CSS Industries Inc.
Annual Report 2016

Plain-text annual report

Annual Report 2015-2016 Clean Seas Tuna Limited ABN 61 094 380 435 | 1 Kingfish at sea, Port Lincoln South Australia 2 | Table of Contents Company Overview .............................................................................................................................................02 Chairman’s & Managing Director’s Report ..........................................................................................10 Director’s Report ......................................................................................................................................................17 Auditor’s Independence Declaration ........................................................................................................33 Corporate Governance Statement ............................................................................................................ 34 Consolidated Statement of Profit or Loss & Other Comprehensive Income .................35 Consolidated Statement of Financial Position ..................................................................................36 Consolidated Statement of Changes in Equity .................................................................................37 Consolidated Statement of Cash Flows ................................................................................................. 38 Notes to the Consolidated Financial Statements ............................................................................39 Directors’ Declaration ..........................................................................................................................................74 Independent Auditor’s Report .......................................................................................................................75 ASX Additional Information ........................................................................................................................... 78 Corporate Directory .............................................................................................................................................80 Cover Image: Crispy skin Hiramasa Kingfish | 3 1 | 1 | The quality of Clean Seas unique South Australian grown Hiramasa Kingfish is quite outstanding, and we are well positioned to grow our business both locally and overseas with this fine example of culinary excellence.Fingerling’s transferred to sea at approx 75 daysCompany Overview Background Clean Seas is Australia’s only commercial producer of Clean Seas Yellowtail Kingfish are indigenous to these Kingfish and is renowned around the world for the remote, crystal clear waters, with our current brood exceptional quality of our fish. stock bred from fish sourced only an hour or so from our Formed in 2000, and publicly listed in 2005, Clean Seas has become the largest producer of aquaculture Kingfish current operations. outside Japan. As well as our superb quality, we are World Class Product Hiramasa Kingfish’s firm white-to-light-pink flesh boasts a sweet, rich, clean flavour of consistently high standard. Hiramasa Kingfish has long been renowned as a superb sashimi fish, but it’s increasingly being acclaimed worldwide for its extraordinary versatility. recognised for our innovations in Kingfish farming, and our reliability in supplying fresh fish to markets all over the world 52 weeks of the year. Location Based in Port Lincoln, South Australia, Clean Seas operates from 2 main locations. Our hatchery is located at Arno Bay and our sea farm operations are located in the Spencer Gulf, just off Port Lincoln and at Arno Bay. The Spencer Gulf’s rugged, untamed coastline enjoys a cool, temperate, Mediterranean-style climate, which provides ideal conditions to grow our premium quality Kingfish. Hiramasa Kingfish at Stokehouse restaurant, Melbourne, Victoria Clean Seas staff inspect fish at sea | 2 3 | Clean Seas is committed to continual innovation and improvement through R&D to ensure the highest quality while improving sustainability and reducing environmental impact in the process. 3 | Clean Seas hatchery site, Arno Bay, South AustraliaCompany Overview Research and Development Our Hatchery Clean Seas considers research fundamental to product At our Arno Bay hatchery, the cycle of life commences quality, sustainability and business success. with eggs from our selectively bred brood stock. Never content with the status quo, Clean Seas is committed to continual innovation and improvement through R&D to ensure the highest quality, while improving sustainability and reducing environmental impact in the process. Our team of experts collaborates extensively with world leading institutions and our proprietary studies have resulted in halving dependence on fish meal and fish oil in feeds, significantly lowering the Fish In Fish Out Ratio The eggs are carefully transferred to an incubator where they hatch just 48 hours later, at which time the new larvae are gently bathed before being transferred to custom-designed larval rearing tanks. For the next 21 days, the larvae enjoy a diet of live feeds (rotifers and artemia) until they are 0.1 grams. They are then transferred to the nursery for weaning, where they move to a specially formulated feed which replicates the ideal diet they would eat in the wild. They remain in this nursery until they reach a weight of up to 35grams, at – a key contributor to environmental sustainability. which point they are transferred to sea. Live food being prepared for larval Kingfish Kingfish eggs being assessed for viability prior to hatching | 4 5 | Clean Seas Hiramasa Kingfish are expertly grown in the pristine waters of South Australia’s Spencer Gulf.5 | Fingerlings in transit to seaCompany Overview Farm Operations From approximately 75 days after hatching, Hiramasa Kingfish reside in the crisp, cool waters of the Spencer Gulf. These waters are replenished year round by the cold currents that flow from the Southern Ocean, creating a unique environment to Hiramasa Kingfish are harvested quickly and efficiently to minimise stress, utilising modern equipment that instantly stuns the fish in an Ikejime-like manner. Once stunned and bled the fish are immediately placed in chilled seawater to grow these special fish. protect the quality. While at sea, they continue to be fed specially formulated feed which is balanced for optimal nutrition and growth. Safeguarded against predators and encountering minimal stress along the way (which is key to producing healthy, delicious fish) , our fish remain at sea until they are 16-24 months and are harvested humanely once they reach the highly sought after sashimi grade size of 3.5+kgs Truly a beautiful fish Harvest vessel alongside sea pen | 6 7 | Increasingly, Hiramasa Kingfish is being acclaimed by chefs for its extraordinary versatility; whether served raw, cured, smoked, grilled, fried, roasted or poached. 7 | Hiramasa Kingfish Carpacio, The Atlantic, Melbourne Australia.Company Overview Why Clean Seas Hiramasa Kingfish is the ultimate in Culinary Excellence Hiramasa is the Japanese word for the species, where Clean Seas currently has independent sustainability it is highly prized as a superb sashimi fish. Increasingly certification from Friend of the Sea and has embarked though, Hiramasa Kingfish is being acclaimed for its on the process of obtaining Aquaculture Stewardship extraordinary versatility; whether served raw, cured, Council accreditation to compliment this, further smoked, grilled, fried, roasted or poached. Little wonder demonstrating our commitment to sustainability. then that chef’s worldwide revere Hiramasa for its unparalleled quality and consistency and have come to rely on fresh deliveries direct from South Australia twice weekly, 52 weeks of the year. Its high fat content is superbly moist unadorned as sashimi, yet rich enough to hold its own when paired with more robust flavours. This high fat content also ensures that Hiramasa’s skin crisps brilliantly too. The versatility of Hiramasa Kingfish makes it a fish for every season. Hiramasa Kingfish at Cafe Sydney, Sydney, New South Wales Hiramasa Kingfish at Cafe Sydney, Sydney, New South Wales | 8 9 | Clean Seas experienced a challenging year in FY16. While there were pleasing outcomes due to strong sales growth, establishment of a strategic alliance for distribution in China, Hong Kong and South Korea and ongoing excellent Kingfish survival rates, health and growth, there were also challenges associated with having a structural imbalance of Kingfish inventory levels.9 | Kingfish fingerlings is sea pen, Spencer Gulf Chairman’s & Managing Director’s Report Paul Steere Chairman David J Head Managing Director & CEO Chairman’s and Managing Director’s Report For the year ended 30 June 2016 On behalf of the Board and management, we are pleased to present the eleventh Annual Report of Clean Seas Tuna In FY16 Clean Seas reported a full year loss after tax of $8.98 million. This reflects a: • • First half loss after tax of $10.8 million; and a Second half profit after tax of $1.8 million Limited (‘Clean Seas’). Clean Seas experienced a challenging year in FY16. While there were pleasing outcomes due to strong sales growth, establishment of a strategic alliance for distribution in China, Hong Kong and South Korea and ongoing excellent Kingfish survival rates, health and The results include a write-down of Biological Assets and Inventories of $10.5 million during the year to deal with the structural imbalance between Inventory and Sales. The majority of the write down ($8.6m) was recognised in the first half, leading to an improved second half result of $1.8 million profit after tax. growth, there were also challenges associated with The FY16 underlying profit before tax of $0.6 million having a structural imbalance of Kingfish inventory levels. compares to last year’s underlying profit before tax of David Head commenced as Managing Director and CEO $1.0 million. These amounts are summarised as follows; in January 2016 and has undertaken a strategic review of the business which is discussed below. Reconciliation – Statutory to Underlying Statutory net profit after tax Add / (Deduct); Biological Assets and Inventory write-down R&D tax incentive refund – Tax expense credit Capital raising expense – Tax expense AusIndustry Commercial Ready Deferred Grant FY16 $’000 (8,982) 10,479 (946) FY15 $’000 4,108 - (3,075) - - Underlying profit before tax 551 1,033 FY14 $’000 9,156 - (2,778) 219 (3,953) 2,644 | 10 Chairman’s & Managing Director’s Report Sales Volumes Increased 84%, on top of 92% growth in previous year Clean Seas has continued to achieve outstanding • Incentivised pricing of a proportion of fresh fish Kingfish sales growth rates. After growth in FY15 of 92%, into non-core markets so as to not disrupt our core sales volumes grew a further 84% in FY16 to slightly market pricing; over 2,000 tonnes. Encouragingly, during this period of significant sales growth, the Company has maintained its farm gate prices in Australia and in its key European markets. Structural Imbalance • Around 750 tonnes have been frozen