average production post ramp‑up of:
(i) 21,780 tpa nickel and 4,640 tpa cobalt (Year 2 – 6)
and;
(ii) 19,620 tpa nickel and 4,420 tpa cobalt (Year 2 – 11)
(iii) 18,520 tpa nickel and 3,450 tpa cobalt (Year 2 – 25)
• Average scandium oxide production capacity of 80 tonnes
per year which can be readily expanded to 160 tonnes
per year. The DFS conservatively caps scandium oxide
sales at 10 tonnes per year for the life of mine.
1. Net Present Value calculated using 8% discount rate.
2. AUD/USD 1/0.75 exchange rate applied for life of mine.
3. C1 Cash Cost includes mining, processing, site overheads (including administration), haulage and port charges.
4. Credits from cobalt sulphate, scandium oxide and ammonium sulphate.
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Clean TeQ Holdings Limited Annual Report 2018
19
Directors’ Report continued
• Pre‑production capital cost estimate of US$1.33 billion
(A$1.77 billion) (excluding US$165m estimated
contingency). The estimate reflects a significant increase in
refining capacity, relative to the 2016 Pre‑Feasibility Study,
to provide the potential opportunity to increase production
volumes once in operations.
• Significant economic and social benefits to local
communities over the life of mine including employment,
infrastructure upgrades, royalties, taxes and local
community contributions.
Compared to the 2016 Pre‑feasibility Study and the Sunrise
Nickel Cobalt Project, New South Wales, Australia NI 43‑101
Technical Report completed in 2017, the total capital cost
estimate for the Project has increased. This is primarily due to
the implementation of a number of measures devised to de‑risk
the delivery of the Project and to increase the Project’s scope
in order to deliver the potential to substantially increase
revenue, EBITDA and return on capital. Improvements to the
Project included upsizing the refinery capacity, increasing
surge capacities and revising the mine plan to significantly
bring forward future cobalt metal production, which will allow
the Company to respond to the strong demand for battery raw
materials from major automobile producers and battery
manufacturers.
The DFS assumes that the Project will be designed and built by
the Consolidated Entity in conjunction with SNC‑Lavalin and
McDermott International (collectively ‘the Alliance’), whereby
the three parties will jointly manage engineering, procurement
and construction. In parallel, the Consolidated Entity has been
evaluating a competing fixed‑price
Engineering‑Procurement‑Construction (‘EPC’) proposal
received from one of China’s largest engineering and
construction groups. At the end of the financial year, the
Consolidated Entity remained in discussions with both the
potential Chinese EPC contractor and the Alliance partners,
with a decision on the final delivery model expected during
the third quarter of the calendar year 2018.
With the DFS completed, Clean TeQ’s focus has turned to
finalising offtake discussions for the production which remains
uncontracted and securing funding for the Project. Once
developed, the Project is expected to produce substantial
volumes of high‑purity, battery‑grade nickel and cobalt
sulphate – products in high demand from the electric vehicle
industry. The Company is continuing to engage with numerous
parties in the electric vehicle supply chain who have indicated
strong interest in securing a reliable source of supply from a
favourable jurisdiction.
During the year the Consolidated Entity announced the signing
of a binding offtake agreement with Beijing Easpring Material
Technology Co Ltd (‘Easpring’) for the supply of hydrated
cobalt sulphate and nickel sulphate products. Under the
agreement, Easpring will purchase fixed tonnages representing
approximately 20 per cent of forecast production, for an initial
five‑year period commencing from the start of commercial
production. The agreement represents a significant milestone
for the Sunrise Project as it develops into a leading global
supplier of battery grade cobalt and nickel to the lithium ion
battery industry.
The Company is confident of securing additional binding
long‑term sales contracts for the majority of the uncontracted
portion of production during the second half of the calendar
year 2018.
Securing the necessary finance to develop the Project is now
a key priority for the Consolidated Entity. During the financial
year, the Consolidated Entity announced the appointment of
Industrial and Commercial Bank of China (‘ICBC’), Société
Générale, National Australia Bank and Natixis as Mandated
Lead Arrangers (‘MLAs’) to arrange a debt financing facility
to fund a significant proportion of the development cost
of the Sunrise Project. Each of the MLAs have undertaken to
use best efforts to provide US$125 million, for a total of
US$500 million for the proposed total credit facilities
required for the development of the Project.
This includes providing a debt facility to fund capital
expenditure and working capital and other credit facilities
including bonds and bank guarantees. The financing will be
contingent upon completion of a successful due diligence
process, credit approval and agreement of formal
documentation of terms and conditions.
With the DFS completed, the MLAs have now commenced
the detailed work of undertaking due diligence and finalising
a binding term sheet for a debt finance facility. In addition,
the Consolidated Entity is assessing a range of opportunities
to raise the remaining equity required to build the Project.
This includes negotiations involving potential project level
investment, joint ventures, product prepayment and
streaming/royalty transactions.
As outlined in the DFS, the current indicative schedule sees
a final investment decision in early 2019 followed closely by
commencement of construction. The DFS estimated a 24‑month
construction period, followed by a 24‑month period of
commissioning and ramp up. First production is expected in
early 2021.
During the financial year, the Consolidated Entity announced
the acquisition of two autoclaves, critical components of the
proposed processing plant for the Sunrise Project. The
acquisition significantly de‑risks the Project schedule, with
delivery lead times in today’s market for similar equipment
being approximately three years.
The autoclaves, which were acquired from Vale International
S.A. (a subsidiary of Brazilian multinational metals and mining
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20
Directors’ Report continued
group, Vale SA) for US$6.5 million have never been used, are
ideally sized for the Project and are in excellent condition. The
autoclaves have been shipped from New Caledonia to Port
Pirie in South Australia where they will be stored until they are
ready to be transported by road to the Sunrise Project site
for installation.
During the financial year, the Consolidated Entity announced
that it had paid a deposit to purchase a 300‑person
accommodation facility to support the construction phase
of the Sunrise Project. The facility will be purchased from
Fleetwood Corporation for A$3.8 million and includes 306
rooms, administration area, first aid centre, mess and
recreation facilities, with the flexibility to expand capacity
as required.
The acquisition price represents a significant discount to the
cost of a newly built facility, which is consistent with the
Consolidated Entity’s strategy to identify and procure pre‑made
facilities to reduce capital costs and fast‑track development of
the Project.
The facility was originally constructed in 2014 for a natural
gas project in Queensland, Australia. It is in excellent
condition and ideally suited for the site conditions and
operational requirements of the Project. The Consolidated
Entity paid an initial deposit of $440,000 with the balance
due in 2018 when the facility is delivered and installed at the
Sunrise Project area.
During the financial year, another important milestone was
achieved with the NSW Department of Planning and
Environment formally issuing the Mining Leases (MLs) over
the Project area (ML1770) and limestone quarry (ML1769).
The Clean TeQ Sunrise Project has an approve Development
Consent DA 374‑11‑00, which has been modified on five
occasions since it was issued in 2005 (Modifications 1, 2, 3,
5 and 6). The most recent modification to the Development
Consent provided for changes to the accommodation facility
at the Project which were necessary to both optimise the mine
development plan and improve the amenity of the on‑site
workforce (Mod 6). The changes included the relocation of
the accommodation facility from the main mine site to an
adjacent property south of the mine on a property owned
by the Company called ‘Sunrise’.
A Development Consent modification to support several
project optimising scope amendments (Mod 4) is well
advanced with final approval currently anticipated in the
second half of calendar year 2018. Mod 4 involves the
implementation of a range of optimisation opportunities
including mining in a more selective manner, addition of
drilling and blasting, adoption of the resin‑in‑pulp processing
method, increased sulphur demand and sulphuric acid
production; increase limestone demand, addition of a
cystalliser, changes to process input and road transport
requirements, addition of a water treatment plant, increased
tailings storage facility capacity, reduced evaporation pond
capacity, relocation of mine infrastructure, addition of surface
water extraction from the Lachlan River, minor changes to the
borefield transfer station and reduced gas demand.
Water Division
Clean TeQ’s water division is currently delivering on four
key contracts focused on mine and municipal waste water
treatment, as well as assessing new opportunities to promote
and develop Clean TeQ’s Continuous Ion Exchange
Technology (CIF®) and DeSALx® technologies for power,
mining, municipal and industrial wastewater applications.
During the financial year, the joint venture between
Clean TeQ and Jinzhong Hoyo Municipal Urban Investment
& Construction Co., Ltd (‘Hoyo’) continued to work on water
treatment opportunities in China’s Shanxi Province utilising the
Consolidated Entity’s CIF® proprietary technology.
The JV Company was awarded an initial contract to build,
own and operate a water treatment plant, using this
technology to treat up to 13,000 tonnes of effluent per day for
a 20‑year period at a waste water treatment plant owned by
Hoyo. The contract allows for the JV Company to be paid a
service fee of 1RMB per tonne of water treated, subject to a
minimum payment for 9,000 tonnes per day.
During the financial year, the joint venture completed the
environmental impact assessment and final works on the
detailed design. While this process is taking longer than
anticipated, steady progress is being made toward securing
various government approvals required in order for
construction to commence, now expected during the third
quarter of 2018.
The Consolidated Entity is also executing a significant contract
with Multotec Process Equipment Pty Ltd (‘Multotec’) to design,
procure and commission a Clean TeQ CIF® wastewater
treatment solution at a minerals processing plant currently
being constructed in Oman (‘Oman Contract’).
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Clean TeQ Holdings Limited Annual Report 2018
21
Directors’ Report continued
The Oman Contract is valued in excess of US$400,000
and includes a technology fee and payments for engineering,
equipment and resin supply and commissioning support. The
CIF® waste water treatment plant will treat waste water from
a flue gas desulphurisation scrubber at a minerals processing
plant at Port of Sohar Free Zone, Sultanate of Oman.
Significant changes in the state of affairs
In November 2017 the shares of the Consolidated Entity began
trading on the Toronto Stock Exchange under the ticker ‘CLQ’.
The Company’s ordinary share capital continues to trade
under the symbol ‘CLQ’ on the Australian Stock Exchange and
‘CTEQF’ on the United States OTCQX Exchange.
The plant will treat waste water from a flue gas
desulphurisation scrubber removing toxic pollutants and
sulphate, antimony and arsenic from the wastewater stream.
Construction of the waste water treatment plant was
completed in May and first stage cold commissioning
was completed in June 2018. Construction of the mineral
processing plant is expected to be completed during the
third quarter, after which the Consolidated Entity will
complete final commissioning and hand over.
The technology uses the Consolidated Entity’s proprietary
CIF® technology to remove toxic pollutants and in particular
sulphate, antimony and arsenic from the wastewater stream.
This solution is being provided to Multotec as an equipment
design and supply package.
Multotec is the principal contractor with overall responsibility
for delivering the CIF® wastewater management systems for
the mineral processing facility. Fabrication of the CIF® waste
water treatment plant equipment was completed by the
Consolidated Entity.
During the financial year the Consolidated Entity announced
that it had entered into a landmark agreement with Fosterville
Gold Mine Pty Ltd (‘Fosterville’) to design, supply and
commission a two million litre‑per‑day Clean TeQ DeSALx®
mine water treatment plant.
The award of the contract follows a period of extensive due
diligence and testwork conducted by Fosterville to validate the
efficacy of the Consolidated Entity’s proprietary DeSALx®
system for the treatment of mining process waters. The value
of the contract is $3,500,000 and serves as a significant
milestone for the Clean TeQ Water division.
The Fosterville Gold Mine is located in Bendigo in regional
Victoria. Design of the Fosterville water treatment plant has
been completed in the financial year. Manufacturing of the
columns and major components of the plant largely been
completed, with installation on site expected to commence
in Q4 2018.
The Water Division has continued to develop new
opportunities during the financial year, with a number of
feasibility and pilot programs underway to allow clients to
assess the benefits of Clean TeQ’s ion exchange technology.
The Consolidated Entity announced on 1 November 2017
that Mr Roger Harley, had retired as a Non‑Executive Director
of the Consolidated Entity with effect from the conclusion of
the 2017 Annual General Meeting. Mr Harley was appointed
to the Board of Consolidated Entity in June 2010 and since his
appointment has played an instrumental part in the growth of
the Company. The Board would like to thank Mr Harley for his
valuable and substantial contribution.