and processed into a variety of formats and sold at a range of discounted prices – but always outside our traditional markets. Part of this inventory is being used for a market entry into the China, Hong Kong and Korean markets; The structural imbalance in FY16 resulted from high • The balance has been retained in the live fish levels of fingerling intakes in 2013 and 2014. At the time, inventory as this provides the next highest the Company was in the early stages of recovery from (practical) return after the above options, and whilst Taurine Deficient Feed, which had led to high mortality it will mean higher operating and feed costs over rates in 2012 of 77%. Improvements in feed quality and fish husbandry led to vastly improved survival rates and above trend growth in FY16. The increased production, combined with longer than expected lead times to re- enter export markets which were abandoned during the Taurine crisis, resulted in significant overstocking of live fish compared to the slower growth of market demand. Management of Stock Overhang Correction of the excess inventory position is being managed through several mechanisms, balanced to minimise losses and maximise returns: the next 18 months, it will deliver the highest returns and limit the risk of damage to our existing markets. Our biomass is expected to return to balance during FY18 as the remaining excess stock is reduced, our brand and marketing strategies are ramped up, and domestic and export markets are progressively expanded. The risk of future production and sales imbalances will be reduced through a combination of improved growth monitoring and planning systems and the expansion of the market for smaller fish to provide a more cost effective channel to deal with any future excess inventory before the fish grow to full size. Annual Sales Tonnage Sales Domestic Export Total Tonnes FY16 FY15 FY14 Growth Growth FY16 v F15 FY15 v F14 1,094 924 2,018 827 271 1,098 471 100 571 +32% +241% +84% +65% +76% +171% +92% +83% Revenue from Kingfish Sales $30.001m $18.185m $9.917m 11 | Chairman’s & Managing Director’s Report Strategic Initiatives The Company has completed the first stage of its • Post-harvest and logistics initiatives targeted to strategic review and significant profit improvement achieve savings of more than $1.0 million p.a.; initiatives have been identified for implementation from FY17. These initiatives include: • Continuing product development to leverage planned post-harvest initiatives including • A new brand strategy and campaign to position development of value added retail and super Clean Seas Australian Hiramasa as a Premium frozen products; Seafood with a proposition of Culinary Excellence supported by its unique Provenance; • Leveraging in house infrastructure at Arno Bay for targeted research to underpin improving • This new positioning will also underpin a phased Feed Conversion Ratios and diet formulations for increase in Farm Gate prices for those markets that inclusion in contractual arrangements with feed have previously been price driven; suppliers; and • Accreditation by the internationally renowned • Strengthening the Senior Executive team Aquaculture Stewardship Council to strengthen Clean Seas environmental and social credentials and provide an early adopter competitive advantage in Australia and key export markets; • An activation program targeting leading dining establishments and their chefs to be implemented in key global markets to leverage the new brand positioning; The second phase of the strategic review will continue to investigate lower cost of production opportunities including automation, new farm locations and the impact of warmer water farming. Considerable work has been undertaken over the past six months, and whilst on-going evaluation of these opportunities will continue, finalisation of this part of the strategic review will take place once the new General • The customer activation program will be based on Manager of Aquaculture is on board. a market segmentation profile being developed by Clean Seas utilising a range of international data bases, that identifies dining establishments by country, by city, by location, by cuisine, by price range and other relevant attributes; Hiramasa Kingfish at Union Dining, Melbourne, Victoria Sea pen, Port Lincoln, South Australia | 12 Chairman’s & Managing Director’s Report Marketing & Brands Our Hiramasa Kingfish brand has suffered from brand Plans are well advanced to develop our own in-house confusion in several markets, failed to establish a post-harvest processing facilities utilising state of the compelling brand proposition and has been positioned art processing technology. The facility is expected to as a lower cost replacement product in US and Southern deliver annualised savings of more than $1 million. It will European markets. After extensive assessment, we have concluded that the Brand Proposition should be “Australian Hiramasa”, positioned as a Premium Seafood with a proposition of Culinary Excellence backed by a strong South Australian Provenance claim. provide additional flexibility and facilitate development of a range of product and process areas including rapid freezing technologies. In-house facilities are also expected to improve a number of aspects of product quality including reducing delivery times for fresh product from marine harvest to market. In the coming year we will develop a brand campaign in Australia and selected export markets including Feed Optimisation laboratory and field based assessments with Chefs, Feed remains the largest cost of farming Australian wine/food writers and professional panellists and Hiramasa Kingfish and relatively small improvements kitchen based performance testing to develop handling, in feed conversion and growth rates can translate into preparation and cooking protocols. significant improvements in profitability. To further support the new positioning of the Hiramasa The Arno Bay Hatchery is an ideal facility for Feed Trials Brand we will seek accreditation by the internationally with up to 20 tanks available year-round, allowing renowned Aquaculture Stewardship Council (ASC) comparative testing of a range of different feed formulas to strengthen Clean Seas environmental and social in identical conditions. The Company’s professionally credentials in addition to our current Friend of the designed and managed trials have delivered a number of Sea accreditation. ASC accreditation will demonstrate valuable outcomes for Clean Seas to date, including the our compliance with international sustainability and solution to the Taurine Deficient Feed issue. environmental standards thus providing a competitive advantage in Australia and key export markets. Post-Harvest Processing / Product Development We will continue to leverage the in-house infrastructure at Arno Bay for targeted research to optimise fish health and growth rates, and to underpin improved Feed Conversion Ratios and diet formulations for inclusion in contractual arrangements with feed suppliers. Clean Seas currently outsources its post-harvest processing to a range of contractors in South Australia, Management team New South Wales and Vietnam. Outsourced processing is relatively expensive, restricts our capacity to respond to market demand, limits our capacity for product development and makes it harder to control product quality across the supply chain. Clean Seas has a talented and dedicated workforce and senior executive team, however our review has identified the need to strengthen leadership in Aquaculture, Processing, Logistics, Product Development and Human Resources management. 13 | | 14 Our plans in FY17 and FY18 for a new brand marketing campaign, a new customer activation campaign across multiple international markets, managing significant farm gate price increases across our markets and a new product development program has resulted in the need to expand our Sales and Marketing resources. As a result, we intend to strengthen the management team in the coming months through the recruitment of a General Manager Aquaculture, a General Manager Sales, a Marketing & Product Development Manager and a Processing Manager. Litigation – Taurine Deficient FeedWe announced in July 2016 the receipt of the Independent Expert Forensic Accountant’s Report in support of our litigation against Gibson’s Limited, trading as Skretting Australia, in relation to Taurine deficient feed supplied from December 2008 to July 2012. This report assessed the quantum of the Group’s claim to be in the range of $34.5 million to $39.1 million plus interest and costs. Gibson’s Limited is defending the proceedings and has denied all liability to the Group. A trial date is yet to be set. Costs of advancing this litigation claim have been expensed as incurred.We intend to pursue the claim vigorously and we will update shareholders as the process progresses.Yellowtail Kingfish Biomass Increased 9%Total biomass increased 9% from June 2015 to be 2,508 tonnes at June 2016. This followed a 76% increase over the previous 12 months. With sales forecast to be up to 2,500 tonnes in FY17 and the other initiatives summarised above, biomass is expected to return to balance during FY18 and no further write-downs are expected in FY17.Southern Bluefin TunaAs previously reported, the Company has maintained a reduced level of research and development activity in relation to Southern Bluefin Tuna. Options for the future development of these activities continues to be under review and the Company continues to retain broodstock for the option of accelerating the propagation program at a later stage.5,0004,0003,0002,0001,0000 TONNESKingfish Biomass at June 3020083,20320094,12720102,90720111,70620121,o71201347820141,30920152,30420162,508Chairman’s & Managing Director’s Report15 | We remain very grateful to the continued support of our customers and you, our loyal supportive shareholders.15 | Hiramasa Kingfish at Sokyo restaurant, Sydney, New South WalesChairman’s & Managing Director’s Report Outlook Appreciation Clean Seas is targeting sales volumes in FY17 of up to David Head took up his role as Managing Director in 2,500 tonnes, a 20% + increase from the 2,018 tonnes January and has been directly involved in the litigation in FY16. The Company expects improvement in average progression and the significant contract with China, farmgate pricing in FY17 as a result of the new brand Korean and Hong Kong in addition to carrying out a positioning, targeted activation programs and ASC review of the strategic imperatives along with new accreditation. Over subsequent years the Company initiatives including the underlying rationales for expects to further increase sales to 3,000 tonnes and such strategies. beyond. The Group currently has the water leases and licences and hatchery capacity to produce up to 6,000 tonnes per annum. The Board and management look forward to a full recovery from the Structural Imbalance issues that have impacted the FY16 results, and further success in the development of the Clean Seas business in FY17 and beyond. Full details of the results for FY16 can be found in the attached Consolidated