The Consolidated Entity announced on 20 February 2018 that
Mr Tim Kindred, had been appointed to the role of Project
and Start Up Director. Mr Kindred has over 30 years’
experience in the mining industry, having held senior positions
in project management, construction, commissioning and
ramp‑up of development projects, with a strong background
in development and operations of pressure‑acid‑leach
nickel projects.
On 8 March 2018, the Consolidated Entity announced that it
was conducting an underwritten institutional placement to raise
a minimum of $150 million at a $1.15 a share (‘Placement’).
The offer was made to institutional, accredited, sophisticated
and professional investors under relevant prospectus
exemptions. In conjunction with the Placement, the
Consolidated Entity also conducted share purchase plan,
offering eligible shareholders in Australia and New Zealand
the ability to apply to subscribe for up to A$15,000 of new
shares at a $1.15 a share. Proceeds raised via the placement
and share purchase plan are to be used to fund early works
and long lead items to accelerate the development of the
Sunrise Project.
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 2018
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.
22
Directors’ Report continued
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CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Likely developments and expected results
of operations
The Consolidated Entity will continue to pursue its objectives
of advancing the development of the Sunrise Project as well
as its suite of technology applications for the treatment of
water in 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 debt finance, equity partnerships, capital raisings as
well as operational revenues from contracts entered into, and
through securing additional contracts throughout the year.
Further information on likely developments in the operations of
the Consolidated Entity and the expected results of operations
have not been included in this report because the directors
believe it would be likely to result in unreasonable prejudice
to the Consolidated Entity.
Environmental regulation
The Consolidated Entity has an interest in the mineral licences
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 mineral 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.
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Clean TeQ Holdings Limited Annual Report 2018
23
Directors’ Report continued
Information on directors
Name:
Title:
Qualifications:
Experience and
Expertise:
Mr Robert Friedland
Co‑Chairman and Non‑Executive Director
Bachelor of Arts in Political Science from Reed College, Oregon, USA
Mr Friedland was appointed Co‑Chairman of Clean TeQ on 8 September 2016. During the past
20 years of his career, Mr Friedland has founded and led two prominent, international mining
entities under the Ivanhoe Mines banner. He is Executive Chairman and a director of the present
Ivanhoe Mines Ltd., which has three major mine development projects underway in Southern
Africa, including construction of two new mines on world‑scale mineral discoveries in South Africa
and the Democratic Republic of Congo. The company operated under the Ivanplats name after its
founding in 1998 and assumed the Ivanhoe name in 2013. The original Ivanhoe Mines, founded
in 1994, had extensive mining and exploration interests in the Asia Pacific Region. Mr Friedland
was Executive Chairman and Chief Executive Officer of the initial Ivanhoe Mines until 2012, and
also was President from 2003 to 2008. He directed Ivanhoe Mines’ assembly of a portfolio of
interests in several countries over 16 years and led the company’s discoveries and initial
development of the Oyu Tolgoi copper‑gold‑silver deposits in southern Mongolia. Rio Tinto
acquired a controlling interest in the company in 2012; the company was required to relinquish the
Ivanhoe name and became Turquoise Hill Resources, which is continuing the development of Oyu
Tolgoi. Mr Friedland also is Chairman and President of Ivanhoe Capital Corporation, his family’s
private, Singapore‑based company founded in 1987 that specializes in providing venture capital,
project financing and related services for international business enterprises, predominantly in the
minerals, energy and communications technologies sectors. He was inducted into the Canadian
Mining Hall of Fame in 2016.
Other current
directorships:
Executive Chairman, Ivanhoe Mines Ltd.
Chairman & President, Ivanhoe Capital Corporation
Chairman & Co‑Founder, I‑Pulse Inc.
Chairman & Chief Executive Officer, High Power Exploration Inc.
Chairman, Pu Neng Energy
Co‑Chairman, SK Global Entertainment
Chairman, Ivanhoe Pictures
Ivanhoe Industries & Kietta
Former directorships
(last 3 years):
Nil
Special responsibilities:
Nil
Interests in shares:
94,518,888 fully paid ordinary shares
Interests in options:
Interests in rights:
Nil
Nil
24
Directors’ Report continued
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CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Name:
Title:
Qualifications:
Experience and
Expertise:
Mr Jiang Zhaobai
Co‑Chairman and Non‑Executive Director
EMBA, China International Business School
Mr Jiang took part in numerous engineering and construction projects following graduation from
university in the 1980’s. He later founded his own real estate development company in 1988. In
1997, Shanghai Pengxin Group Co., Ltd. was established with Mr Jiang as founding Chairman
and he remains in that role to this date. Under Mr Jiang’s leadership, Shanghai Pengxin Group has
successfully developed a number of significant property projects, amounting to a total of six million
square meters. Starting from real estate development including both residential and commercial as
well as hotel industry, the group has diversified into a range of other sectors including modern
agriculture, mining, environmental science and technology and financial investment. The group is
now a diversified conglomerate with controlling interests in four listed companies in China. He was
appointed a Director of Clean TeQ on 24 April 2017.
Other current
directorships:
Chairman of Shanghai Pengxin Group; Executive Chairman of Shanghai Entrepreneurs Association;
Vice President of China Non‑governmental Enterprise Directors Association; Economic Adviser to
China Development Bank
Former directorships
(last 3 years):
Nil
Special responsibilities:
Nil
Interests in shares:
92,518,888 fully paid ordinary shares
Interests in options:
Interests in rights:
Nil
Nil
Name:
Title:
Mr Sam Riggall
Managing Director & Chief Executive Officer
Qualifications:
LLB (Hons), B.Com., MBA
Experience and
Expertise:
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. Mr Riggall resigned as Chairman and assumed the role of Managing
Director effective 24 April 2017.
Other current
directorships:
Syrah Resources Limited
Former directorships
(last 3 years):
Nil
Special responsibilities:
Nil
Interests in shares:
26,112,055 fully paid ordinary shares
Interests in options:
Nil
Interests in rights:
1,722,571
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Clean TeQ Holdings Limited Annual Report 2018
25
Directors’ Report continued
Name:
Title:
Mr Ian Knight
Independent Non‑Executive Director
Qualifications:
FCA
Experience and
Expertise:
Mr Knight is a graduate in Business Studies and is also a fellow of the Institute of Chartered
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 Axsia Group and a partner of nem Australasia Pty Ltd. He was appointed a
director of Clean TeQ on 8 July 2013.
Other current
directorships:
Former directorships
(last 3 years):
Nil
Nil
Special responsibilities: Member of the Nomination, Remuneration and Governance Committee and Chair of the Audit and
Interests in shares:
1,646,840 fully paid ordinary shares
Finance Committee.
Interests in options:
375,000 unlisted options exercisable at $0.3100 (31.00 cents) per option
Interests in rights:
Nil
Name:
Title:
Qualifications:
Experience and
Expertise:
Other current
directorships:
Former directorships
(last 3 years):
Mr Eric Finlayson
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. He was appointed a director of Clean TeQ on
16 September 2015.
Cordoba Minerals Corp., Kaizen Discovery Inc. and Sama Resources Inc. (all TSX Venture
Exchange); VRB Energy (private)
Apollo Minerals Limited (resigned 7 July 2016)
Special responsibilities: Member of the Nomination, Remuneration and Governance Committee and Audit and Finance
Interests in shares:
Nil
Committee.
Interests in options:
750,000 unlisted options exercisable at $0.2712 (27.12 cents) per option; 375,000 unlisted
options exercisable at $0.3100 (31.00 cents) per option
Interests in rights:
Nil
26
Directors’ Report continued
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CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Name:
Title:
Qualifications:
Experience and
Expertise:
Mr Michael Spreadborough
Independent Non‑Executive Director
BEng (Mining Engineering); MBA, AICD
Mr Spreadborough is a mining engineer with extensive experience in the development and
operation of mineral resources projects spanning a range of commodities including copper, gold,
uranium, lead, zinc and iron ore. Over the past 20 years Mr Spreadborough has held senior
executive roles with a number of mining companies including Chief Operating Officer of Sandfire
Resources and Inova Resources Ltd (formerly Ivanhoe Australia), General Manager – Coastal
Operations for Rio Tinto and General Manager – Mining for WMC and later Vice President
– Mining for BHP Billiton at the world‑class Olympic Dam mine in South Australia. He was
appointed a director of Clean TeQ on 8 December 2016.
Other current
directorships:
Nusantara Resources Limited
Former directorships
(last 3 years):
Nil
Special responsibilities:
Chair of the Sustainability and Risk Committee
Member of the Audit and Finance Committee
Interests in shares:
Nil
Interests in options:
750,000 unlisted options exercisable at $0.7700 (77.00 cents) per option
Interests in rights:
Nil
Name:
Title:
Qualifications:
Experience and
Expertise:
Mr Li Binghan
Non‑Executive Director
Masters in International Law, Law School, Fudan University, Masters in Intellectual Property Law,
Law School, Queen Mary University of London and a Qualification Certificate for Attorney at Law
and Qualification Certificate for Patent Attorney
Mr Li is a lawyer with more than 20 years’ experience. He is currently the Director of the Risk
Control and Legal Department of Pengxin Mining. He commenced his career with Henan Province
Judicial Bureau in 1996. After five years in the Judicial Bureau, Mr Li began his legal career with
Shanghai Pudong Law firm in 2003, focusing on foreign direct investment and mergers and
acquisitions. In 2012 Mr Li joined Shanghai Co‑effort Law Firm, working in the field of intellectual
property law. Mr Li joined Pengxin Mining in 2015. He was appointed a Director of Clean TeQ
on 24 April 2017.
Other current
directorships:
Former directorships
(last 3 years):
Nil
Nil
Special responsibilities: Member of the Sustainability and Risk Committee
Interests in shares:
Interests in options:
Interests in rights:
Nil
Nil
Nil
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CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Clean TeQ Holdings Limited Annual Report 2018
27
Directors’ Report continued
Name:
Title:
Qualifications:
Experience and
Expertise:
Ms Stefanie Loader
Independent Non‑Executive Director
Bachelor of Science with Honours (Geology), University of Western Australia, Graduate Certificate
in Applied Statistics, Murdoch University; MAIG; GAICD.
Ms Stefanie (Stef) Loader is a mining industry executive with broad international experience having
worked in exploration, project evaluation and development, mining and corporate roles across
seven countries and four continents. Residing in Central West NSW, Ms Loader was most recently
Managing Director of Northparkes Copper and Gold Mine for CMOC International. A geologist
and statistician by training, Ms Loader began her career with Rio Tinto as an exploration geologist
in Western Australia and was then part of the discovery team for the Khanong copper deposit at
Sepon in Laos in the late 1990s. After exploration and evaluation roles in the Americas, Ms Loader
was assigned to the office of Rio Tinto Chief Executive in London where she then worked on global
exploration strategy and prioritisation as Exploration Executive. Ms Loader also led the
development of the Bunder diamond project in India for four years, including the signing of a
landmark development agreement with the State of Madhya Pradesh in support of the project.
Ms Loader was appointed a Director of Clean TeQ on 28 June 2017, with effect from 1 July 2017.
Other current
directorships:
Former directorships
(last 3 years):
Nil
Nil
Special responsibilities:
Chair of the Nomination, Remuneration and Governance Committee
Member of the Sustainability and Risk Committee and the Audit and Finance Committee
Interests in shares:
50,000 fully paid ordinary shares
Interests in options:
Interests in rights:
Nil
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.
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.
28
Directors’ Report continued
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CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
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 2018, and the number of meetings attended by each director were:
Robert Friedland
Jiang Zhaobai
Sam Riggall
Roger Harley*
Ian Knight
Eric Finlayson
Stefanie Loader
Mike Spreadborough
Li Binghan
Robert Friedland
Jiang Zhaobai
Sam Riggall
Roger Harley*
Ian Knight
Eric Finlayson
Stefanie Loader
Mike Spreadborough
Li Binghan
Full Board Meeting
Audit and Finance Committee
Attended
Held
Attended
Held
5
1
6
2
6
6
6
6
–
6
6
6
2
6
6
6
6
6
–
–
–
1
4
2
3
1
–
–
–
–
1
4
2
3
2
–
Nomination, Remuneration and
Governance Committee
Sustainability and Risk Committee
Attended
Held
Attended
Held
–
–
–
–
3
3
3
–
–
–
–
–
–
3
3
3
–
–
–
–
–
–
–
–
3
3
1
–
–
–
–
–
–
3
3
3
* Roger Harley retired from the board, effective 1 November 2017.
Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.
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Clean TeQ Holdings Limited Annual Report 2018
29
Directors’ Report continued
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
The Board of Directors is responsible for approving the
compensation arrangements for the Directors and senior
executives following recommendations received from the
Nomination, Remuneration and Governance Committee.
The Board, in conjunction with the Nomination, Remuneration
and Governance Committee, assesses the appropriateness
of the nature and amount of emoluments of such officers on
a periodic basis by reference to relevant employment market
conditions, with the overall objective of ensuring maximum
stakeholder benefit from the retention of a high quality Board
and executive team.
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:
• Ben Stockdale – Chief Financial Officer
• Scott Magee – Sunrise Project Director (resigned)
• Tim Kindred – Sunrise Project Director
A. Principles used to determine the nature and
amount of remuneration (audited)
There were no other employees in the Consolidated Entity
that met the definition of key management personnel in
accordance with the Corporations Act 2001 or Australian
Accounting Standards.
Compensation levels are competitively set to attract and
retain appropriately qualified and experienced directors
and executives. As and when required the Nomination,
Remuneration and Governance 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 sought during the 2017 and 2018 financial years and
their recommendations were implemented during financial
year 2018.
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;
• the Consolidated Entity’s performance including:
(i) the Consolidated Entity’s earnings;
• Robert Friedland – Co‑Chairman and Non‑Executive
(ii) the growth in share price and delivering constant
Director
returns on shareholder wealth; and
• Jiang Zhaobai – Co‑Chairman and Non‑Executive Director
(iii) the amount of incentives within each key management
• Sam Riggall – Managing Director and Chief Executive Officer
person’s compensation.
• Li Binghan – Non‑Executive Director
• Eric Finlayson – Non‑Executive Director
• Roger Harley – Independent Non‑Executive Director (retired)
• Ian Knight – Independent Non‑Executive Director
• Stefanie Loader – Independent Non‑Executive Director
• Mike Spreadborough – Independent Non‑Executive Director
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.
30
Directors’ Report continued
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CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
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 at least annually by the
Nomination, Remuneration and Governance 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 employees for
meeting or exceeding their financial and personal objectives.
The short‑term incentive (‘STI’) is an ‘at risk’ bonus while the
long‑term incentive (’LTI’) is provided as options and
performance rights over ordinary shares of the Company
under the rules of the shareholder approved Employee
Incentive Plan. The STI and LTI plans provide for Board
discretion on the provision of bonuses as cash, shares
and options.
During the 2018 financial year the Board exercised its
discretion and authorised the issue of options and
performance rights to a number of employees. In addition,
STI bonuses relating to performance against FY17 KPI’s of
$87,144 were paid to staff during the 2018 financial year.
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, Remuneration and Governance
Committee sets the key performance indicators (’KPI’s’) for all
employees. 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 performance objectives include financial 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, Remuneration
and Governance 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 performance expectation.
Long Term Incentive
The LTI consists of a grant of performance rights and options
to certain directors and employees, administered under the
Company’s shareholder approved Employee Incentive Plan (‘EIP’).
The EIP 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.
The LTI also consists of a grant of performance rights to
employees, administered under the terms of the EIP. 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 a semi‑annual
basis, with the at‑risk value of the annual grant over the vesting
period, typically three years, representing a percentage of
the employee’s total fixed remuneration, priced at the time of
grant. Vesting is contingent on the Consolidated Entity meeting
or exceeding a performance hurdle over the 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.
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Clean TeQ Holdings Limited Annual Report 2018
31
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 include fees for subcommittee
roles and responsibilities.
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 however, Director remuneration figures quoted
herein are inclusive of superannuation where applicable.
The Company determines the maximum amount for
remuneration, including thresholds for share‑based
remuneration, for Directors by resolution.
Voting and comments made at the Company’s
1 November 2017 Annual General Meeting (‘AGM’)
The Company received 97.3% of ‘for’ votes in relation to
its remuneration report for the year ended 30 June 2017.
The Company did not receive any specific feedback at
the AGM regarding its remuneration practices.
Directors’ Report continued
The EIP, which was adopted on 19 July 2017, states that the
total number of options issued pursuant to the EIP must not
exceed 5% of the total number of issued shares in the
Company, which excludes options and performance rights
issued pursuant to shareholder approval or to non‑employees.
The Nomination, Remuneration and Governance Committee,
in conjunction with the Board, determines the number of options
performance rights and the terms and conditions associated
with those options and performance rights that may be issued to
employees each year. The criteria used to assess the number of
options and performance rights 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, Remuneration and
Governance Committee with an objective means of
measuring performance against expected performance.
Short Term and Long-Term Incentive Structure
The Nomination, Remuneration and Governance 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 Sunrise Project being at the
pre‑production development phase.
The Nomination, Remuneration and Governance Committee
will conduct a formal assessment of employees’ key
performance indicators and the Consolidated Entity’s
performance as a whole during the 2019 financial year to
determine if any STI bonus is to be awarded in respect of
the 2018 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 $1,000,000 per annum or such other maximum
amount determined from time to time by the Company in a
general meeting.
32
Directors’ Report continued
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CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
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
Post-
employment
benefits
Long-term
benefits
Share based
payments
Cash salary
and fees
Bonus
Non-
monetary
Super-
annuation
Long service
leave
Equity-settled
2018
Non‑Executive
Directors:
$
Robert Friedland
127,500
Jiang
Zhaobai
Li Binghan
Eric Finlayson
Roger Harley*
Ian Knight
Stefanie Loader**
Mike
Spreadborough
Executive
Directors:
127,500
87,504
83,713
37,576
99,083
95,700
86,377
$
–
–
–
–
–
–
–
–
Sam Riggall
436,750
44,280
Other KMP:
Tim Kindred***
107,692
Scott Magee****
308,425
Ben Stockdale
303,199
–
12,033
30,831
1,901,019
87,144
$
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
7,953
3,570
–
–
8,206
$
–
–
–
–
–
–
–
Total
$
127,500
127,500
87,504
91,666
41,146
99,083
95,700
$
–
–
–
–
–
–
230,855
325,438
23,250
12,031
135,139
651,450
10,231
24,258
25,000
–
–
–
–
117,923
344,716
10,349
66,843
436,222
102,468
22,380
432,837
2,545,848
*
Roger Harley retired as a Non‑Executive Director on 1 November 2017.
**
Stefanie Loader was appointed to the Board as a Non‑Executive Director with effect from 1 July 2017.
***
Tim Kindred was appointed as Project and Start up Director with effect from 20 February 2018.
**** Scott Magee resigned as Sunrise Project Director effective 20 February 2018. Of his salary payment, $79,908 is a severance benefit.
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Clean TeQ Holdings Limited Annual Report 2018
33
Directors’ Report continued
Short-term benefits
Cash salary
and fees
$
Bonus
$
37,500
8,333
8,333
45,872
45,872
50,000
25,649
300,000
250,000
92,952
253,750
1,118,261
–
–
–
–
–
–
–
–
–
–
–
–
2017
Non‑Executive
Directors:
Robert Friedland*
Jiang
Zhaobai****
Li Binghan****
Eric Finlayson
Roger Harley
Ian Knight
Mike
Spreadborough**
Executive
Directors:
Sam Riggall
Peter Voigt*****
Other KMP:
Scott Magee***
Ben Stockdale
$
–
–
–
–
–
–
–
–
413
–
–
Post-
employment
benefits
Long-term
benefits
Share based
payments
Non-
monetary
Super-
annuation
Long service
leave
Equity-
settled
$
–
–
–
4,358
4,358
–
2,437
$
–
–
–
–
–
–
–
$
–
–
–
137,738
137,738
Total
$
37,500
8,333
8,333
187,968
187,968
137,738
187,738
–
28,086
28,500
23,750
6,974
3,004,288
3,339,762
16,719
418,331
709,213
6,230
24,106
1,593
4,329
346,640
447,415
30,433
312,618
413
93,739
29,615
4,212,906
5,454,934
*
Robert Friedland was appointed as Co‑Chairman and Non‑Executive Director on 8 September 2016.
** Mike Spreadborough was appointed as a Non‑Executive Director on 8 December 2016.
***
Scott Magee was appointed Sunrise Project Director on 27 February 2017.
****
Jiang Zhaobai was appointed as Co‑Chairman and Non‑Executive Director on 24 April 2017. Li Binghan was appointed as a Non‑Executive Director
on 24 April 2017.
***** Peter Voigt retired as a director effective 30 June 2017.
34
Directors’ Report continued
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
The following tables sets out the relative mix of fixed remuneration and the total opportunity for performance related remuneration
for Key Management Personnel for the current and previous financial period:
2018
Non–Executive Directors:
Robert Friedland
Jiang Zhaobai
Li Binghan
Eric Finlayson
Roger Harley*
Ian Knight
Stefanie Loader**
Mike Spreadborough
Executive Directors:
Sam Riggall
Other KMP:
Tim Kindred***
Scott Magee****
Ben Stockdale
Proportion of
remuneration that
is fixed
Proportion of
remuneration at
risk as an STI
Proportion of
remuneration at
risk as an LTI
Proportion of
remuneration
consisting of
options
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
29.06%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
72.46%
6.80%
20.74%
100.00%
96.51%
77.61%
–
3.49%
7.07%
–
–
15.32%
–
–
–
–
–
–
–
70.94%
–
–
–
–
*
Roger Harley retired as a Non‑Executive Director on 1 November 2017.
**
Stefanie Loader was appointed to the Board as a Non‑Executive Director with effect from 1 July 2017.
***
Tim Kindred was appointed as Project and Start up Director with effect from 20 February 2018.
**** Scott Magee resigned as Sunrise Project Director effective 20 February 2018.
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Clean TeQ Holdings Limited Annual Report 2018
35
Directors’ Report continued
2017
Non–Executive Directors:
Robert Friedland*
Jiang Zhaobai****
Li Binghan****
Eric Finlayson
Roger Harley
Ian Knight
Mike Spreadborough**
Executive Directors:
Sam Riggall
Peter Voigt*****
Other KMP:
Scott Magee***
Ben Stockdale
Proportion of
remuneration that
is fixed
Proportion of
remuneration at
risk as an STI
Proportion of
remuneration at
risk as an LTI
Proportion of
remuneration
consisting of
options
100.00%
100.00%
100.00%
26.72%
26.72%
26.63%
100.00%
10.04%
41.01%
22.52%
90.27%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.97%
5.63%
–
–
–
73.28%
73.28%
73.37%
–
87.98%
53.35%
–
77.48%
9.73%
–
*
Robert Friedland was appointed as Co‑Chairman and Non‑Executive Director on 8 September 2016.
** Mike Spreadborough was appointed as a Non‑Executive Director on 8 December 2016.
***
Scott Magee was appointed Sunrise Project Director on 27 February 2017.
****
Jiang Zhaobai was appointed as Co‑Chairman and Non‑Executive Director on 24 April 2017. Li Binghan was appointed as a Non‑Executive Director
on 24 April 2017.
***** Peter Voigt retired as a director effective 30 June 2017.
36
Directors’ Report continued
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
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:
Name:
Title:
Agreement
commenced:
Mr Sam Riggall
Managing Director
1 July 2015
Term of agreement:
No fixed term
Remuneration
Name:
Title:
Agreement
commenced:
Total fixed remuneration is set at a salary inclusive of superannuation of $460,000 per annum based
on duties as Managing Director. 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 Ben Stockdale
Chief Financial Officer
15 January 2015
Term of agreement:
No fixed term
Remuneration
Name:
Title:
Agreement
commenced:
Total fixed remuneration set at salary inclusive of superannuation of $394,200 per annum 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.
Mr Tim Kindred
Project and Start up Director
20 February 2018
Term of agreement:
No fixed term
Remuneration
Total fixed remuneration set at salary inclusive of superannuation of $438,000 per annum based
on duties as Project Director. The Company may terminate the agreement upon three months’ notice
or payment in lieu of notice. Mr Kindred 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.