Financial Statements. The Board notes that the inherent operational risks in aquaculture may impact future results. We are pleased to support and record our appreciation of David’s continuing stewardship of the company. We also record our appreciation of the service of Craig Foster as CEO until January, who continued after that date to undertake discrete project work on a consultancy basis. The Board extends its appreciation to all the executive team in a very busy year challenged further by the stock overhang. Similarly we remain very grateful to the continued support of our customers and you, our loyal supportive shareholders Paul Steere Chairman David J Head Managing Director & CEO Hatchery site, Arno Bay, South Australia Kingfish at sea, Port Lincoln, South Australia | 16 Clean Seas Tuna Limited | Directors’ Report Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 1 Directors’ Report Directors’ Report The Directors of Clean Seas Tuna Limited (‘Clean Seas’) present their Report together with the financial statements of the Consolidated Entity, being Clean Seas Tuna Limited (‘the Company’) and its Controlled Entity (‘the Group’) for the for the year ended 30 June 2016. Directors The following persons held office as Directors of Clean Seas during or since the end of the financial year: • Mr Paul Steere – Chairman; • Mr Nick Burrows; • Dr Hagen Stehr; • Mr Marcus Stehr; and • Mr David Head – Appointed 28 January 2016 • Mr Paul Robinson – Alternate Director for Dr Hagen Stehr. Company Secretary The following person was Company Secretary of Clean Seas during and since the end of the financial year: • Mr Wayne Materne Principal activities The principal activities of the consolidated Group during the financial year were: • The propagation of Hiramasa Yellowtail Kingfish, producing fingerlings for sale and growout; • The growout of Hiramasa Yellowtail Kingfish for harvest and sale; and • Research and development activities for the future aquaculture production of Southern Bluefin Tuna. The Group continues to enhance its operations through new research and the application of world’s best practice techniques to deliver Hiramasa Yellowtail Kingfish of premium quality. There have been no significant changes in the nature of these activities during the year. Review of operations and financial results The Board and Management of Clean Seas report a loss after tax for the year of $8.982 million. This compares to a $4.108 million profit in FY15 and encompasses a first half FY16 after tax loss of $10.820 million. This result in FY16 was largely due to a $10.5 million write-down of Biological Assets and Inventory which was necessary to address a structural imbalance between biomass and sales levels. Significant positive outcomes of the FY16 year included: • Sales volumes increased 84% to 2,018 tonnes; • Revenue increased 63% to $30.1 million; • Achieved a second half FY16 profit after tax of $1.8 million; 17 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 2 Directors’ Report | Clean Seas Tuna Limited • Establishment of a strategic alliance with Beston Global Food Company for the distribution of Yellowtail Kingfish in China, Hong Kong and South Korea with an initial sale of 176 tonnes (whole weight equivalent) in June 2016 • Continued excellent Yellowtail Kingfish survival rates, health and growth; • Yellowtail Kingfish biomass at year end increased 9% to 2,508 tonnes; and • The company has completed the first stage of its strategic review and significant profit improvement initiatives have been identified for implementation from FY17. Sales expansion was achieved in the key Australian and European markets with strong sales of fresh Hiramasa Kingfish to premium markets reflecting continued recognition of the quality of our product. Clean Seas is also now re-entering the American and Asian markets as part of its growth strategy, with both fresh and frozen products being targeted at premium market segments. Sales expansion in these markets, combined with continued growth in our established Australian and European markets, is a key focus in FY17. Fish husbandry costs increased 20% to $20.9 million, which is directly attributable to the increase in biomass. Other costs also increased for the same reason. The $10.5 million FY16 write-down has provided the opportunity to utilise entry level pricing in some new markets in order to more quickly build product awareness and grow market share. The Company recognises however the need to increase such prices as critical mass is established. Research and development activities into Southern Bluefin Tuna continued during the year including an Australia-wide search for juvenile growout and monitoring of offshore breakthroughs with Atlantic Bluefin Tuna in particular. Options for the future development of these activities continue to be under review. The Independent Expert Forensic Accountant’s Report was received in July 2016 in support of our litigation against Gibson’s Limited, trading as Skretting Australia, in relation to taurine deficient feed supplied from December 2008 to July 2012. This report assesses the quantum of the Group’s claim to be in the range of $34.5 million to $39.1 million plus interest and costs. Gibson’s Limited is defending the proceedings and has denied all liability to the Group. A trial date is yet to be set. As noted in the accounts, no amounts have been included for potential compensation to be received or potential costs in undertaking this litigation. Costs of advancing this litigation claim have been expensed as incurred. Si(cid:21)nificant c(cid:22)an(cid:21)es in t(cid:22)e state of affairs Mr David Head was appointed Managing Director and Chief Executive Officer with effect from 28 January 2016. Mr Head’s initial focus has been on the continued expansion of domestic and export markets utilising excess inventory identified as at 31 December 2015 to open up strategic new market and opportunities for the company. Concurrently, he has been coordinating a comprehensive strategic review which will lead to Clean Seas maximising its first mover advantage in Hiramasa Kingfish aquaculture production in Australia. Dr Craig Foster retired as Chief Executive Officer in January 2016 at the conclusion of his 4 year contract with the company. Dr Foster’s contribution in identifying and resolving the dietary | 18 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 3 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 (cid:10) Clean Seas Tuna Limited | Directors’ Report deficiency and consequential losses was essential to the company’s survival and the company is grateful for his significant contributions during his tenure (cid:7)vents arisin(cid:21) since t(cid:22)e end of t(cid:22)e reportin(cid:21) period There are no matters or circumstances that have arisen since the end of the year that have significantly affected or may significantly affect either: • • • the entity’s operations in future financial years; the results of those operations in future financial years; or the entity’s state of affairs in future financial years. other than the Independent Expert engaged for the Gibson’s litigation quantifying in July 2016 the company’s significant claim as detailed above. (cid:9)i(cid:24)ely developments(cid:4) (cid:16)usiness strate(cid:21)ies and prospects The company has completed the first stage of its strategic review and significant profit improvement initiatives have been identified for implementation from FY17. These initiatives include: • A new brand strategy and campaign to position Clean Seas Australian Hiramasa as a Premium Seafood with a proposition of Culinary Excellence supported by its unique Provenance, • An activation program targeting leading dining establishments and their chefs will be implemented in key global markets to leverage the new brand positioning, • The customer activation program will be based on a market segmentation profile being developed by Clean Seas utilising a range of international databases that identifies dining establishments by country, by city, by location, by cuisine, by price range and other relevant attributes. • This new positioning will also underpin a phased increase in Farm Gates for those markets that had previously been price driven, • Aquaculture Stewardship Council Accreditation to strengthen Clean Seas environmental and social credentials and provide an early adopter competitive advantage in Australia and key export markets, Post-harvest and logistics initiatives targeted to achieve savings in excess of $1 million p.a., • • Continuing product development to leverage planned post-harvest initiatives including • • development of value added retail and super frozen products, Leveraging in house infrastructure at Arno Bay for targeted research to underpin improving FCRs and diet formulations for inclusion in contractual arrangements with feed suppliers, and Strengthening the Senior Executive team, including the recruitment of a General Manager of Aquaculture. The second phase of the strategic review will continue to investigate lower cost of production opportunities including automation, new farm locations and the impact of warmer water farming. Considerable work has been undertaken over the past six months however, whilst on-going evaluation of these opportunities including potential small scale trials will continue. Finalisation of this part of the strategic review will take place once the new General Manager of Aquaculture is on board. Clean Seas is targeting sales volumes in FY17 of up to 2,500 tonnes, a 20%+ increase from the 2,018 tonnes in FY16. Over subsequent years the company expects to further increase sales to 3,000 tonnes and beyond. The Group currently has the water leases and licences and hatchery capacity to produce up to 6,000 tonnes per annum. 