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Clean TeQ Holdings Limited Annual Report 2018
37
Directors’ Report continued
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 2018.
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key
management personnel in the year ended 30 June 2018 financial year are as follows:
Grantee/Number of
Options/Grant Date
Ian Knight
375,000 options
6 September 2016
Eric Finlayson
750,000 options
20 November 2015
Eric Finlayson
375,000 options
6 September 2016
Mike Spreadborough
375,000 options
19 July 2017
Mike Spreadborough
375,000 options
19 July 2017
Vesting date &
exercisable date
Expiry Date
Exercise Price
Fair value per option
at grant date
6 September 2016
16 May 2019
$0.3100
$0.367
20 November 2015
30 November 2018
$0.2712
$0.083
6 September 2016
16 May 2019
$0.3100
$0.367
8 December 2017
17 February 2020
$0.7770
$0.379
8 December 2018
17 February 2020
$0.7770
$0.379
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 2018 is set out below:
Name
Sam Riggall
Peter Voigt
Roger Harley
Ian Knight
Eric Finlayson
Number of
options granted
during the year
Number of
options granted
during the year
Number of
options vested
during the year
Number of
options vested
during the year
2018
2017
2018
2017
–
–
–
–
–
8,000,000
1,000,000
375,000
375,000
375,000
–
–
–
–
–
8,000,000
1,000,000
375,000
375,000
375,000
Mike Spreadborough
750,000
Ben Stockdale
Scott Magee
Tim Kindred
–
–
–
–
–
375,000
–
3,000,000
1,500,000
–
–
–
–
–
–
38
Directors’ Report continued
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
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 2018 are set out below:
Value of options
granted during
the year
Value of options
exercised during
the year
Value of options
lapsed during
the year
Remuneration
consisting
of options
for the year
Name
Sam Riggall
Peter Voigt
Roger Harley*
Ian Knight
Eric Finlayson
$
–
–
–
–
–
Mike Spreadborough
230,856
Ben Stockdale
Scott Magee
Tim Kindred
–
–
–
$
3,398,984
179,933
–
$
764,288
24,667
–
51,629
10,696
–
–
270,126
658,977
–
–
–
42,273
658,977
–
%
–
–
–
–
–
70.94%
–
–
–
* Retired as director 1 November 2017. No options were granted, exercised or lapsed during the period 1 July 2017 to 1 November 2017 by Mr Harley.
Options vested in prior years and expired in the current year are disclosed in note 42 to the financial statements.
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
19 November 2015
Ben Stockdale – 400,000 rights
8 July 2015
Ben Stockdale – 468,606 rights
16 May 2016
Sam Riggall – 831,025 rights
6 September 2016
Ben Stockdale – 187,880 rights
1 July 2017
Sam Riggall – 411,546 rights
1 July 2017
Ben Stockdale – 45,998 rights
6 Feb 2018
Vesting date
1 July 2018
Expiry Date
1 July 2018
1 July 2018
1 July 2018
1 July 2019
1 July 2019
6 September 2019
6 September 2019
1 July 2020
1 July 2020
1 July 2020
1 July 2020
1 January 2021
1 January 2021
Exercise
Price
Fair value per
performance right
at grant date
Nil
Nil
Nil
Nil
Nil
Nil
Nil
$0.065
$0.086
$0.126
$0.195
$0.581
$0.581
$1.014
Performance rights granted carry no dividend or voting rights.
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Clean TeQ Holdings Limited Annual Report 2018
39
Directors’ Report continued
The number of performance rights over ordinary shares granted to each key management personnel as part of compensation
during the year ended 30 June 2018 is set out below:
Name
Sam Riggall
Peter Voigt*
Ben Stockdale
Number of rights
granted during
the year
Number of rights
granted during
the year
Number of rights
vested during
the year
Number of rights
vested during
the year
2018
411,546
215,317
233,878
2017
831,025
461,681
–
2018
2017
–
–
–
–
–
–
* Peter Voigt retired as a director effective 30 June 2017.
Values of performance rights over ordinary shares granted, exercised and lapsed key management personnel as part of
compensation during the year ended 30 June 2018 are set out below:
$ Value of rights
granted during
the year
$ Value of rights
granted during
the year
$ Value of rights
vesting during
the year
$ Value of rights
vesting during
the year
2018
69,218
33,491
36,378
2017
53,914
29,952
–
2018
2017
–
–
–
–
–
–
Name
Sam Riggall
Peter Voigt*
Ben Stockdale
* Peter Voigt retired as a director effective 30 June 2017.
E. Additional information (audited)
In considering the Consolidated Entity’s performance and generation of shareholder value, the Nomination, Remuneration and
Governance Committee has due regard to profit or loss after tax in the current and previous financial years, along with the
market capitalisation and movement in the share price.
The earnings of the Consolidated Entity for the five years to 30 June 2018 are summarised below:
2014
$’000
2015
$’000
2016
$’000
2017
$’000
2018
$’000
Profit/(loss) after income tax
(4,910)
(8,225)
(6,423)
(12,184)
(16,012)
The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:
Share price at financial year
end ($)
Movement in share price ($)
Dividends paid ($)
2014
0.05
(0.05)
–
2015
0.23
0.18
–
2016
0.43
0.20
–
2017
0.67
0.24
–
2018
0.81
0.14
–
Company, and individual, key performance indicators are the basis of the performance targets assessed for determining the
award of short‑term incentives. Dividends and changes in share price are included in the total shareholder return calculation,
which is the key performance criteria assessed for the long‑term incentives.
40
Directors’ Report continued
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
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
Balance at end
of the year
Ordinary shares
Robert Friedland
Jiang Zhaobai
Sam Riggall
Li Binghan
Eric Finlayson
Roger Harley**
Ian Knight
Stefanie Loader*
Mike Spreadborough
Scott Magee***
Tim Kindred****
Peter Voigt*****
Ben Stockdale
94,518,888
92,518,888
6,917,944
–
–
1,830,812
1,025,557
–
–
–
–
22,725,794
75,000
219,612,883
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,082,008
–
–
–
96,600,896
92,518,888
19,594,111
400,000
26,112,055
–
–
621,283
50,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,830,812
1,646,840
50,000
–
–
–
22,725,794
2,594,047
969,047
1,700,000
24,941,449
1,369,047
243,185,285
*
Appointed to the position of Non‑Executive Director during the financial year.
**
Retired as director with effect from 1 November 2017. Final balance as per date of resignation.
***
Resigned on 20 February 2018. Final balance as per date of resignation.
**** Appointed as Project and Start‑up Director during the financial year.
***** Resigned as director on 30 June 2017. Final balance as per date of resignation.
Grant of anti-dilution right to Pengxin International Group Limited
On 27 March 2017, ASX Limited (‘ASX’) granted the Company a waiver from ASX listing rule 6.18. This waiver was given to
the extent necessary to permit Pengxin International Group Limited (‘Pengxin’), a company associated with Mr Jiang Zhaobai
and Mr Li Binghan, to maintain, its percentage interest in the issued share capital of the company.
This Anti‑Dilution Right is activated if a dilution event occurs in the future. The Anti‑Dilution Right lapses on the earlier of:
(i) the date on which Pengxin and its related bodies corporate cease to hold in aggregate at least 10% voting power
in the Company;
(ii) the date on which Pengxin and its related bodies corporate’s voting power in the Company exceeds 25%; or
(iii) the strategic relationship between the Company and Pengxin ceases or changes in such a way that it effectively ceases.
This Anti‑Dilution Right can only be transferred to an entity in the wholly owned group of Pengxin.
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Clean TeQ Holdings Limited Annual Report 2018
41
Directors’ Report continued
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:
Balance at the
start of the year
Granted as part
of remuneration
Exercised
Expired/
forfeited/other
Balance at end
of the year
Options over ordinary shares
Sam Riggall
Peter Voigt
Eric Finlayson
Roger Harley
Ian Knight
Ben Stockdale
24,000,000
3,000,000
1,125,000
1,125,000
1,125,000
3,000,000
(19,594,111)
(4,405,889)
–
(1,758,876)
(241,124)
1,000,000
–
(929,101)
(621,283)
(2,594,047)
–
1,125,000
(195,899)
(128,717)
(405,953)
–
375,000
–
Mike Spreadborough
–
750,000
–
–
750,000
Scott Magee
3,000,000
(1,500,000)
(1,500,000)
–
36,375,000
750,000
(26,997,418)
(6,877,582)
3,250,000
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
1,311,025
861,681
868,606
3,041,312
411,546
215,317
233,878
860,741
–
–
–
–
–
–
–
–
1,722,571
1,076,998
1,102,484
3,902,053
This concludes the remuneration report, which has been audited.
42
Directors’ Report continued
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Shares under option
Unissued ordinary shares of Clean TeQ Holdings Limited under option at the date of this report are as follows:
Grant Date
20 November 2015
16 May 2016
6 September 2016
15 December 2016
19 July 2017
7 September 2017
13 November 2017
5 February 2018
Expiry Date
Exercise Price Number under Option
30 November 2018
16 May 2019
16 May 2019
15 December 2019
17 February 2020
31 August 2020
6 November 2020
4 December 2020
$0.2712
$0.2820
$0.3100
$0.5850
$0.7700
$0.9500
$1.7300
$1.8000
1,000,000
3,000,000
750,000
325,000
750,000
350,000
75,000
5,500,000
11,750,000
No person is 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 2018 are as follows:
Grant Date
8 July 2015
20 November 2015
16 May 2016
6 September 2016
1 July 2017
6 February 2018
Vest Date
Exercise Price
1 July 2018
1 July 2018
1 July 2019
6 September 2019
1 July 2020
1 January 2021
Nil
Nil
Nil
Nil
Nil
Nil
Number
766,416
880,000
1,169,463
1,292,706
1,503,828
484,903
6,097,316
Shares issued on the exercise of options or performance rights
During the year, the Company issued the following amount of shares, as a result of option holders exercising their options:
Number of Shares
5,212,356
7,004,743
6,545,512
2,246,628
978,319
666,214
6,347,612
108,471
1,500,000
600,000
Amount paid
on each share
$0.1450
$0.1574
$0.2305
$0.2712
$0.2820
$0.3010
$0.3100
$0.5850
$0.6549
$0.9500
COLLIER CREATIVE 03 9088 2470
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Clean TeQ Holdings Limited Annual Report 2018
43
Directors’ Report continued
Indemnity and insurance of officers
• none of the services undermine the general principles
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.
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 32 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 32 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
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 44 and forms part of the directors’
report for the financial year ended 30 June 2018
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
Managing Director
24 August 2018
Melbourne
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
44
Auditor’s Independence Declaration
For the year ended 30 June 2018
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Clean TeQ Holdings Limited Annual Report 2018
45
Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 30 June 2018
Revenue
Share of profit/(loss) of joint venture accounted for using the equity method
Expenses
Raw materials and other direct costs
Employee benefits expenses
Depreciation and amortisation expenses
Legal and professional expenses
Occupancy expenses
Marketing expenses
Write off of bad debts
Other expenses
Finance costs
Loss before income tax benefit
Income tax benefit
Consolidated
2018
$’000
5,966
(1)
(2,480)
(9,895)
(781)
(2,281)
(1,159)
(1,363)
–
(3,864)
(154)
(16,012)
–
2017
$’000
1,612
1
(76)
(8,841)
(813)
(1,050)
(420)
(756)
(2)
(1,669)
(170)
(12,184)
–
Note
5
6
7
7
7
7
8
Loss after income tax benefit for the year
(16,012)
(12,184)
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
–
–
–
–
(16,012)
(12,184)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
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 loss attributable to the owners
of Clean TeQ Holdings Limited
Basic earnings per share
Diluted earnings per share
Consolidated
2018
Cents
(2.57)
(2.57)
(2.57)
(2.57)
2017
Cents
(2.49)
(2.49)
(2.49)
(2.49)
Note
41
41
41
41
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
46
Statement of Financial Position
As at 30 June 2018
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Research and development incentive receivable
Total current assets
Non-current assets
Other financial assets
Investment in equity accounted investee
Property, plant and equipment
Intangibles
Exploration and evaluation assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Employee benefits
Provisions
Deferred revenue
Notes payable
Total current liabilities
Non-current liabilities
Deferred revenue
Employee benefits
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Consolidated
Note
2018
$’000
2017
$’000
9
10
11
12
13
14
15
16
17
18
19
24
20
21
20
23
24
25
26
27
152,637
2,658
96
67
155,458
228
803
18,580
9,762
76,894
106,267
88,863
993
96
2,088
92,040
80
804
2,662
10,406
14,379
28,331
261,725
120,371
6,998
613
1,225
47
–
8,883
448
40
198
686
3,172
300
–
47
2,850
6,369
495
68
55
618
9,569
6,987
252,156
113,384
289,293
11,492
(48,629)
137,517
8,484
(32,617)
252,156
113,384
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Clean TeQ Holdings Limited Annual Report 2018
47
Statement of Changes in Equity
For the year ended 30 June 2018
Contributed
Equity
Accumulated
Losses
Reserves
Total Equity
Consolidated
Balance at 1 July 2016
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 25)
Share‑based payments (note 42)
Lapse of options
Total contribution and distribution:
Change in ownership interests:
Total transactions with owners of the Company
Balance at 30 June 2017
Balance at 1 July 2017
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 25)
Share‑based payments (note 42)
Lapse of options
$’000
39,856
–
–
97,661
–
–
97,661
97,661
137,517
137,517
–
–
151,776
–
–
Total contribution and distribution:
151,776
Change in ownership interests:
Total transactions with owners of the Company
Balance at 30 June 2018
151,776
289,293
$’000
(20,433)
(12,184)
(12,184)
–
–
–
–
–
(32,617)
(32,617)
(16,012)
(16,012)
–
–
–
–
–
(48,629)
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
$’000
3,302
–
–
–
5,182
–
5,182
5,182
8,484
$’000
22,725
(12,184)
(12,184)
97,661
5,182
–
102,843
102,843
113,384
8,484
113,384
–
–
–
3,008
–
(16,012)
(16,012)
151,776
3,008
–
3,008
154,784
3,008
11,492
154,784
252,156
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
48
Statement of Cash Flows
For the year ended 30 June 2018
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
Net cash used in operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for acquisition of other intangibles
Payments for exploration and evaluation assets
Acquisition of non‑controlling interest
Proceeds from disposal of plant & equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares, net of issuance costs
Cash on deposit for security over bank guarantees
Repayment of borrowings
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Note
40
15
16
17
5
Consolidated
2018
$’000
4,423
(17,863)
(13,440)
1,652
–
4,790
(6,998)
(14,682)
–
2017
$’000
616
(5,112)
(4,496)
392
(4)
2,604
(1,504)
(336)
(70)
(63,174)
(13,619)
–
–
(804)
12
(77,856)
(14,817)
151,776
97,661
(148)
(3,000)
148,628
63,774
88,863
297
–
97,958
81,637
7,226
Cash and cash equivalents at the end of the financial year
9
152,637
88,863
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Clean TeQ Holdings Limited Annual Report 2018
49
Notes to the Financial Statements
For the year ended 30 June 2018
Note 1. General information
The financial statements cover the Clean TeQ Holdings Limited
group as a Consolidated Entity consisting of Clean TeQ
Holdings Limited (‘the Company’) and its subsidiaries
(‘Consolidated Entity’). 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 24 August 2018.
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) 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 $16,012,000
(30 June 2017: loss of $12,184,000). We note there were
no significant revenues from continuing operations during the
financial year. Operational revenues were more than offset
by exploration and evaluation, business development and
corporate overhead costs. Working capital, being current
assets less current liabilities, amounts to a $146,576,000
surplus (30 June 2017: $85,671,000 surplus), with cash
reserves increasing from $88,863,000 to $152,637,000
during the financial year. Net cash outflows from operating
activities were $6,998,000 for the financial year
(30 June 2017: $1,504,000 outflow).
During the financial year, the following events have taken
place to support the going concern basis of preparation for
the Consolidated Entity:
• The Consolidated Entity increased its available cash on
hand as at 30 June 2018 to $152,637,000;
• During the financial year, the Consolidated Entity raised
$151,776,000 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 $4,790,000 cash
rebate from the Australian Tax Office for eligible research
and development expenditure relating to the 2017 financial
year. The Consolidated Entity anticipates that a proportion
of the 2018 financial years’ development 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 2019
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 Clean TeQ Sunrise 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 medium
term working capital requirements and has a history of securing
such funding as required in the past to support their confidence.
On the basis of cash and cash equivalents available as at
30 June 2018, cashflow forecasts to 31 December 2020,
and that sufficient funding is expected to be raised to meet
the Consolidated Entity’s medium to long term expenditure
forecasts, the directors consider that the Consolidated Entity
remains a going concern and these financial statements have
been prepared on this basis.
50
Notes to the Financial Statements continued
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
(b) 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.
(c) 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 36.
(d) Principles of consolidation
The consolidated financial statements incorporate the assets
and liabilities of all subsidiaries of Clean TeQ Holdings Limited
as at 30 June 2018 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
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.
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Clean TeQ Holdings Limited Annual Report 2018
51
Notes to the Financial Statements continued
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.
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.
(e) 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.
(f) 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 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.
52
Notes to the Financial Statements continued
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
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.
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.
(g) 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(o)). 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.
(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;
• temporary differences related to investments in subsidiaries,
associates and 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
• 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
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Clean TeQ Holdings Limited Annual Report 2018
53
Notes to the Financial Statements continued
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 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 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
54
Notes to the Financial Statements continued
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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:
Mining equipment
Office furniture and
equipment
2.5 to 20 years (straight line
and diminishing value)
2.5 to 20 years (straight line
and diminishing value)
Leasehold improvements
3‑7 years (diminishing value)
Motor vehicles
5‑6 years (diminishing value)
Land
Indefinite
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.
Capitalised development costs
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).
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Clean TeQ Holdings Limited Annual Report 2018
55
Notes to the Financial Statements continued
Patents and trademarks
Significant costs associated with patents and trademarks are
deferred and amortised on a straight‑line basis over the period
of their expected benefit, being between 4 and 20 years.
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases
the future economic benefits embodied in the specific asset
to which it relates. All other expenditure, including expenditure
on internally generated goodwill and brands, is recognised
in profit or loss as incurred.
(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 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.
56
Notes to the Financial Statements continued
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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.
(u) Employee benefits
Short-term employee benefits
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.
(t) Finance income and costs
The Consolidated Entity’s finance income and finance costs
include, as applicable:
• 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.
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.
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 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.
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57
Notes to the Financial Statements continued
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.
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.
58
Notes to the Financial Statements continued
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(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 Legislative
Instrument to the nearest thousand dollars, or in certain cases,
the nearest dollar.
(aa) 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 2018,
however, the Group has not applied the following new or
amended standards in preparing these consolidated
financial statements.
AASB 15 Revenue from Contracts with Customers
AASB 15 establishes a comprehensive framework for
determining whether, how much and when revenue is
recognised. It replaces existing revenue recognition guidance,
including AASB 118 Revenue, AASB 111 Construction
Contracts and AASB Interpretation 13 Customer Loyalty
Programmes.
AASB 15 is effective for annual reporting periods beginning
on or after 1 January 2018, with early adoption permitted.
The adoption of this standard is not expected to be material.
AASB 9 Financial Instruments
AASB 9, published in July 2014, replaces the existing
guidance in AASB 139 Financial Instruments: Recognition
and Measurement. AASB 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 AASB 139.
AASB 9 is effective for annual reporting periods beginning
on or after 1 January 2018, with early adoption permitted.
The adoption of this standard is not expected to be material.
AASB 16 Leases
AASB 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. AASB 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; however, the impact is not expected to be material
to net equity.
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Clean TeQ Holdings Limited Annual Report 2018
59
Notes to the Financial Statements continued
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.
Exploration & Evaluation Assets
As set out in Note 2(g) 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.
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.
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.
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 2018, the directors determined
that no impairment of the intangible assets be recognised
(2017: Nil). Details of the review, and the assumptions and
estimates used, are contained in note 16.
Estimation of reserves
Reserves are estimates of the amount of product that can be
economically and legally extracted from the properties owned
by the Consolidated Group. In order to calculate reserves,
estimates and assumptions are required abut a range of
geological, technical and economic factors, including
quantities, grades, production techniques, recovery rates,
production costs, transport costs, commodity demand,
commodity prices and exchange rates.
Estimating the quantity, and/or grade of reserves requires the
size, shape and depth of ore bodies or fields to be determined
by analysing geological data such as drilling samples. This
process may require complex and difficult geological
judgements and calculations to interpret the data.
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.
60
Notes to the Financial Statements continued
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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.
Major customers
Major revenue for the year ended 30 June 2018 is derived
chiefly from interest income and contracts with customers.
Revenues from the contract with Fosterville Gold Mine
represented approximately $2,200,000 (2017: nil) of
the Consolidated Entity’s total revenue.
Note 4. Operating segments
Identification of reportable operating segments
The Consolidated Entity is organised into two operating
segments: 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 Managing Director 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:
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 Sunrise Project in
New South Wales.
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 Managing Director.
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.
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Clean TeQ Holdings Limited Annual Report 2018
61
Notes to the Financial Statements continued
Operating segment information
Consolidated – 2018
Revenue
Sales to external customers
Rental income
Interest income
Other revenue
Total revenue
Share of profit/(loss) from JV
Reportable segment (loss)/profit before interest,
depreciation and tax
Depreciation and amortisation
Impairment of assets
Finance costs
Profit/(loss) before income tax benefit
Income tax benefit
Loss after income tax benefit
Consolidated – 2018
Assets
Segment assets
Total assets
Total assets includes:
Metals
$’000
–
46
1
–
47
–
(423)
(339)
–
–
(762)
–
(762)
Intersegment
eliminations/
unallocated**
$’000
–
–
1,756
1
1,757
–
Total
$’000
3,639
46
1,757
524
5,966
(1)
(13,744)
(15,077)
(62)
–
(154)
(781)
–
(154)
Water
$’000
3,639
–
–
523
4,162
(1)
(910)
(380)
–
–
(1,290)
(13,960)
(16,012)
–
–
–
(1,290)
(13,960)
(16,012)
Metals
$’000
Water
$’000
Intersegment
eliminations/
unallocated*
$’000
101,500
6,005
154,220
Total
$’000
261,725
261,725
Additions of non‑current assets (including
those acquired in a business combination)
78,220
–
360
78,580
Liabilities
Segment liabilities
Total liabilities
6,388
92
3,089
9,569
9,569
* 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.
62
Notes to the Financial Statements continued
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Consolidated – 2017
Revenue
Sales to external customers
Rental income
Interest income
Other revenue
Total revenue
Share of profit from JV
Metals
$’000
–
72
–
500
572
–
Intersegment
eliminations/
unallocated**
$’000
–
–
453
14
467
–
Water
$’000
392
–
–
181
573
1
Total
$’000
392
72
453
695
1,612
1
Reportable segment (loss)/profit before interest,
depreciation and tax
(1,541)
(1,754)
(7,906)
(11,201)
Depreciation and amortisation
(388)
(378)
Impairment of assets
Finance costs
Profit/(loss) before income tax benefit
Income tax benefit
Loss after income tax benefit
–
–
(1,929)
–
–
–
(2,132)
–
(47)
–
(170)
(813)
–
(170)
(8,123)
(12,184)
–
–
(12,184)
Consolidated – 2017
Assets
Segment assets
Total assets
Total assets includes:
Metals
$’000
Water
$’000
Intersegment
eliminations/
unallocated*
$’000
24,668
5,754
89,949
Total
$’000
120,371
120,371
Additions of non‑current assets (including those
acquired in a business combination)
13,689
804
336
14,829
Liabilities
Segment liabilities
Total liabilities
2,850
542
3,595
6,987
6,987
* 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.