19 | (cid:8)nformation on Directors and Senior (cid:10)ana(cid:21)ement Mr Paul Steere – Chairman, Independent Non-Executive Director Mr Steere was appointed to the Company Board on 20 May 2010 and was appointed Chairman effective 22 May 2012. He is also Chairman of the Remuneration and Nominations Committee and a member of the Finance, Audit and Risk Management (‘FARM’) Committee. Mr Steere was Chief Executive of New Zealand King Salmon for 15 years from 1994 to 2009. NZ King Salmon is the leading aquaculture company in New Zealand and globally the largest Chinook salmon farmer with an international reputation for quality, service, process/product innovation and Prior to joining NZ King Salmon, Mr Steere served in senior executive roles with the NZ Dairy Board and a British International Trader, including a range of sole charge stewardship and professionalism. Directorships. Mr Steere remains a Director of NZ King Salmon and also holds the following positions: • Chair of Nelson Airport Limited; • Chair of Allan Scott Family Winemakers Limited of Marlborough NZ; • Government appointed Councillor of the Nelson Marlborough Institute of Technology; and • Director of Kaynemaile Limited, a company producing unique ring linked curtains for architectural applications and aquaculture farm netting. Mr Steere is a member of the New Zealand Institute of Directors. Dr Hagen Stehr – Non-Executive Director Appointed to the Company Board at incorporation in September 2000, Dr Stehr continues as one of the founding Directors. Dr Stehr was Chairman from September 2000 to December 2009. Dr Stehr’s extensive knowledge of and experience in the fishing and aquaculture industries are well documented, having been a co-founder of the world’s first Southern Bluefin Tuna offshore ranching industry in 1990 and a major player in the Tuna industry since 1960 in Australia and other parts of the world. In addition to being a Director of Australian Tuna Fisheries Pty Ltd (a major shareholder in Clean Seas), Stehr Group Pty Ltd and Sanchez Tuna Pty Ltd, Dr Stehr is currently: • Chairman of the Australian Maritime and Fisheries Academy (Australian Fisheries Academy Ltd) since 1997, a major institution for training of fishermen and seafarers; • Board member of Primary Industries Skills Council SA Inc; • Member of the Australian Maritime Safety Authority (AMSA) Advisory Committee; and • Member of the Waite Independent Industry Leaders Club. Dr Stehr has previously also held the following positions: • Founding member of Australian Bight Seafood in 1971; • Chair of the South Australian Marine Finfish Farmers Association Inc, the peak body for the sea farming industry; • Chairman of the South Australian Fishing and Seafood Industry Training Council for over 20 years, being the longest serving Chairman; • Member of the South Australian Government’s Aquaculture Advisory Committee; Founding Board member of the Australian Tuna Boat Owners Association (now Australian • • Southern Bluefin Tuna Industry Association Ltd); and Founder of Fishing Industry House. Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 (cid:10) Directors’ Report | Clean Seas Tuna Limited (cid:8)nformation on Directors and Senior (cid:10)ana(cid:21)ement Mr Paul Steere – Chairman, Independent Non-Executive Director Mr Steere was appointed to the Company Board on 20 May 2010 and was appointed Chairman effective 22 May 2012. He is also Chairman of the Remuneration and Nominations Committee and a member of the Finance, Audit and Risk Management (‘FARM’) Committee. Mr Steere was Chief Executive of New Zealand King Salmon for 15 years from 1994 to 2009. NZ King Salmon is the leading aquaculture company in New Zealand and globally the largest Chinook salmon farmer with an international reputation for quality, service, process/product innovation and professionalism. Prior to joining NZ King Salmon, Mr Steere served in senior executive roles with the NZ Dairy Board and a British International Trader, including a range of sole charge stewardship and Directorships. Mr Steere remains a Director of NZ King Salmon and also holds the following positions: • Chair of Nelson Airport Limited; • Chair of Allan Scott Family Winemakers Limited of Marlborough NZ; • Government appointed Councillor of the Nelson Marlborough Institute of Technology; and • Director of Kaynemaile Limited, a company producing unique ring linked curtains for architectural applications and aquaculture farm netting. Mr Steere is a member of the New Zealand Institute of Directors. Dr Hagen Stehr – Non-Executive Director Appointed to the Company Board at incorporation in September 2000, Dr Stehr continues as one of the founding Directors. Dr Stehr was Chairman from September 2000 to December 2009. Dr Stehr’s extensive knowledge of and experience in the fishing and aquaculture industries are well documented, having been a co-founder of the world’s first Southern Bluefin Tuna offshore ranching industry in 1990 and a major player in the Tuna industry since 1960 in Australia and other parts of the world. In addition to being a Director of Australian Tuna Fisheries Pty Ltd (a major shareholder in Clean Seas), Stehr Group Pty Ltd and Sanchez Tuna Pty Ltd, Dr Stehr is currently: • Chairman of the Australian Maritime and Fisheries Academy (Australian Fisheries Academy Ltd) since 1997, a major institution for training of fishermen and seafarers; • Board member of Primary Industries Skills Council SA Inc; • Member of the Australian Maritime Safety Authority (AMSA) Advisory Committee; and • Member of the Waite Independent Industry Leaders Club. Dr Stehr has previously also held the following positions: • • Chair of the South Australian Marine Finfish Farmers Association Inc, the peak body for the Founding member of Australian Bight Seafood in 1971; sea farming industry; • Chairman of the South Australian Fishing and Seafood Industry Training Council for over 20 years, being the longest serving Chairman; • Member of the South Australian Government’s Aquaculture Advisory Committee; • Founding Board member of the Australian Tuna Boat Owners Association (now Australian Southern Bluefin Tuna Industry Association Ltd); and Founder of Fishing Industry House. • | 20 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Clean Seas Tuna Limited | Directors’ Report (cid:11) Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 6 Dr Stehr also; • In 1997 became a Justice of the Peace and was awarded the Officer of the Order of Australia (AO) for services to the Seafood Industry; In 2000 was awarded the Australian Centenary Medal; In 2009 was awarded Icon of the Sea for services to the Fishing Industry of Australia and sustainability of Southern Bluefin Tuna; In 2010 received an honorary doctorate from the University of the Sunshine Coast in recognition of his internationally significant contribution to sustainable fishing industries; In 2013 was inducted to the National Seafood Industry Hall of Fame; and In 2014 was awarded the title of Food Ambassador for South Australia by the South Australian Government. • • • • • Mr Marcus Stehr - Non-Executive Director Mr Stehr was appointed to the Company Board on incorporation in September 2000. He is also a member of the FARM Committee and the Remuneration and Nominations Committee. Mr Stehr’s technical qualifications include Master Class 4 Fishing/Trading Skippers certificates, MED 1 and Dive Master certificates. Commercial qualifications include business management courses spanning post graduate studies in Business and completion of the Company Director’s Course. He is a Graduate Member of the Australian Institute of Company Directors. Mr. Stehr has accumulated 25 years hands on experience in marine finfish aquaculture operations encompassing Tuna, Kingfish and Mulloway. In addition to being a Director of Australian Tuna Fisheries Pty Ltd (a major shareholder in Clean Seas), Stehr Group Pty Ltd and Sanchez Tuna Pty Ltd, Mr Stehr makes a strong contribution to the Australian fishing and aquaculture industries as: • Board member of the Australian Southern Bluefin Tuna Industry Association Ltd; and • Director of the Australian Maritime and Fisheries Academy (Australian Fisheries Academy Ltd); and Industry member of Southern Bluefin Tuna Fishery Management Advisory Committee. • He has also previously held the following positions; • Board member of the South Australian Marine Finfish Farmers Association Inc; and • Deputy member of the South Australian Government’s Aquaculture Advisory Committee. Mr Nick Burrows – Independent Non-Executive Director Mr Burrows was appointed to the Company Board on 18 April 2012. He is also Chairman of the FARM Committee and a member of the Remuneration and Nominations Committee. Mr Burrows is a respective Fellow of the Australian Institute of Company Directors, Institute of Chartered Accountants Australia, Governance Institute of Australia Ltd and the Financial Services Institute of Australasia and is a Chartered Accountant and Registered Company Auditor. Mr Burrows was Chief Financial Officer and Company Secretary of Tassal Group Limited for 21 years from 1988 to 2009 and accordingly brings to the Board the benefits of an extensive and contemporary senior executive ASX200 aquaculture listed entity background. Mr Burrows’ Directorship background encompasses a multi-sector portfolio of Chair, Non- Executive Directorship and Board Committee positions spanning local and state government, not- for-profit and major private companies. He is: • Chairman of TasTAFE; • Non-Executive Director of Tasmanian Water & Sewerage Corporation Pty Ltd; 21 | • Non-Executive Director of Metro Tasmania Pty Ltd; • Non-Executive Director of Australian Seafood Industries Pty Ltd; • Director of Value Adviser Associates; and • Member of the Australian China Business Council – Tasmanian Chapter. He also has significant experience as an Audit and Risk Committee member across his multi-sector Board portfolio. Mr Burrows has had a long involvement with Governance Institute of Australia including serving as National President and is currently serving on the Tasmanian Branch Council. Mr Paul Robinson – Non-Executive Alternate Director Mr Robinson was appointed Alternate Director for Dr Hagen Stehr in December 2005. He is also a consultant to the FARM Committee. Mr Robinson is a Fellow of the Institute of Chartered Accountants with fifteen years experience as a partner of a leading international accounting practice. He is Chairman and Non-Executive Director for a number of private property and investment companies. He was appointed a Non-Executive Director of Australian Tuna Fisheries Pty Ltd, a major Clean Seas shareholder which is associated with Dr Hagen Stehr, in May 2006. He is also a Director of PSMMR Pty Ltd which provides consulting services to Clean Seas. Mr David Head – Managing Director and Chief Executive Officer Mr Head was appointed as Managing Director and Chief Executive Officer on 28 January 2016. He has over 25 years experience as a CEO, Non-Executive Director and Corporate Advisor in a wide range of industry sectors in Australia, New Zealand, Asia and Europe in public and privately owned companies. This includes Chief Executive roles at Pepsi, Lion Nathan, Calum Textile Group and Leigh Mardon Group. Mr Head has extensive Board experience as both Non-Executive and Executive Director including previously as Non-Executive Director of ASX listed Snack Brands Limited. He is currently a Director of Fairtrade Australia and New Zealand Limited. Mr Wayne Materne – Company Secretary and Chief Financial Officer Mr Materne was appointed Company Secretary and Chief Financial Officer of Clean Seas on 22 August 2014. Mr Materne is a Fellow of CPA Australia and a Graduate Member of the Australian Institute of Company Directors. He has extensive experience in CFO and senior finance roles in the agribusiness and manufacturing sectors with ASX listed and unlisted companies. This includes experience in livestock, forestry and wine / viticulture with companies including Elders, SA Forestry Corporation, Southcorp and Nepenthe. Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 6 Directors’ Report | Clean Seas Tuna Limited • Non-Executive Director of Metro Tasmania Pty Ltd; • Non-Executive Director of Australian Seafood Industries Pty Ltd; • Director of Value Adviser Associates; and • Member of the Australian China Business Council – Tasmanian Chapter. He also has significant experience as an Audit and Risk Committee member across his multi-sector Board portfolio. Mr Burrows has had a long involvement with Governance Institute of Australia including serving as National President and is currently serving on the Tasmanian Branch Council. Mr Paul Robinson – Non-Executive Alternate Director Mr Robinson was appointed Alternate Director for Dr Hagen Stehr in December 2005. He is also a consultant to the FARM Committee. Mr Robinson is a Fellow of the Institute of Chartered Accountants with fifteen years experience as a partner of a leading international accounting practice. He is Chairman and Non-Executive Director for a number of private property and investment companies. He was appointed a Non-Executive Director of Australian Tuna Fisheries Pty Ltd, a major Clean Seas shareholder which is associated with Dr Hagen Stehr, in May 2006. He is also a Director of PSMMR Pty Ltd which provides consulting services to Clean Seas. Mr David Head – Managing Director and Chief Executive Officer Mr Head was appointed as Managing Director and Chief Executive Officer on 28 January 2016. He has over 25 years experience as a CEO, Non-Executive Director and Corporate Advisor in a wide range of industry sectors in Australia, New Zealand, Asia and Europe in public and privately owned companies. This includes Chief Executive roles at Pepsi, Lion Nathan, Calum Textile Group and Leigh Mardon Group. Mr Head has extensive Board experience as both Non-Executive and Executive Director including previously as Non-Executive Director of ASX listed Snack Brands Limited. He is currently a Director of Fairtrade Australia and New Zealand Limited. Mr Wayne Materne – Company Secretary and Chief Financial Officer Mr Materne was appointed Company Secretary and Chief Financial Officer of Clean Seas on 22 August 2014. Mr Materne is a Fellow of CPA Australia and a Graduate Member of the Australian Institute of Company Directors. He has extensive experience in CFO and senior finance roles in the agribusiness and manufacturing sectors with ASX listed and unlisted companies. This includes experience in livestock, forestry and wine / viticulture with companies including Elders, SA Forestry Corporation, Southcorp and Nepenthe. | 22 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Clean Seas Tuna Limited | Directors’ Report (cid:13) Directors(cid:38) meetin(cid:21)s The number of Board meetings and meetings of Board Committees held during the year, and the number of meetings attended by each Director is as follows: (cid:17)oard (cid:24)eetin(cid:33)s F(cid:16)(cid:26)(cid:24) Committee (cid:2)2(cid:3) (cid:26)emuneration and (cid:25)ominations Committee (cid:19)irector(cid:46)s name (cid:16) (cid:17) (cid:16) (cid:17) (cid:16) (cid:17) (cid:35)(cid:40)(cid:59)(cid:50) (cid:37)(cid:58)(cid:44)(cid:44)(cid:56)(cid:44) (cid:33)(cid:48)(cid:42)(cid:49) (cid:22)(cid:59)(cid:56)(cid:56)(cid:53)(cid:61)(cid:57) (cid:28)(cid:40)(cid:46)(cid:44)(cid:52) (cid:37)(cid:58)(cid:44)(cid:47)(cid:56) (cid:4)(cid:12)(cid:5) (cid:32)(cid:40)(cid:56)(cid:42)(cid:59)(cid:57) (cid:37)(cid:58)(cid:44)(cid:47)(cid:56) (cid:12)(cid:13) (cid:12)(cid:13) (cid:12)(cid:13) (cid:12)(cid:13) (cid:12)(cid:13) (cid:12)(cid:13) (cid:12)(cid:11) (cid:12)(cid:11) (cid:16) (cid:16) (cid:8) (cid:16) (cid:16) (cid:16) (cid:8) (cid:16) (cid:13) (cid:13) (cid:8) (cid:13) (cid:13) (cid:13) (cid:8) (cid:13) (cid:24)(cid:40)(cid:60)(cid:48)(cid:43) (cid:28)(cid:44)(cid:40)(cid:43) (cid:4)(cid:14)(cid:5) (cid:13) (cid:4)(cid:12)(cid:5) (cid:35)(cid:40)(cid:59)(cid:50) (cid:36)(cid:53)(cid:41)(cid:48)(cid:52)(cid:57)(cid:53)(cid:52) (cid:40)(cid:58)(cid:58)(cid:44)(cid:52)(cid:43)(cid:44)(cid:43) (cid:13) (cid:22)(cid:53)(cid:40)(cid:56)(cid:43) (cid:51)(cid:44)(cid:44)(cid:58)(cid:48)(cid:52)(cid:46)(cid:57) (cid:40)(cid:52)(cid:43) (cid:16) (cid:26)(cid:21)(cid:36)(cid:32) (cid:51)(cid:44)(cid:44)(cid:58)(cid:48)(cid:52)(cid:46)(cid:57) (cid:41)(cid:63) (cid:48)(cid:52)(cid:60)(cid:48)(cid:58)(cid:40)(cid:58)(cid:48)(cid:53)(cid:52) (cid:40)(cid:57) (cid:21)(cid:50)(cid:58)(cid:44)(cid:56)(cid:52)(cid:40)(cid:58)(cid:44) (cid:24)(cid:48)(cid:56)(cid:44)(cid:42)(cid:58)(cid:53)(cid:56) (cid:45)(cid:53)(cid:56) (cid:28)(cid:40)(cid:46)(cid:44)(cid:52) (cid:15) (cid:13) (cid:17) (cid:8) (cid:8) (cid:37)(cid:58)(cid:44)(cid:47)(cid:56)(cid:9) (cid:4)(cid:13)(cid:5) (cid:26)(cid:21)(cid:36)(cid:32) (cid:23)(cid:53)(cid:51)(cid:51)(cid:48)(cid:58)(cid:58)(cid:44)(cid:44) (cid:48)(cid:57) (cid:58)(cid:47)(cid:44) (cid:26)(cid:48)(cid:52)(cid:40)(cid:52)(cid:42)(cid:44)(cid:7) (cid:21)(cid:59)(cid:43)(cid:48)(cid:58) (cid:40)(cid:52)(cid:43) (cid:36)(cid:48)(cid:57)(cid:49) (cid:32)(cid:40)(cid:52)(cid:40)(cid:46)(cid:44)(cid:51)(cid:44)(cid:52)(cid:58) (cid:23)(cid:53)(cid:51)(cid:51)(cid:48)(cid:58)(cid:58)(cid:44)(cid:44)(cid:9) (cid:4)(cid:14)(cid:5) (cid:21)(cid:54)(cid:54)(cid:53)(cid:48)(cid:52)(cid:58)(cid:44)(cid:43) (cid:13)(cid:19) (cid:30)(cid:40)(cid:52)(cid:59)(cid:40)(cid:56)(cid:63) (cid:13)(cid:11)(cid:12)(cid:17)(cid:7) (cid:47)(cid:53)(cid:61)(cid:44)(cid:60)(cid:44)(cid:56) (cid:61)(cid:40)(cid:57) (cid:48)(cid:52)(cid:60)(cid:48)(cid:58)(cid:44)(cid:43) (cid:58)(cid:53) (cid:40)(cid:58)(cid:58)(cid:44)(cid:52)(cid:43) (cid:13) (cid:22)(cid:53)(cid:40)(cid:56)(cid:43) (cid:51)(cid:44)(cid:44)(cid:58)(cid:48)(cid:52)(cid:46)(cid:57) (cid:40)(cid:57) (cid:53)(cid:41)(cid:57)(cid:44)(cid:56)(cid:60)(cid:44)(cid:56) (cid:54)(cid:56)(cid:48)(cid:53)(cid:56) (cid:58)(cid:53) (cid:42)(cid:53)(cid:51)(cid:51)(cid:44)(cid:52)(cid:42)(cid:48)(cid:52)(cid:46) (cid:40)(cid:57) (cid:32)(cid:40)(cid:52)(cid:40)(cid:46)(cid:48)(cid:52)(cid:46) (cid:24)(cid:48)(cid:56)(cid:44)(cid:42)(cid:58)(cid:53)(cid:56) (cid:40)(cid:52)(cid:43) (cid:23)(cid:25)(cid:34)(cid:9) Where: column A is the number of meetings the Director was entitled to attend column B is the number of meetings the Director attended (cid:14)nissued s(cid:22)ares under option There are no unissued ordinary shares of Clean Seas under option at the date of this report. S(cid:22)ares issued durin(cid:21) or since t(cid:22)e end of t(cid:22)e year as a result of e(cid:36)ercise During or since the end of the financial year, the Company has not issued ordinary shares as a result of the exercise of options. Remuneration Report (cid:2)audited(cid:3) The Directors of Clean Seas Tuna Limited (‘the Group’) present the Remuneration Report for Non- Executive Directors and other Key Management Personnel, prepared in accordance with the Corporations Act 2001 and the Corporations Regulations 2001. 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 Bonuses included in remuneration; and e Other information. a Principles used to determine t(cid:22)e nature and amount of remuneration The principles of the Group’s executive strategy and supporting incentive programs and frameworks are: • • • to align rewards to business outcomes that deliver value to shareholders; to drive a high performance culture by setting challenging objectives and rewarding high performing individuals; and to ensure remuneration is competitive in the relevant employment market place to support the attraction, motivation and retention of executive talent. 23 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 (cid:14) Directors’ Report | Clean Seas Tuna Limited The Board has established a Remuneration and Nominations Committee which operates in accordance with its charter as approved by the Board and is responsible for determining and reviewing compensation arrangements for the Directors and the Executive Team. The Committee engages independent remuneration consultants to provide any necessary information to assist in the discharge of its responsibilities. No such consultant was engaged during the year. (cid:33)(cid:53)(cid:52)(cid:8)(cid:25)(cid:62)(cid:44)(cid:42)(cid:59)(cid:58)(cid:48)(cid:60)(cid:44) (cid:24)(cid:48)(cid:56)(cid:44)(cid:42)(cid:58)(cid:53)(cid:56) (cid:36)(cid:44)(cid:51)(cid:59)(cid:52)(cid:44)(cid:56)(cid:40)(cid:58)(cid:48)(cid:53)(cid:52) In accordance with best practice corporate governance, the remuneration of Non-Executive Directors is structured separately from that of Executive Directors and Senior Executives. The Company’s Non-Executive Directors receive only fees (including statutory superannuation) for their services and the reimbursement of reasonable expenses. The Board reviews its fees to ensure the Company’s Non-Executive Directors are fairly remunerated for their services, recognising the level of skill and experience required to conduct the role and to have in place a fee scale which enables the Company to attract and retain talented Non-Executive Directors. The advice of independent remuneration consultants is taken from time to time so as to establish that Directors’ fees are in line with market standards. No remuneration consultants were retained this financial year. Non-Executive Directors do not receive any shares, options or other securities in addition to their remuneration and are not eligible to participate in any Company share plans or any other incentive plans that may be in operation. They do not receive any retirement benefits other than compulsory superannuation where applicable. The aggregate remuneration paid to all the Non-Executive Directors (inclusive of statutory superannuation) may not exceed the current “fee pool” limit of $360,000. This ‘fee pool’ is only available to Non-Executive Directors, as Board membership is taken into account in determining the remuneration paid to Executive Directors as part of their normal employment conditions. Annual Directors’ fees are currently set at $120,000 for the Chairman of the Board and $60,000 for all other Directors. No separate fees are paid for Board Committee membership(cid:9) (cid:37)(cid:44)(cid:52)(cid:48)(cid:53)(cid:56) (cid:25)(cid:62)(cid:44)(cid:42)(cid:59)(cid:58)(cid:48)(cid:60)(cid:44) (cid:36)(cid:44)(cid:51)(cid:59)(cid:52)(cid:44)(cid:56)(cid:40)(cid:58)(cid:48)(cid:53)(cid:52) The remuneration structure adopted by the Group for FY16 consists of the following components: • • • fixed remuneration being annual salary and benefits short term incentives, being cash bonuses; and long term incentive, being share based remuneration, in the case of the Managing Director and CEO The Remuneration and Nominations Committee assess the appropriateness of the nature and amount of remuneration on a periodic basis by reference to recent employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Executive Team. | 24 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Clean Seas Tuna Limited | Directors’ Report (cid:15) The payment of bonuses is reviewed by the Remuneration and Nominations Committee annually as part of the review of executive remuneration and a recommendation is put to the Board for approval. All bonuses must be linked to pre-determined performance criteria. (cid:37)(cid:47)(cid:53)(cid:56)(cid:58) (cid:38)(cid:44)(cid:56)(cid:51) (cid:29)(cid:52)(cid:42)(cid:44)(cid:52)(cid:58)(cid:48)(cid:60)(cid:44) (cid:4)(cid:37)(cid:38)(cid:29)(cid:5) The Group’s performance measures involve the use of annual performance objectives, metrics and performance appraisals. Financial targets are based on profit before tax or profit contribution. Non- financial targets are based on strategic goals set in