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Clean TeQ Holdings Limited Annual Report 2018
63
Notes to the Financial Statements continued
Note 5. Revenue
Sales revenue
Contract revenue
Government grants
Rental income
Other revenue
Interest income
Proceeds from sale of asset
Other revenue
Revenue
Note 6. Share of Profits of Joint Ventures Accounted for using the Equity Method
Share of profit/(loss) – Joint Venture
Consolidated
2018
$’000
2017
$’000
3,639
419
46
4,104
1,757
–
105
1,862
5,966
392
682
72
1,146
453
12
1
466
1,612
Consolidated
2018
$’000
(1)
2017
$’000
1
64
Notes to the Financial Statements continued
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Note 7. Expenses
Loss before income tax from continuing operations
includes the following specific expenses:
Cost of sales
Raw materials and other direct costs
Depreciation
Motor vehicles
Leasehold improvements
Office equipment and furniture
Total depreciation
Amortisation
Capitalised development costs
Patents and trademarks
Total amortisation
Total depreciation and amortisation
Employee benefit expenses
Wages and salaries
Employee entitlements expense including movements
in provisions for employee entitlements
Superannuation
Equity settled share‑based payments
Other costs
Total employee benefit expenses
Rental expense relating to operating leases
Lease payments
Other expenses
Write off of bad debts
Consolidated
2018
$’000
2017
$’000
2,480
12
22
103
137
610
34
644
781
5,169
156
224
3,008
1,338
9,895
76
2
63
(20)
45
732
35
767
813
2,565
40
256
5,182
798
8,841
1,159
420
–
2
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Clean TeQ Holdings Limited Annual Report 2018
65
Notes to the Financial Statements continued
Note 8. 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)
Consolidated
2018
$’000
2017
$’000
–
–
–
–
–
–
–
–
Numerical reconciliation of income tax benefit and tax at the statutory rate
Loss before income tax benefit from continuing operations
(16,012)
(12,184)
Profit before income tax (expense)/benefit from discontinued operations
Tax at the statutory tax rate of 27.5% (2017: 27.5%)
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
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
Tax losses not recognised:
–
(16,012)
(4,403)
21
827
41
3,611
(103)
279
(441)
168
–
–
(12,184)
(3,351)
4
1,425
46
2,764
(138)
1,637
(2,589)
202
–
Unused tax losses for which no deferred tax asset has been recognised, including
tax losses arising from a business combination
Potential tax benefit @ 27.5% (2017: 27.5%)
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
40,576
25,508
11,158
589
7,015
589
11,747
7,604
Temporary differences not brought to account
903
903
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.
66
Notes to the Financial Statements continued
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Note 9. Current assets – cash and cash equivalents
Cash at bank
Consolidated
2018
$’000
2017
$’000
152,637
88,863
The effective interest rate on short‑term bank deposits at 30 June 2018 was 2.67% (2017: 2.03%). These deposits have a
maximum maturity of three months from 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
Past due but not impaired
Consolidated
2018
$’000
473
2,185
2,658
2017
$’000
91
902
993
Customers with balances past due but without provision for impairment of receivables amount to $nil as at 30 June 2018
($nil as at 30 June 2017).
The Consolidated Entity did not consider a credit risk on the aggregate balances after reviewing credit terms of customers
based on recent collection practices.
The ageing of the past due but not impaired receivables are as follows:
31–60 days
60–90 days
90+ days
Consolidated
2018
$’000
–
–
365
365
2017
$’000
–
–
–
–
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 2018 or 30 June 2017 and thus
should not be provided for.
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Clean TeQ Holdings Limited Annual Report 2018
67
Notes to the Financial Statements continued
Note 11. Current assets – inventories
Raw materials – at net realisable value
Finished goods – at cost
Consolidated
2018
$’000
10
86
96
2017
$’000
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 2018 the carrying value of grape skin extract is $10,000 (2017: $10,000). During the year ending 30 June 2018,
there was no write down of finished goods (2017: $nil).
Note 12. Current assets – Research and development incentive receivable
Research and development incentive receivable
Consolidated
2018
$’000
67
2017
$’000
2,088
Research and development incentive 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. Non‑Current Assets – Other financial assets
Current
Cash on deposit used as security for bank guarantees
Non‑Current
Cash on deposit used as security for bank guarantees and facilities
Note 14. Non‑current assets – Investment in equity accounted investee
Investment in joint venture
Consolidated
2018
$’000
2017
$’000
–
228
–
80
Consolidated
2018
$’000
803
2017
$’000
804
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
68
Notes to the Financial Statements continued
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 depreciation
Mining Equipment – at cost
Land – at cost
Consolidated
2018
$’000
2017
$’000
339
(162)
177
146
(52)
94
737
(737)
–
342
(94)
248
13,374
13,374
4,687
4,687
18,580
194
(100)
94
101
(40)
61
737
(737)
–
213
(63)
150
–
–
2,357
2,357
2,662
Approximately $2,229,000 of the land was acquired from Ivanhoe Mines Ltd as part of the Consolidated Group’s acquisition
of the Sunrise 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.
The acquisition of the Sunrise Project has been recognised as an asset acquisition in accordance with Australian
Accounting Standards.
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Clean TeQ Holdings Limited Annual Report 2018
69
Notes to the Financial Statements continued
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 2016
Additions
Disposals
Transfers In/Out
Depreciation expense
Balance as at 30 June 2017
Mining
Equipment
$’000
–
–
–
–
–
–
Land
$’000
2,229
128
–
–
–
2,357
Additions
Write off of assets
Depreciation expense
13,374
2,330
–
–
–
–
Balance as at 30 June 2018
13,374
4,687
Office
Furniture &
Equipment
Leasehold
Improve-
ments
Motor
Vehicles
$’000
$’000
$’000
38
94
(1)
(57)
20
94
188
(2)
(103)
177
41
115
–
57
(63)
150
138
(18)
(22)
248
21
50
(8)
(2)
61
45
–
(12)
94
Total
$’000
2,329
387
(9)
–
(45)
2,662
16,075
(20)
(137)
18,580
Additions in leasehold improvements include a non‑cash provision for make good of $139,000 that was provided for in this
financial year. This provision relates to the lease over the property that the Company holds at Level 6, 350 Collins Street.
Note 16. Non‑current assets – intangibles
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
2018
$’000
18,424
(10,495)
7,929
713
(371)
342
4,542
(3,051)
1,491
9,762
2017
$’000
18,424
(9,885)
8,539
713
(337)
376
4,542
(3,051)
1,491
10,406
70
Notes to the Financial Statements continued
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
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
Capitalised
Development
Costs
$’000
License
Rights
$’000
Patents and
Trademarks
$’000
Balance as at 1 July 2016
9,271
1,421
Additions
Impairment charge
Amortisation expense
Balance as at 30 June 2017
Additions
Impairment charge
Amortisation expense
Balance as at 30 June 2018
Allocation of Intangible Assets
to Cash Generating Units (CGUs)
As at 30 June 2017:
Water
Metals
As at 30 June 2018:
Water
Metals
–
–
(732)
8,539
–
–
(610)
7,929
Capitalised
Development
Costs
$’000
4,472
4,067
8,539
4,108
3,821
7,929
70
–
–
1,491
–
–
–
1,491
411
–
–
(35)
376
–
–
(34)
342
License
Rights
$’000
Patents and
Trademarks
$’000
141
1,350
1,491
20
1,471
1,491
188
188
376
171
171
342
Total
$’000
11,103
70
–
(767)
10,406
–
–
(644)
9,762
Total
$’000
4,801
5,605
10,406
4,299
5,463
9,762
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Clean TeQ Holdings Limited Annual Report 2018
71
Notes to the Financial Statements continued
The carrying amount of each CGU inclusive of assets other
than intangible assets is $1,705,000 (2017: $953,000) for
Water and $96,036,000 (2017: $19,063,000) for Metals.
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 where the Consolidated Entity’s
technologies are 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 2018,
the directors and management of the Consolidated Entity
identified that no impairment charge be recognised
(30 June 2017: impairment of $nil).
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;
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 forecast prices of US$8.00/lb for nickel (including
US$1.00/lb sulphate premium), US$30.00/lb for cobalt,
US$1,500/Kg for Scandium oxide and AUD/USD 0.75 and
a post‑tax discount rate of 15% (2017: 15%) for all future cash
flows for a 25 year period for the Metals CGU. The Water
CGU forecast cashflows include income derived from a mix
of long term (20 years) and short to medium term (5 years),
tolling arrangement and plant revenue projects using a
discount rate of 15% post‑tax (2017: 15%). 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.
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. Management
considered the following reasonable possible changes in key
assumptions as at 30 June 2018:
• 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;
• the extent of any incremental costs expected to be incurred
• An increase of 5% in operating expenditure;
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
• A reduction of 5% in commodity prices;
• A reduction of 5% in production yield;
• An increase of 5% in foreign currency exchange rates; and
• An increase of 10% in capital expenditure.
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 2018, 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 2018
(30 June 2017: nil).
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
72
Notes to the Financial Statements continued
Note 17. Non‑current assets – Exploration & evaluation assets
At the beginning of the financial year
Reversal of accrual
Additions
R&D incentive on exploration asset off‑set
Accrual of expenditure at year end
Disposals/Write offs
At end of the financial year
Mineral tenement summary
Licence Number
EL4573
EL8561
ML1770
ML1769
Note 18. Current liabilities – trade and other payables
Trade payables
Other payables
Consolidated
2018
$’000
14,379
–
63,174
(2,395)
1,736
–
2017
$’000
3,201
(351)
13,619
(2,088)
–
(2)
76,894
14,379
Project Name
Location
Equity Interest
Equity Interest
Sunrise
Sunrise
Sunrise
Sunrise
NSW
NSW
NSW
NSW
2018
100%
100%
100%
100%
Consolidated
2018
$’000
4,508
2,490
6,998
2017
100%
100%
–
–
2017
$’000
2,520
652
3,172
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Clean TeQ Holdings Limited Annual Report 2018
73
Notes to the Financial Statements continued
Note 19. Current liabilities – employee benefits
Annual leave
Long service leave
Note 20. Deferred revenue
Current
Government grant*
Non‑Current
Government grant*
Consolidated
2018
$’000
448
165
613
2017
$’000
168
132
300
Consolidated
2018
$’000
2017
$’000
47
448
495
47
495
542
* 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.
Note 21. Current assets – Notes payable
Current
Notes Payable
Consolidated
2018
$’000
–
–
2017
$’000
2,850
2,850
As part of the acquisition of the Sunrise 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 was repaid to Ivanhoe Mines during the current financial year.
74
Notes to the Financial Statements continued
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Note 22. Non‑current liabilities/assets – deferred tax
Consolidated
Net balance
1 July 2017
Recognised in
profit or loss
Recognised
directly in equity
Deferred tax
assets
Deferred tax
liabilities
Balance as at 30 June 2018
$’000
$’000
$’000
$’000
$’000
Deferred tax asset (liability) comprises
temporary differences attributable to:
Amounts recognised in:
• Intangible assets
• Unearned interest
• Accrued expenses
• Prepaid 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 2018
Opening balance
Charges to profit or loss (note 8)
Closing balance
(2,206)
18
123
–
101
252
17
11
1,684
–
–
–
–
–
–
Note 23. Non‑current liabilities – employee benefits
Long service leave
Note 24. Provisions
Current
Provision for settlement of creditor dispute*
Non‑Current
Provision for make good at end of lease
168
30
(110)
78
–
(2)
(54)
(28)
–
–
–
–
(82)
–
–
–
–
48
13
179
170
15
–
1,656
2,081
(2,081)
–
(2,038)
–
–
–
–
(43)
–
(2,081)
2,081
–
Consolidated
2018
$’000
40
Consolidated
2018
$’000
1,225
198
1,423
2017
$’000
68
2017
$’000
–
55
55
* The provision of $1,225,000 raised in the current financial year relates to a dispute that a member of the Consolidated Entity is having with a current creditor
in relation to the value of services provided by the creditor.