relation to the main priorities for the position. The performance measures are set annually after consultation with the Directors and executives and are specifically tailored to the areas where each executive has a level of control. The measures target areas the Board believes hold the greatest potential for business improvement, expansion and profit and cover financial and non-financial measures. The Key Performance Indicators (‘KPI’s’) for the Executive Team in FY16 are summarised as follows: • Managing Director and CEO (David Head – from 28 January 2016): Pre-tax profit in H2FY16, sales targets, clearance of excess stock, development of China market entry strategy and strategic review of the business. • Chief Executive (Craig Foster – to 28 January 2016): Economic Food Conversion Ratio for yellowtail kingfish, profit contribution from yellowtail kingfish and aquaculture produced Southern Bluefin Tuna juvenile numbers; • CFO and Company Secretary: Consolidated NPBT and personal targets related to the position; and • General Manager – Sales & Marketing: Consolidated NPBT and personal targets related to the position; (cid:31)(cid:53)(cid:52)(cid:46) (cid:38)(cid:44)(cid:56)(cid:51) (cid:29)(cid:52)(cid:42)(cid:44)(cid:52)(cid:58)(cid:48)(cid:60)(cid:44) (cid:4)(cid:31)(cid:38)(cid:29)(cid:5) A share based LTI was applicable to the previous Chief Executive (Dr Craig Foster), based on an entitlement to Performance Rights, being rights to acquire shares at a specified price, if the VWAP of Clean Seas shares ranged above a specified range in the month of June 2015. These share price levels were not achieved and therefore no entitlement to Performance Rights arose. A share based LTI for the new Managing Director and CEO (Mr David Head) will be submitted to the 2016 Annual General Meeting for approval. (cid:35)(cid:44)(cid:56)(cid:45)(cid:53)(cid:56)(cid:51)(cid:40)(cid:52)(cid:42)(cid:44) (cid:36)(cid:44)(cid:60)(cid:48)(cid:44)(cid:61)(cid:57) Management have regular annual performance reviews in accordance with established procedures. Pursuant to the Board’s and Board Committee’s respective Charters, the Board conducts annual evaluations of its performance, the performance of its Committees, the Chairman, individual Directors and the key governance processes that support the Board’s work. The respective Board Committee Charters also require the Committees to evaluate their performance and composition at least annually to determine whether they are functioning effectively by reference to current best practice. This evaluation is presented to the Board for review(cid:9) 25 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 10 Directors’ Report | Clean Seas Tuna Limited (cid:39)(cid:53)(cid:58)(cid:48)(cid:52)(cid:46) (cid:40)(cid:52)(cid:43) (cid:42)(cid:53)(cid:51)(cid:51)(cid:44)(cid:52)(cid:58)(cid:57) (cid:51)(cid:40)(cid:43)(cid:44) (cid:40)(cid:58) (cid:58)(cid:47)(cid:44) (cid:23)(cid:53)(cid:51)(cid:54)(cid:40)(cid:52)(cid:63)(cid:64)(cid:57) (cid:50)(cid:40)(cid:57)(cid:58) (cid:21)(cid:52)(cid:52)(cid:59)(cid:40)(cid:50) (cid:27)(cid:44)(cid:52)(cid:44)(cid:56)(cid:40)(cid:50) (cid:32)(cid:44)(cid:44)(cid:58)(cid:48)(cid:52)(cid:46) The Group received 100% ‘yes’ votes on a show of hands on its Remuneration Report for the financial year ending 30 June 2015. The Company received no specific feedback on its Remuneration Report at the Annual General Meeting. (cid:23)(cid:53)(cid:52)(cid:57)(cid:44)(cid:55)(cid:59)(cid:44)(cid:52)(cid:42)(cid:44)(cid:57) (cid:53)(cid:45) (cid:54)(cid:44)(cid:56)(cid:45)(cid:53)(cid:56)(cid:51)(cid:40)(cid:52)(cid:42)(cid:44) (cid:53)(cid:52) (cid:57)(cid:47)(cid:40)(cid:56)(cid:44)(cid:47)(cid:53)(cid:50)(cid:43)(cid:44)(cid:56) (cid:61)(cid:44)(cid:40)(cid:50)(cid:58)(cid:47) In considering the Group’s performance and benefits for shareholder wealth, the Board have regard to the following measures in respect of the current financial year and the previous four financial years: (cid:21)tem (cid:22)(cid:40)(cid:57)(cid:48)(cid:42) (cid:25)(cid:35)(cid:37) (cid:4)(cid:42)(cid:44)(cid:52)(cid:58)(cid:57)(cid:5) (cid:35)(cid:56)(cid:53)(cid:45)(cid:48)(cid:58) (cid:10) (cid:4)(cid:50)(cid:53)(cid:57)(cid:57)(cid:5) (cid:41)(cid:44)(cid:45)(cid:53)(cid:56)(cid:44) (cid:58)(cid:40)(cid:62) (cid:4)(cid:2)(cid:64)(cid:11)(cid:11)(cid:11)(cid:5) (cid:35)(cid:56)(cid:53)(cid:45)(cid:48)(cid:58) (cid:10) (cid:4)(cid:50)(cid:53)(cid:57)(cid:57)(cid:5) (cid:40)(cid:45)(cid:58)(cid:44)(cid:56) (cid:58)(cid:40)(cid:62) (cid:4)(cid:2)(cid:64)(cid:11)(cid:11)(cid:11)(cid:5) (cid:33)(cid:44)(cid:58) (cid:21)(cid:57)(cid:57)(cid:44)(cid:58)(cid:57) (cid:4)(cid:2)(cid:64)(cid:11)(cid:11)(cid:11)(cid:5) (cid:37)(cid:47)(cid:40)(cid:56)(cid:44) (cid:54)(cid:56)(cid:48)(cid:42)(cid:44) (cid:40)(cid:58) (cid:14)(cid:11) (cid:30)(cid:59)(cid:52)(cid:44) (cid:4)(cid:42)(cid:44)(cid:52)(cid:58)(cid:57)(cid:5) 2016 201(cid:11) 201(cid:10)(cid:2)(cid:4)(cid:3) 2013(cid:2)(cid:4)(cid:3) 2012 (cid:4)(cid:11)(cid:9)(cid:19)(cid:12)(cid:5) (cid:4)(cid:20)(cid:7)(cid:20)(cid:13)(cid:19)(cid:5) (cid:4)(cid:19)(cid:7)(cid:20)(cid:19)(cid:13)(cid:5) (cid:15)(cid:13)(cid:7)(cid:20)(cid:12)(cid:18) (cid:14)(cid:9)(cid:15) (cid:11)(cid:9)(cid:14)(cid:18) (cid:12)(cid:7)(cid:11)(cid:14)(cid:14) (cid:15)(cid:7)(cid:12)(cid:11)(cid:19) (cid:16)(cid:12)(cid:7)(cid:19)(cid:20)(cid:20) (cid:16)(cid:9)(cid:20) (cid:11)(cid:9)(cid:20)(cid:15) (cid:17)(cid:7)(cid:16)(cid:20)(cid:18) (cid:20)(cid:7)(cid:12)(cid:16)(cid:17) (cid:15)(cid:18)(cid:7)(cid:18)(cid:20)(cid:12) (cid:15)(cid:9)(cid:20) (cid:4)(cid:16)(cid:9)(cid:12)(cid:19)(cid:5) (cid:4)(cid:14)(cid:13)(cid:7)(cid:15)(cid:11)(cid:16)(cid:5) (cid:4)(cid:13)(cid:19)(cid:7)(cid:14)(cid:11)(cid:12)(cid:5) (cid:13)(cid:20)(cid:7)(cid:15)(cid:14)(cid:14) (cid:12)(cid:9)(cid:14) (cid:4)(cid:17)(cid:9)(cid:13)(cid:16)(cid:5) (cid:4)(cid:14)(cid:11)(cid:7)(cid:18)(cid:16)(cid:11)(cid:5) (cid:4)(cid:14)(cid:11)(cid:7)(cid:18)(cid:16)(cid:11)(cid:5) (cid:16)(cid:15)(cid:7)(cid:16)(cid:15)(cid:11) (cid:13)(cid:9)(cid:13) (cid:4)(cid:6)(cid:5) (cid:36)(cid:44)(cid:57)(cid:58)(cid:40)(cid:58)(cid:44)(cid:43) (cid:58)(cid:53) (cid:56)(cid:44)(cid:45)(cid:50)(cid:44)(cid:42)(cid:58) (cid:42)(cid:47)(cid:40)(cid:52)(cid:46)(cid:44) (cid:48)(cid:52) (cid:36)(cid:3)(cid:24) (cid:58)(cid:40)(cid:62) (cid:48)(cid:52)(cid:42)(cid:44)(cid:52)(cid:58)(cid:48)(cid:60)(cid:44) (cid:56)(cid:44)(cid:45)(cid:59)(cid:52)(cid:43) (cid:40)(cid:42)(cid:42)(cid:53)(cid:59)(cid:52)(cid:58)(cid:48)(cid:52)(cid:46) | 26 Clean Seas Tuna Limited | Directors’ Report e c n a m r o f r e P d e s a b f o e g a t n e c r e p n o i t a r e n u m e r d e s a b - e r a h S n o i t a n m r e T i m r e t - g n o L l t n e m y o p m e - t s o P s t n e m y a p s t i f e n e b s t i f e n e b s t i f e n e b s t i f e n e b e e y o p m e m r e t l t r o h S n o i t a n m r e T i e c i v r e s g n o L y r a t e n o m - n o N y r a l a s h s a C l a t o T s n o i t p O s t n e m y a p e v a e l n o i t a u n n a r e p u S s t i f e n e b s u n o b h s a C s e e f d n a r a e Y e e y o p m E l ) 0 0 0 ’ $ ( n o i t a r e n u m e r l e n n o s r e P t n e m e g a n a M y e K r e h t o d n a r o t c e r i D e l b a t e h t n i n w o h s e r a p u o r G e h t f o ) ’ P M K ‘ ( l e n n o s r e P t n e m e g a n a M y e K h c a e f o n o i t a r e n u m e r e h t f o t n e m e l e h c a e f o t n u o m a d n a e r u t a n e h t f o s l i a t e D n o i t a r e n u m e r f o s l i a t e D b : w o l e b - - - - - - - - - - - - % 3 3 - % 6 % (cid:17) 1 - - - - % 7 % 7 0 2 1 0 2 1 0 6 0 6 0 6 0 6 0 6 0 6 - - - 6 4 2 3 2 2 (cid:13) 1 (cid:13) 0 4 2 6 9 1 - 7 3 1 5 1 2 7 2 4 2 2 , 1 (cid:13) 7 0 (cid:6) 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 9 - - - - - - 9 9 9 9 9 - - - - - - - - - - 1 - - 6 2 1 1 - - 1 - 7 4 1 - - - - - - 5 5 - - - 5 1 1 2 1 3 0 2 7 1 - 7 7 1 2 8 7 2 6 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 0 8 - 7 6 0 1 - - - - 0 8 7 7 0 2 1 0 2 1 0 6 0 6 0 6 0 6 5 5 5 5 - - - 0 5 1 3 9 1 0 1 3 8 0 2 (cid:17) 6 1 - 1 3 7 9 1 5 2 9 2 (cid:17) 3 4 0 , 1 6 1 0 2 5 1 0 2 6 1 0 2 5 1 0 2 6 1 0 2 5 1 0 2 6 1 0 2 5 1 0 2 6 1 0 2 5 1 0 2 s r o t c e r i D e v i t u c e x E - n o N t n e d n e (cid:53) e d n (cid:27) (cid:6) n a m r i a h (cid:21) e r e e t (cid:35) l (cid:57) a (cid:33) ) 1 ( r h e t (cid:35) n e g a H s (cid:59) o r r (cid:57) (cid:20) (cid:48) (cid:41) N i t n e d n e (cid:53) e d n (cid:27) r o t (cid:41) e r i D e t a n r e t l (cid:19) n o s n (cid:40) o (cid:34) i l (cid:57) a (cid:33) r h e t (cid:35) s (cid:57) (cid:41) r a M l e n n o s r e P t n e m e g a n a M y e K r e h t O 6 1 0 2 5 1 0 2 6 1 0 2 5 1 0 2 6 1 0 2 5 1 0 2 6 1 0 2 5 1 0 2 6 1 0 2 5 1 0 2 6 1 0 2 5 1 0 2 O (cid:23) (cid:21) (cid:3) r o t (cid:41) e r i i D g n g a n a M ) 2 ( d a e H d v a D i (cid:3) O (cid:24) (cid:21) - e n r e t a M e n y a W ) (cid:13) ( y r a t e r (cid:41) e (cid:35) y n a (cid:53) m o (cid:21) ) 5 ( y r a t e r (cid:41) e (cid:35) y n a (cid:53) m o (cid:21) (cid:3) O (cid:24) (cid:21) (cid:62) t i h g n (cid:29) (cid:48) n a r (cid:24) l s e a (cid:35) M (cid:25) (cid:62) y e m o o T s e l i M ) 6 ( g n i t e (cid:48) r a M (cid:3) ) 3 ( r e t s o (cid:24) g a r (cid:21) i e v i t (cid:57) (cid:41) e (cid:60) (cid:23) i f e h (cid:21) l a t o T 6 1 0 2 l a t o T 5 1 0 2 6 1 0 2 y r a (cid:57) n a (cid:28) (cid:17) 2 d e r i t e (cid:34) ) 3 ( 6 1 0 2 y r a (cid:57) n a (cid:28) (cid:17) 2 i d e t n o (cid:53) (cid:53) (cid:19) ) 2 ( r o t (cid:41) e r i D e h t h t i (cid:59) d e t a (cid:41) o s s a i y n a (cid:53) m o (cid:41) a o t i d a (cid:53) s e e f s r o t (cid:41) e r i D 5 1 0 2 y a M (cid:13) i d e t n o (cid:53) (cid:53) (cid:19) ) 6 ( (cid:13) 1 0 2 t s (cid:57) g (cid:57) (cid:19) 2 2 d e r i t e (cid:34) ) 5 ( (cid:13) 1 0 2 t s (cid:57) g (cid:57) (cid:19) 2 2 d e t i n o (cid:53) (cid:53) (cid:19) ) 1 ( ) (cid:13) ( 1 1 s t n e m e t a t S i l a i c n a n F d e t a d i l o s n o C – d e t i i m L a n u T s a e S n a e l C 6 1 0 2 e n u J 0 3 d e d n e r a e y e h t r o F 27 | e h t f o s n o i s i v o r p r o j a m e h T . t n e m e e r g A e c i v r e S a n i d e s i l a m r o f e r a l e n n o s r e P t n e m e g a n a M y e K r e h t O e h t r o f t n e m y o p m e l f o s m r e t r e h t o d n a n o i t a r e n u m e R : w o l e b t u o t e s e r a n o i t a r e n u m e r o t g n i t a l e r s t n e m e e r g a 6 r e t f a ( s h t n o m 9 / s h t n o m 3 ) s h t n o m s h t n o m 3 s h t n o m 3 i g n o g n O i g n o g n O i g n o g n O s e Y o N s e Y 5 6 3 0 0 2 0 7 1 d o i r e p e c i t o N t n e m e e r g a f o m r e T e c n a (cid:57) o l l (cid:19) (cid:8) e l c i h e (cid:35) r o t o M 0 0 0 ’ $ y r a l a s e s a (cid:20) e n r e t a M e n y a W y e m o o T s e l i M . d a e H d v a D i e m a N : s w o l l o f s a e r a d e x i f e r a t a h t e s o h t d n a e c n a m r o f r e p o t d e k n i l e r a t a h t n o i t a r e n u m e r f o s n o i t r o p o r p e v i t a l e r e h T s n o i t p o - (cid:46) s i r t (cid:19) (cid:25) T S - (cid:46) s i r t (cid:19) n o i t a r e n u m e r d e x F i e m a N - - - % 9 2 % 3 2 % 1 2 % 1 7 % 7 7 % 9 7 l e n n o s r e P t n e m e g a n a M y e K r e h t O e n r e t a M e n y a W y e m o o T s e l i M d a e H d v a D i s t n e m e e r (cid:9) a e (cid:6) i (cid:19) r e (cid:3) (cid:6) 2 1 s t n e m e t a t S i l a i c n a n F d e t a d i l o s n o C – d e t i i m L a n u T s a e S n a e l C 6 1 0 2 e n u J 0 3 d e d n e r a e y e h t r o F Directors’ Report | Clean Seas Tuna Limited | 28 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Clean Seas Tuna Limited | Directors’ Report 13 d Bonuses included in remuneration Details of the short-term incentive cash bonuses awarded as remuneration to each Key Management Personnel for FY16, the percentage of the available bonus that was awarded in the financial year and the percentage that was forfeited because the performance criteria were not achieved is set out below. No part of the bonus carries forward to future years. The awarded bonuses have been recognised in FY16 and will be paid in FY17. Other Key Management Personnel David (cid:28)ead Craig Foster (cid:39)ayne Materne Miles Toomey e Other information Included in remuneration ($’000) Percentage vested during the year Percentage forfeited during the year 80 - - - 100(cid:3) - - - - 100(cid:3) 100(cid:3) 100(cid:3) Shares held by (cid:30)ey Management Personnel The number of ordinary shares in the Company during the 2016 reporting period held by each of the Group’s Key Management Personnel, including their related parties, is set out below: Year ended 30 June 2016 – Shares’000 Personnel P Steere (cid:33) Burrows (cid:28) Stehr (1) M Stehr P Robinson D (cid:28)ead (1) C Foster (2) (cid:39) Materne M Toomey Totals Balance at start of year Granted as remuneration Received on exercise Other changes Held at the end of reporting period (cid:14)(cid:15)(cid:17) (cid:14)31 100,31(cid:15) (cid:17)30 1,(cid:17)(cid:15)0 - (cid:14),(cid:14)16 - - 108,099 - - - - - - - - - - - - - - - - - - - - - - 800 - - 3,881 ((cid:14),(cid:14)16) - - 265 (cid:14)(cid:15)(cid:17) (cid:14)31 101,11(cid:15) (cid:17)30 1,(cid:17)(cid:15)0 3,881 - - - 108,364 (1) Changes are on market purchases (2) Retired during FY16 and reporting discontinued None of the shares included in the table above are held nominally by Key Management Personnel. No options to acquire shares are held by Key Management Personnel. (cid:34)ther Transactions with (cid:30)ey Management Personnel The Group's related parties comprise its key management and entities associated with key management. The largest shareholder in Clean Seas Tuna Limited is Australian Tuna Fisheries Pty Ltd (ATF). ATF and its associated entities controlled 9.1% of issued shares at 30 June 2016 (2015: 9.1%) and it is associated with Stehr Group Pty Ltd and Sanchez Tuna Pty Ltd. All transactions with related parties are negotiated on a commercial arms length basis. These transactions were as follows: 29 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 14 Directors’ Report | Clean Seas Tuna Limited Australian Tuna Fisheries Pty Ltd: • Receipts for ice, expenses, SBT quota lease and contract labour • Payments for towing, contract labour, fish feed, marina and net shed rent, fish and electricity Stehr Group Pty Ltd • Payments for office rent PSMMR Pty Ltd (associated with Paul Robinson – Alternate Director) • Payments for consulting services 2016 $’000 2015 $’000 11 380 13 56 11 326 10 36 The following balances are outstanding as at the reporting date in relation to transactions with related parties: Current Payables • Australian Tuna Fisheries Pty Ltd • PSMMR Pty Ltd End of audited Remuneration Report. 2016 $’000 3(cid:16) 15 2015 $’000 18 - (cid:13)n(cid:42)ironmental le(cid:30)islation The Group’s operations are subject to Commonwealth and State regulations governing marine and hatchery operations, processing, land tenure and use, environmental requirements including site specific environmental licences, permits and statutory authorisations, workplace health and safety and trade and export. The Group’s management regularly and routinely monitor compliance with the relevant environmental regulations and compliance is regularly reported to the Board. The Group has well established procedures to monitor and manage compliance with existing environmental regulations and new regulations as they come into force. The Directors believe that all regulations have been met during the period covered by this Annual Financial Report and are not aware of any significant environmental incidents arising from the operations of the consolidated entity during the financial year. Further information in relation to specific regulated areas of the operation is as follows: • The Arno Bay and Port Augusta Hatcheries are licenced to operate under an Aquaculture Land based Category C License issued by the South Australian Minister for Agriculture, Food and Fisheries under the Aquaculture Act 2001. The licensee is required to comply with the requirements of all statutes, regulations, by-laws, ordinances, rules, notices or orders lawfully given pursuant to the Aquaculture Act 2001, Aquaculture Regulations 2005, Environment Protection (Water Quality) Policy 2003 and the Livestock Act 1997. Clean Seas has not recorded any breaches of the license requirements. • The Group operates 29 marine aquaculture licenses issued by The South Australian Minister for Agriculture, Food and Fisheries under the Aquaculture Act 2001. The licensee is required to comply with the requirements of all statutes, regulations, by-laws, ordinances, rules, notices or orders lawfully given pursuant to the Aquaculture Act 2001, Aquaculture Regulations 2005, | 30 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Clean Seas Tuna Limited | Directors’ Report 15 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 16 (cid:22)oundin(cid:30) of amounts Clean Seas is a type of Company referred to in ASIC Class Order 2016/191 and therefore the amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable), or in certain cases, to the nearest dollar under the option permitted in the Class Order. Signed in accordance with a resolution of the Directors. Paul Steere Chairman 31 August 2016 Environment Protection (Water Quality) Policy 2003 and the Livestock Act 1997. There have been no material recorded breaches of the license requirements with temporary approval having been received to carry additional biomass in the Port Lincoln licences. (cid:16)ndemnities (cid:30)i(cid:42)en to and insurance (cid:37)remiums (cid:37)aid for (cid:12)irectors and officers Under rules 50 and 51 of the Company’s Constitution, each of the Company’s Directors, the Company Secretary and every other person who is an officer is indemnified to the extent permitted by law and Directors and Officers Liability Insurance has been implemented. The terms of the insurance contract prohibit the Company from disclosing the level of premium paid. Each Director and the Company Secretary has entered into a Deed of Indemnity and Access which indemnifies a Director or officer against liabilities arising as a result of acting as a Director or officer subject to certain exclusions and provides for related legal costs to be paid by the Company. The Deed requires the Company to maintain an insurance policy against any liability incurred by a Director or officer in his or her capacity as a Director or officer during that person’s term of office and seven years thereafter. It also provides a Director or officer with a right of access to Board papers and other documentation while in office and for seven years thereafter. (cid:19)on(cid:3)audit ser(cid:42)ices During the year, Grant Thornton, the Company’s auditors, performed certain other services in addition to their statutory audit duties. The Board has considered the non-audit services provided during the year by the auditor and, in accordance with written advice provided by resolution of the FARM Committee, is satisfied that the provision of those non-audit services during the year is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons: • • all non-audit services were subject to the corporate governance procedures adopted by the Company and have been reviewed by the FARM Committee to ensure they do not impact upon the impartiality and objectivity of the auditor; and the non-audit services do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision- making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards. Details of the amounts paid to the auditors of the Company, Grant Thornton, and its related practices for audit and non-audit services provided during the year are set out in Note 25 to the Financial Statements. A copy of the Auditor’s Independence Declaration as required under s307C of the Corporations Act 2001 is included on page 20 of this financial report and forms part of this Directors’ Report. (cid:21)roceedin(cid:30)s of (cid:25)ehalf of the (cid:11)om(cid:37)an(cid:44) 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. 31 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 16 Directors’ Report | Clean Seas Tuna Limited (cid:22)oundin(cid:30) of amounts Clean Seas is a type of Company referred to in ASIC Class Order 2016/191 and therefore the amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable), or in certain cases, to the nearest dollar under the option permitted in the Class Order. Signed in accordance with a resolution of the Directors. Paul Steere Chairman 31 August 2016 | 32 Clean Seas Tuna Limited | Auditor’s Independence Declaration Auditor’s Independence Declaration (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) Level 1, 67 Greenhill Rd Wayville SA 5034 Correspondence to: GPO Box 1270 Adelaide SA 5001 T 61 8 8372 6666 Level 1, F 61 8 8372 6677 67 Greenhill Rd E info.sa@au.gt.com Wayville SA 5034 W www.grantthornton.com.au Correspondence to: GPO Box 1270 Adelaide SA 5001 T 61 8 8372 6666 F 61 8 8372 6677 E info.sa@au.gt.com W www.grantthornton.com.au (cid:36)(cid:56)(cid:39)(cid:44)(cid:55)(cid:50)(cid:53)(cid:183)(cid:54)(cid:3)(cid:44)(cid:49)(cid:39)(cid:40)(cid:51)(cid:40)(cid:49)(cid:39)(cid:40)(cid:49)(cid:38)(cid:40)(cid:3)(cid:39)(cid:40)(cid:38)(cid:47)(cid:36)(cid:53)(cid:36)(cid:55)(cid:44)(cid:50)(cid:49)(cid:3) (cid:3) 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(cid:45)(cid:3)(cid:47)(cid:3)(cid:43)(cid:88)(cid:80)(cid:83)(cid:75)(cid:85)(cid:72)(cid:92)(cid:3) (cid:51)(cid:68)(cid:85)(cid:87)(cid:81)(cid:72)(cid:85)(cid:3)(cid:178)(cid:3)(cid:36)(cid:88)(cid:71)(cid:76)(cid:87)(cid:3)(cid:9)(cid:3)(cid:36)(cid:86)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:3) (cid:3) (cid:36)(cid:71)(cid:72)(cid:79)(cid:68)(cid:76)(cid:71)(cid:72)(cid:15)(cid:3)(cid:22)(cid:20)(cid:3)(cid:36)(cid:88)(cid:74)(cid:88)(cid:86)(cid:87)(cid:3)(cid:21)(cid:19)(cid:20)(cid:25) (cid:3) Grant Thornton Audit Pty Ltd ACN 130 913 594 (cid:3) a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme Grant Thornton Audit Pty Ltd ACN 130 913 594 applies. a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies. 33 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 18 Corporate Governance Statement Corporate Governance Statement Corporate Governance Statement | Clean Seas Tuna Limited The Board is committed to achieving and demonstrating the highest