COLLIER CREATIVE 03 9088 2470
CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Clean TeQ Holdings Limited Annual Report 2018
75
Notes to the Financial Statements continued
Note 25. Equity – issued capital
Consolidated
2018
Shares
2017
Shares
2018
$’000
2017
$’000
Ordinary shares – fully paid
742,757,760
576,266,310
289,293
137,517
Movements in ordinary share capital
Details
Balance
Date
Shares
Issue Price
$’000
1 July 2017
576,266,310
137,517
Exercise of Options by Option Holder
Exercise of Options by Option Holder
26 July 2017
26 July 2017
36,545
$0.3010
29,900
$0.3010
Exercise of Options by Option Holder
11 August 2017
1,637,001
$0.1450
Exercise of Options by Option Holder
29 August 2017
200,751
$0.2820
Shares Issued as a result of Employee Share Plan
7 September 2017
10,219
$0.0979
Exercise of Options by Option Holder
19 October 2017
500,000
$0.2712
Exercise of Options by Option Holder
24 October 2017
231,884
$0.3010
Exercise of Options by Option Holder
6 November 2017
625,345
$0.2712
Exercise of Options by Option Holder
6 November 2017
303,756
$0.3100
Exercise of Options by Option Holder
20 November 2017
108,471
$0.5850
11
8
–
–
–
136
70
–
–
–
Exercise of Options by Option Holder
22 December 2017
500,000
$0.2712
136
Exercise of Options by Option Holder
19 January 2018
1,816,479
$0.1495
Exercise of Options by Option Holder
19 January 2018
621,283
$0.2712
Exercise of Options by Option Holder
25 January 2018
600,000
$0.9500
Exercise of Options by Option Holder
9 February 2018
7,004,743
$0.1619
Exercise of Options by Option Holder
6 March 2018
1,500,000
$0.6549
–
–
570
–
982
Shares issued as approved by the general meeting
14 March 2018
86,858,903
$1.1500
99,888
Exercise of Options by Option Holder
21 March 2018
3,272,756
$0.2305
Exercise of Options by Option Holder
21 March 2018
3,272,756
$0.2305
Exercise of Options by Option Holder
21 March 2018
6,043,856
$0.3100
Exercise of Options by Option Holder
21 March 2018
777,568
$0.2820
Exercise of Options by Option Holder
30 March 2018
1,758,876
$0.1450
–
–
–
–
–
Shares issued as approved by the general meeting
20 April 2018
43,575,880
$1.1500
50,112
Shares issued as approved by the general meeting
24 April 2018
4,836,593
$1.1500
5,563
Exercise of Options by Option Holder
22 June 2018
257,720
$0.3010
Exercise of Options by Option Holder
28 June 2018
110,165
$0.3010
78
33
(5,811)
–
Capital raising costs
Balance
30 June 2018
742,757,760
289,293
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76
Notes to the Financial Statements continued
Ordinary shares
Capital risk management
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.
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.
Note 26. Equity – reserves
Share based payments reserve
Movements in reserves
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 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.
Consolidated
2018
$’000
11,492
2017
$’000
8,484
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance as at 1 July 2016
Lapsed options
Share based payments
Balance as at 30 June 2017
Lapsed options
Share based payments
Balance as at 30 June 2018
Foreign Currency
Reserve
Share Based
Payments
$’000
–
–
–
–
–
–
–
$’000
3,302
–
5,182
8,484
–
3,008
11,492
Total
$’000
3,302
–
5,182
8,484
–
3,008
11,492
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Clean TeQ Holdings Limited Annual Report 2018
77
Notes to the Financial Statements continued
Note 27. Equity – accumulated losses
Accumulated losses at the beginning of the financial year
Loss after income tax benefit for the year
Consolidated
2018
$’000
(32,617)
(16,012)
(48,629)
2017
$’000
(20,433)
(12,184)
(32,617)
Note 28. Equity – dividends
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Franking credits
Franking credits available for future years based on a tax rate of 27.5%
Consolidated
2018
$’000
–
2017
$’000
–
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 (2017: $nil).
Note 29. 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.
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.
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
78
Notes to the Financial Statements continued
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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 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
and credit card debts, and short‑term deposit facilities with
variable interest rates which mature within 90 days.
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
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 (2017: $nil).
Entity must be approved by the Board prior to the contract
being signed.
Many of the Consolidated Entity’s customers are typically large
multinationals. 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.
The Consolidated Entity’s trade and other receivables
relate mainly to the Group’s wholesale customers who
are predominantly made up of large corporations. 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.
Credit risk
Cash and cash equivalents
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 and other receivables of $2,666,000
(2017: $993,000) 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 concentrations of
credit risk in relation to project revenue, due to the 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
The Consolidated Entity held cash and cash equivalents of
$152,637,000 as at 30 June 2018 (2017: $88,863,000).
The cash and cash equivalents are held with top tier banks
in accordance with a board approved credit risk
management policy.
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.
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Clean TeQ Holdings Limited Annual Report 2018
79
Notes to the Financial Statements 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
Carrying
amount
1 year
or less
Between 1
and 2 years
Between 2
and 5 years
Over
5 years
$’000
$’000
$’000
$’000
$’000
Consolidated – 2018
Non–derivatives
Non‑interest bearing
Trade payables
Other payables
Notes payable
Total non‑derivatives
6,998
6,998
4,508
2,490
–
4,508
2,490
–
–
–
–
–
–
–
–
–
–
–
–
–
Consolidated – 2017
Non–derivatives
Non‑interest bearing
Trade payables
Other payables
Notes payable
Total non‑derivatives
Contractual cash flows
Carrying
amount
1 year
or less
Between 1
and 2 years
Between 2
and 5 years
Over
5 years
$’000
$’000
$’000
$’000
$’000
2,520
652
2,850
6,022
2,520
652
3,000
6,172
–
–
–
–
–
–
–
–
–
–
–
–
Total
$’000
4,508
2,490
–
6,998
Total
$’000
2,520
652
3,000
6,172
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.
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 30.
80
Notes to the Financial Statements continued
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Note 30. 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:
Carrying
amount
$’000
152,637
2,666
228
155,531
Consolidated – 2018
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
(6,998)
Other borrowings
Notes payable
Consolidated – 2017
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
–
–
(6,998)
Carrying
amount
$’000
88,863
993
80
89,936
(3,172)
–
(2,850)
(6,022)
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
Fair value
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Fair value
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2,892)
(2,892)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2,892)
(2,892)
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Clean TeQ Holdings Limited Annual Report 2018
81
Notes to the Financial Statements continued
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
Significant unobservable inputs
Promissory notes
Discounted cash flows
Risk adjusted discount rate of 6.69%
(2017: 6.69%)
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 31. Key management personnel disclosures
Directors
The following persons were directors of Clean TeQ Holdings
Limited during the financial year:
• Robert Friedland (Co‑Chairman and Non‑Executive Director)
• Jiang Zhaobai (Co‑Chairman and Non‑Executive Director)
• Sam Riggall (Managing Director and CEO)
• Li Binghan (Non‑Executive Director)
• Eric Finlayson (Independent Non‑Executive Director)
• Roger Harley (Independent Non‑Executive Director)
• Ian Knight (Independent Non‑Executive Director)
• Stefanie Loader (Independent Non‑Executive Director)
• Mike Spreadborough (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:
• Tim Kindred (Project and Start up Director)
• Scott Magee (Sunrise Project Director)
• Ben Stockdale (Chief Financial Officer)
82
Notes to the Financial Statements continued
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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
Consolidated
2018
$’000
2017
$’000
1,908,255
1,118,674
102,468
22,380
79,908
93,739
29,615
–
432,837
4,212,906
2,545,848
5,454,934
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.
Note 32. 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
2018
$’000
2017
$’000
86,951
64,201
–
–
86,951
64,201
7,687
104,471
112,158
–
76,500
76,500
199,109
140,701
Note 33. Contingent liabilities
The Consolidated Entity has a contingent liability, incurred in the financial year ended 30 June 2015, to pay a 2.5% gross
revenue royalty on output mined from the Sunrise Project. This royalty is payable to Ivanhoe Mines, and is payable by
Clean TeQ Sunrise Pty Ltd, a company within the Consolidated Entity. This royalty was part of the consideration paid
for the acquisition of the Sunrise Project from Ivanhoe Mines, on 31 March 2015.
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Clean TeQ Holdings Limited Annual Report 2018
83
Notes to the Financial Statements continued
Note 34. 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
Note 35. 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
Consolidated
2018
$’000
2017
$’000
–
–
–
–
–
–
486
780
–
1,266
–
–
–
–
–
–
275
1,032
25
1,332
Disclosures relating to key management personnel are set out in note 31.
Transactions with related parties
No transactions occurred with related parties during the financial year ending 30 June 2018, or the previous financial year.
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.
84
Notes to the Financial Statements continued
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Note 36. 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)
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
Parent
2018
$’000
(6,844)
(6,844)
Parent
2018
$’000
4,790
2017
$’000
(5,949)
(5,949)
2017
$’000
–
290,592
138,365
–
11,934
289,293
11,492
(22,127)
2,850
7,646
137,517
8,484
(15,282)
278,658
130,719
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 2018 and 30 June 2017,
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 2018 and 30 June 2017.
Capital commitments – Property, plant and equipment
The Parent Entity had no capital commitments for property,
plant and equipment at as 30 June 2018 and 30 June 2017,
or since the end of the financial year.
Significant accounting policies
The accounting policies of the Parent Entity are consistent
with those of the Consolidated Entity, as disclosed in note 2,
except for the following:
• Investments in subsidiaries are accounted for at cost,
less any impairment, in the Parent Entity.
• 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.
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Clean TeQ Holdings Limited Annual Report 2018
85
Notes to the Financial Statements continued
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
Associated Water Pty Ltd
LiXiR Functional Foods Pty Ltd
Scandium Holding Company Pty Ltd
Clean TeQ Sunrise Pty Ltd***
Uranium Development Pty Ltd
CLQW HK Limited
Sunrise Scandium Pty Ltd
Shanyi Hoyo Clean TeQ Environmental Co Ltd**
Clean Teq Environmental Protection Technology(Beijing) co., Ltd*
*
Chinese entity set up during the year ended 30 June 2017
**
Accounted for as investment in equity accounted trustee
Principal place
of business/Country
of incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Hong Kong
Australia
China
China
Ownership interest
2018
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
2017
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
***
Entity’s name was changed from Scandium21 Pty Ltd to Clean TeQ Sunrise Pty Ltd on 11 July 2018
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 pursuant to ASIC Corporations
(Wholly owned Companies) Instrument 2016/785.
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.
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86
Notes to the Financial Statements continued
Statement of profit or loss and other comprehensive income
Revenue
Raw materials and other direct costs
Employee benefits expenses
Depreciation and amortisation expenses
Legal and professional expenses
Occupancy expenses
Marketing expenses
Other expenses
Finance costs
Loss before income tax benefit
Income tax benefit
Loss after income tax benefit
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Equity – retained profits
Retained profits/ (accumulated losses) at the beginning of the financial year
Loss after income tax benefit
Accumulated losses at the end of the financial year
2018
$’000
2,642
(2,306)
(9,098)
(707)
(2,052)
(1,022)
(1,087)
(2,751)
(154)
2017
$’000
1,040
(76)
(8,608)
(802)
(489)
(359)
(746)
(157)
(170)
(16,535)
(10,367)
–
–
(16,535)
(10,367)
–
–
(16,535)
(10,367)
2018
$’000
(31,132)
(16,535)
(47,667)
2017
$’000
(20,765)
(10,367)
(31,132)
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Clean TeQ Holdings Limited Annual Report 2018
87
Notes to the Financial Statements continued
Statement of financial position
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Non-current assets
Receivables
Other financial assets
Plant and equipment
Intangible assets
Investment in subsidiary companies
Total assets
Current liabilities
Trade and other payables
Notes payable
Employee benefits
Deferred revenue
Non-current liabilities
Deferred revenue
Employee benefits
Provisions
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
2018
$’000
2017
$’000
152,262
1,426
96
67
153,851
88,861
936
96
2,088
91,981
92,433
20,607
128
298
8,442
1,054
102,355
80
135
9,036
1,055
30,913
256,206
122,894
1,855
–
500
47
2,402
448
40
198
686
4,210
2,850
300
47
7,407
495
68
55
618
3,088
8,025
253,118
114,869
289,293
11,492
(47,667)
137,517
8,484
(31,132)
253,118
114,869
88
Notes to the Financial Statements continued
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Note 39. Events after the reporting period
No matters or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly affect the
Consolidated Entity’s operations, the results of those operations, or the Consolidated Entity’s state of affairs in future financial years.
Note 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
Write off of bad debts
Non‑cash finance costs
Change in value of investment
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease/(increase) in other financial assets
Decrease/(increase) in income tax refund due net of capitalised
research and development
Decrease/(increase) in R&D contra asset
(Increase)/decrease in accrued revenue
Increase/(decrease) in trade and other payables
Increase/(decrease) in employee benefits
Net cash used in operating activities
Note
7
7
Consolidated
2018
$’000
2017
$’000
(16,012)
(12,184)
781
3,008
–
150
(1)
(1,235)
(148)
–
2,395
(47)
3,827
284
(6,998)
813
5,182
2
166
–
(692)
–
2,746
–
(48)
2,457
54
(1,504)
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Clean TeQ Holdings Limited Annual Report 2018
89
Notes to the Financial Statements continued
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
(16,012)
(12,184)
Consolidated
2018
$’000
2017
$’000
Weighted average number of ordinary shares
used in calculating basic earnings per share
Weighted average number of ordinary shares
used in calculating diluted earnings per share
Basic earnings per share
Diluted earnings per share
2018
Number
2017
Number
623,241,497
490,055,864
623,241,497
490,055,864
2018
Cents
(2.57)
(2.57)
2017
Cents
(2.49)
(2.49)
Consolidated
2018
$’000
2017
$’000
Earnings per share for loss
Loss after income tax attributable to the owners of Clean TeQ Holdings Limited
(16,012)
(12,184)
Weighted average number of ordinary shares
used in calculating basic earnings per share
Weighted average number of ordinary shares
used in calculating diluted earnings per share
Basic earnings per share
Diluted earnings per share
2018
Number
2017
Number
623,241,497
490,055,864
623,241,497
490,055,864
2018
Cents
(2.57)
(2.57)
2017
Cents
(2.49)
(2.49)
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.
90
Notes to the Financial Statements continued
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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:
2017/2018
Grant
date
Expiry
date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
25/02/2015
25/02/2018
$0.1574
8,000,000
01/03/2015
01/03/2018
$0.1450
4,000,000
06/07/2015
30/06/2018
$0.3010
666,214
20/11/2015
30/06/2018
$0.2305
8,000,000
20/11/2015
31/03/2018
$0.1450
2,000,000
20/11/2015
30/11/2018
$0.2712
3,500,000
16/05/2016
16/05/2019
$0.2820
3,300,000
06/09/2016
16/05/2019
$0.2820
1,000,000
06/09/2016
16/05/2019
$0.3100
9,125,000
15/12/2016
15/12/2019
$0.5850
500,000
22/02/2017
22/02/2020
$0.6549
3,000,000
20/06/2017
20/06/2020
$0.9500
600,000
–
–
–
–
–
–
–
–
–
–
–
–
19/07/2017
17/02/2020
$0.7700
07/09/2017
31/08/2020
07/09/2017
31/08/2020
13/11/2017
06/11/2020
05/02/2018
04/12/2020
05/02/2018
04/12/2020
05/02/2018
04/12/2020
05/02/2018
04/12/2020
$0.9500
$0.9500
$1.7300
$1.8000
$1.8000
$1.8000
$1.8000
–
–
–
–
–
–
–
–
750,000
150,000
200,000
75,000
3,000,000
1,000,000
1,000,000
500,000
(7,004,743)
(995,257)
(3,453,480)
(546,520)
(666,214)
–
(6,545,512)
(1,454,488)
(1,758,876)
(241,124)
–
–
–
–
–
(2,246,628)
(253,372)
1,000,000
(200,751)
(99,249) 3,000,000
(777,568)
(222,432)
–
(6,347,612)
(2,027,388)
750,000
(108,471)
(66,529)
325,000
(1,500,000)
(1,500,000)
(600,000)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
750,000
150,000
200,000
75,000
3,000,000
1,000,000
1,000,000
500,000
43,691,214
6,675,000 (31,209,855)
(7,406,359) 11,750,000
Weighted average exercise price:
$0.2749
$1.6389
$0.2580
$0.3264
$1.0621
The weighted average number of years for share options issued under the Plan is 2.85 years (2017: 2.00 years).
COLLIER CREATIVE 03 9088 2470
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Clean TeQ Holdings Limited Annual Report 2018
91
Notes to the Financial Statements continued
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:
2017/2018
Grant
date
Expiry
date
19/07/2017 17/02/2020
07/09/2017 31/08/2020
13/11/2017 06/11/2020
05/02/2018 04/12/2020
Share price
at grant
date
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
Interest rate
$0.69
$0.97
$1.58
$1.30
$0.7700
$0.9500
$1.7300
$1.8000
88.46%
86.90%
85.65%
86.27%
–%
–%
–%
–%
2.67%
2.59%
2.62%
2.40%
Fair value
at grant
date
$0.379
$0.559
$0.853
$0.612
Set out below are summaries of performance rights granted under the Plan:
2018
Grant
date
Expiry
date
08/07/2015 01/07/2018
20/11/2015 01/07/2018
Exercise
price
$0.00
$0.00
Balance at
the start of
the year
Granted
Exercised
–
1,674,416
766,416
880,000
16/05/2016 01/07/2019
$0.00
1,646,416
1,756,281
06/09/2016 06/09/2019
$0.00
2,815,879
1,292,706
01/07/2017 01/07/2020
$0.00
4,108,585
1,723,838
06/02/2018 01/01/2021
$0.00
5,612,413
487,760
7,815,001
* Performance rights forfeited as the employee ceased employment.
The performance rights have the following vesting conditions:
Expired/
forfeited/
Other*
Balance at
the end of
the year
(908,000)
766,416
–
1,646,416
(586,818)
2,815,879
–
4,108,585
(220,010)
5,612,413
(2,857)
6,097,316
(1,717,685)
–
–
–
–
–
–
–
• Rights vesting if the Company’s total shareholder return outperforms a comparator group of 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:
2017/2018
Grant
date
Expiry
date
01/07/2017 01/07/2020
06/02/2018 01/01/2021
Share price
at grant
date
$0.66
$1.18
Risk-free
Interest rate
Expected
volatility
Dividend
yield
Vesting
probability
–%
–%
87.57%
85.33%
–%
–%
87.00%
50.00%
Fair value
at grant
date
$0.581
$1.014
COLLIER CREATIVE 03 9088 2470
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92
Directors’ Declaration
For the year ended 30 June 2018
In the directors’ opinion:
• the attached Consolidated financial statements and notes thereto, and the Remuneration report in the Directors’ report,
comply with the Corporations Act 2001, the Australian Accounting Standards, and the Corporations Regulations 2001;
• 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(b) 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 2018 and of its performance for
the financial year ended on that date;
• there are reasonable grounds to believe that the Consolidated Entity 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
Managing Director
24 August 2018
Melbourne
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Clean TeQ Holdings Limited Annual Report 2018
93
lndependent Auditor’s Report
To the shareholders of Clean TeQ Holdings Limited
Independent Auditor’s Report
To the shareholders of Clean TeQ Holdings Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Clean TeQ Holdings Limited (the
Company).
In our opinion, the accompanying
Financial Report of the Company is in
accordance with the Corporations Act
2001, including:
• giving a true and fair view of the
Group's financial position as at 30
June 2018 and of its financial
performance for the year ended on
that date; and
•
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
Basis for opinion
The Financial Report comprises:
• Statement of Financial Position as at 30 June 2018
• Statement of Profit or Loss and Other Comprehensive
Income, Statement of Changes in Equity, and
Statement of Cash Flows for the year then ended
• Notes including a summary of significant accounting
policies
• Directors' Declaration.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during the
financial year.
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We
have fulfilled our other ethical responsibilities in accordance with the Code.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
103
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lndependent Auditor’s Report continued
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CLT0007 CleanTeQ AR18 Fins_p4a 24 August 2018 11:53 AM
Key Audit Matters
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our
audit of the Financial Report of the current period.
This matter was addressed in the context of our audit of the Financial Report as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on this matter.
Valuation assessment for intangible assets ($9.8 million) and exploration and evaluation (E&E)
assets ($76.9 million)
Refer to significant accounting policies in Note 2 and Notes 16 and 17 to the Financial Report.
The key audit matter
How the matter was addressed in our audit
A discounted cash flow model is used in
determining the recoverable amount of
the Metals and Water cash generating
units (CGUs) to which intangible assets
and E&E assets have been allocated.
The valuation of the Metals and Water
CGU intangible assets and Metals E&E
assets is a key audit matter due to the
audit effort required by us in assessing
the Group’s judgements applied and
inputs to the models, including:
• Discount rates applied to forecast
cash flows, as each CGU displays
unique conditions varying the
assessment of discount rates
•
•
•
•
Future resource prices
Future foreign exchange rates
For the Water CGU, forecasting the
probability of converting tender
pipeline into contracted revenue
Future production/output, capital
expenditure and operating costs. In
particular, for the Metals CGU, the
Group has not incurred any capital
expenditure for production and has
not yet commenced operations.
Therefore future production/output,
capital expenditure and operating
Our procedures included:
• Working with our valuation specialists, we utilised their
expertise in assessing discounted cash flow models in
the mining and water treatment industries, including
assessing a discount rate range for each CGU and
comparing it to the discount rates used by the Group;
•
•
Testing the acceptability from a valuation perspective of
the discounted cash flow models used to determine the
recoverable amount for each CGU in comparison to
common market practice and accounting standard
requirements;
Performing sensitivity analysis in respect of the discount
rates, future production/output, capital expenditure and
operating costs, future resource prices, future foreign
exchange rates. This allowed us to determine which
inputs relative to the risk of impairment, had the most
impact on the outcome of the models, and to focus our
audit effort thereon;
• Comparing future resource prices and foreign exchange
rates used in the models to external market data, such
as publicly available forecasts and consensus views of
market commentators as well as historical information;
• Reading a sample of tenders, correspondence with
prospective clients, memorandums of understanding and
contracts to inform our view of the likelihood of the
Water CGU tender pipeline being converted into
contracted revenue;
104
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Clean TeQ Holdings Limited Annual Report 2018
95
lndependent Auditor’s Report continued
costs are estimated based on the
Group’s expertise/experience from
other mining operations
• Comparing future production/output, capital expenditure
and operating costs used in the Group’s models to other
market participants;
• Reserves, including the success of
exploration, and appraisal activities,
including drilling and geological and
geophysical analysis.
In assessing this key audit matter, we
involved senior audit team members,
including valuation specialists, who
understand the Group’s business,
industry and the economic environment
it operates in.
•
•
For the Metals CGU, analysing the Group’s
determination of recoupment through successful
development and exploitation of its reserves by
evaluating the Group’s planned future/continuing
activities;
For the Metals CGU, we obtained the Group’s project
budgets identifying areas with existing funding and
those requiring alternate funding sources. We compared
this for consistency with current E&E expenditure, for
evidence of the ability to fund continued activities. We
identified those areas relying on alternate funding
sources and evaluated the capacity of the Group to
secure such funding.
Other Information
Other Information is financial and non-financial information in Clean TeQ Holdings Limited’s annual
reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are
responsible for the Other Information.
The Other Information we obtained prior to the date of this Auditor’s Report was the Directors’ Report and
the Remuneration Report. The Chairman’s Report and CEO’s Report are expected to be made available to
us after the date of the Auditor's Report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not and
will not express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date of
this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
•
•
preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001
implementing necessary internal control to enable the preparation of a Financial Report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error
105
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Clean TeQ Holdings Limited Annual Report 2018
97
Shareholder Information
Shareholder Information
For the year ended 30 June 2018
The information below is current as at 25 July 2018
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
Number of
holders of
ordinary shares
Number of
holders of
options over
ordinary shares
Number of
holders of
convertible notes
1,061
2,075
1,177
2,262
337
6,912
–
–
–
3
12
15
–
–
–
–
–
–
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of fully paid ordinary shares as at 25 July 2018 are listed below:
Rank Name of Share Holder
Number of
Shares Held
% of Total
Shares Issued
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
J P MORGAN NOMINEES AUSTRALIA LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
PENGXIN INTERNATIONAL GROUP LIMITED
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED‑GSCO ECA
SAM RIGGALL
THIERVILLE PTY LTD
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