standards of corporate governance. As such, Clean Seas Tuna Limited and its Controlled Entity (‘the Group’) have adopted the third edition of the Corporate Governance Principles and Recommendations which was released by the ASX Corporate Governance Council on 27 March 2014 and became effective for financial years beginning on or after 1 July 2014. The Group’s Corporate Governance Statement for the financial year ending 30 June 2016 is dated as at 30 June 2016 and was approved by the Board on 31 August 2016. The Corporate Governance Statement is available on Clean Seas’ website at www.cleanseas.com.au/main/investor- information/corporate-governance. | 34 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 20 Clean Seas Tuna Limited | Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Profit or Loss and Consolidated Statement of Profit or Loss Other Comprehensive Income and Other Comprehensive Income (cid:14)or the (cid:44)ear ended (cid:7)(cid:4) (cid:17)une (cid:6)(cid:4)(cid:5)(cid:8) Revenue (cid:34)ther income (cid:33)et gain arising from changes in fair value of (cid:40)ellowtail (cid:30)ingfish Fish husbandry expense (cid:25)mployee benefits expense Fish processing and selling expense Cost of goods sold – Fro(cid:64)en inventory (cid:39)rite-down to net realisable value - Fro(cid:64)en inventory Depreciation and amortisation expense (cid:34)ther expenses Profit (cid:8) (Loss) (cid:38)efore finance items and tax Finance costs Finance income Profit (cid:8) (Loss) (cid:38)efore tax (cid:29)ncome tax benefit (cid:9) (expense) Profit (cid:8) (Loss) for the year from continuing operations Other comprehensive income for the year, net of tax Total comprehensive income (cid:8) (loss) for the year (cid:30)otes 6 (cid:17) 1(cid:14) 21(cid:8)1 1(cid:15) 8 8 (cid:19) 2016 $’000 30,089 4(cid:16)3 1,986 (20,894) (6,293) ((cid:16),026) (2,148) (1,24(cid:16)) (1,821) (2,959) (9,840) (95) (cid:16) (9,928) 946 (8,982) - (8,982) 201(cid:15) (cid:2)(cid:66)000 18,(cid:14)81 1,(cid:15)36 11,3(cid:17)8 (1(cid:17),3(cid:17)2) ((cid:15),(cid:17)(cid:14)(cid:15)) (3,8(cid:17)0) (102) ((cid:14)8) (1,(cid:17)0(cid:15)) (1,62(cid:19)) (cid:19)2(cid:14) ((cid:17)) 116 1,033 3,0(cid:17)(cid:15) (cid:14),108 - (cid:14),108 Profit for the year and total comprehensive income for the year are attributable to owners of the parent(cid:8) (8,982) (cid:14),108 (cid:23)arnings per share from continuing operations(cid:19) Basic earnings per share (cents per share) Diluted earnings per share (cents per share) 23(cid:8)1 23(cid:8)1 (0(cid:7)81) (0(cid:7)81) 0(cid:8)3(cid:17) 0(cid:8)3(cid:17) Note: This statement should be read in conjunction with the notes to the financial statements. 35 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Consolidated Statement of Financial Position | Clean Seas Tuna Limited 21 Consolidated Statement of Consolidated Statement of Financial Position Financial Position As at 30 June 2016 Assets Current Cash and cash equivalents Trade and other receivables Inventories Prepayments Biological assets Current assets Non-current Property, plant and equipment Biological assets Intangible assets Non-current assets TOTAL ASSETS Liabilities Current Trade and other payables Borrowings Provisions Current liabilities Non-current Borrowings Provisions Non-current liabilities TOTAL LIABILITIES Net assets Notes 2016 $’000 2015 $’000 10 11 13 14 15 16 17 18 19 20 19 20 598 3,699 4,088 188 25,036 33,609 13,003 244 3,027 16,274 49,883 3,101 3,063 545 6,709 68 189 257 6,966 42,917 1,513 6,240 2,451 209 27,598 38,011 13,262 244 3,027 16,533 54,544 1,791 166 556 2,513 84 48 132 2,645 51,899 Equity Equity attributable to owners of the Parent: • • share capital retained earnings Total equity 22 157,736 157,736 (114,819) (105,837) 42,917 51,899 Note: This statement should be read in conjunction with the notes to the financial statements. | 36 Clean Seas Tuna Limited – Consolidated Financial Statements Clean Seas Tuna Limited | Consolidated Statement of Changes in Equity For the year ended 30 June 2016 22 Consolidated Statement of Consolidated Statement of Changes in Equity Changes in Equity For the year ended 30 June 2016 Balance at 1 July 2014 Transfer – expired options Profit for the year Other comprehensive income Balance at 30 June 2015 Loss for the year Other comprehensive income Balance at 30 June 2016 Notes Share capital $’000 157,736 - - - 157,736 - - 157,736 Share option reserve $’000 1,054 (1,054) - - - - - - Retained earnings $’000 (110,999) 1,054 4,108 - (105,837) (8,982) - (114,819) Total equity $’000 47,791 - 4,108 - 51,899 (8,982) - 42,917 Note: This statement should be read in conjunction with the notes to the financial statements. 37 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Consolidated Statement of Cash Flows | Clean Seas Tuna Limited 23 Consolidated Statement of Consolidated Statement of Cash Flows Cash Flows For the year ended 30 June 2016 Operating activities Receipts from customers Payments to suppliers excluding feed Payments for feed Payments to employees R&D tax incentive refund Net cash used in operating activities 24 Investing activities Purchase of property, plant and equipment Proceeds from disposals of property, plant and equipment Interest received Net cash used in investing activities Financing activities Proceeds from borrowings Repayment of borrowings Interest paid Net cash from financing activities Net change in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 8 10 Note: This statement should be read in conjunction with the notes to the financial statements. Notes 2016 $’000 2015 $’000 26,674 (14,405) (14,521) (6,133) 6,031 (2,354) 17,665 (10,316) (13,054) (5,545) 4,167 (7,083) (1,391) (1,585) - 7 6 116 (1,384) (1,463) 8,580 (5,669) (88) 2,823 (915) 1,513 598 455 (314) (7) 134 (8,412) 9,925 1,513 | 38 Clean Seas Tuna Limited | Notes to the Consolidated Financial Statements Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 24 Notes to the Consolidated Notes to the Consolidated Financial Financial Statements Statements (cid:26)ature o(cid:37) o(cid:46)erat(cid:40)on(cid:49) 1 Clean Seas Tuna Limited and its subsidiary’s (‘the Group’) principal activities include finfish sales and tuna operations. These activities comprise the following: • Finfish sales – The propagation, growout and sale of Yellowtail Kingfish; and • Tuna operations – Research and development activities to produce juveniles of Southern Bluefin Tuna (cid:22)enera(cid:42) (cid:40)n(cid:37)or(cid:43)at(cid:40)on and (cid:49)tate(cid:43)ent o(cid:37) (cid:34)o(cid:43)(cid:46)(cid:42)(cid:40)an(cid:34)e 2 The consolidated general purpose financial statements of the Group have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board (‘AASB’). Compliance with Australian Accounting Standards results in full compliance with the International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board (‘IASB’). Clean Seas Tuna Limited is a for-profit entity for the purpose of preparing the financial statements. Clean Seas Tuna Limited is the Group’s Ultimate Parent Company and is an ASX listed Public Company (ASX: CSS) incorporated and domiciled in Australia. The address of its registered office and its principal place of business is 7 North Quay Boulevard, Port Lincoln South Australia 5606 Australia. The consolidated financial statements for the year ended 30 June 2016 were approved and authorised for issue by the Board of Directors on 31 August 2016. 3 (cid:19)han(cid:38)e(cid:49) (cid:40)n a(cid:34)(cid:34)ount(cid:40)n(cid:38) (cid:46)o(cid:42)(cid:40)(cid:34)(cid:40)e(cid:49) 3(cid:6)1 (cid:26)e(cid:53) and re(cid:52)(cid:40)(cid:49)ed (cid:49)tandard(cid:49) that are e(cid:37)(cid:37)e(cid:34)t(cid:40)(cid:52)e (cid:37)or the(cid:49)e (cid:37)(cid:40)nan(cid:34)(cid:40)a(cid:42) (cid:49)tate(cid:43)ent(cid:49) A number of new and revised standards became effective for the first time to annual periods beginning on or after 1 July 2015. Information on the more significant standard(s) is presented below. (cid:21)(cid:21)(cid:35)(cid:22) 2015(cid:8)4 Amendments to Australian Accounting Standards – Financial Reporting Requirements for Australian Groups with a Foreign Parent AASB 2015-4 amends AASB 128 Investments in Associates and Joint Ventures to ensure that its reporting requirements on Australian groups with a foreign parent align with those currently available in AASB 10 Consolidated Financial Statements for such groups. AASB 128 will now only require the ultimate Australian entity to apply the equity method in accounting for interests in associates and joint ventures, if either the entity or the group is a reporting entity, or both the entity and group are reporting entities. 39 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 25 Notes to the Consolidated Financial Statements | Clean Seas Tuna Limited AASB 2015-4 is applicable to annual reporting periods beginning on or after 1 July 2015. The adoption of this amendment has not had a material impact on the Group. 3(cid:6)2 (cid:17)(cid:34)(cid:34)ount(cid:40)n(cid:38) (cid:30)tandard(cid:49) (cid:40)(cid:49)(cid:49)ued (cid:33)ut not yet e(cid:37)(cid:37)e(cid:34)t(cid:40)(cid:52)e and not (cid:33)e(cid:40)n(cid:38) ado(cid:46)ted ear(cid:42)y (cid:33)y the (cid:22)rou(cid:46) The accounting standards that have not been early adopted for the year ended 30 June 2016, but will be applicable to the Group in future reporting periods, are detailed below. Apart from these standards, other accounting standards that will be applicable in future periods have been reviewed, however they have been considered to be insignificant to the Group. At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Group. Management anticipates that all of the relevant pronouncements will be adopted in the Group's accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the group’s financial statements is provided below. AASB 139 Financial Instruments: Recognition and Measurement (1 January 2018) AASB 9 introduces new requirements for the classification and measurement of financial assets and liabilities and includes a forward-looking ‘expected loss’ impairment model and a substantially- changed approach to hedge accounting. These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of AASB 139. The main changes are: a Financial assets that are debt instruments will be classified based on: (i) the objective of the entity’s business model for managing the financial assets; and (ii) the characteristics of the contractual cash flows. b Allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income (instead of in profit or loss). Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument. c Introduces a ‘fair value through other comprehensive income’ measurement category for particular simple debt instruments. d Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on different bases. e Where the fair value option is used for financial liabilities the change in fair value is to be accounted for as follows: • the change attributable to changes in credit risk are presented in Other Comprehensive Income (OCI) • the remaining change is presented in profit or loss If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in credit risk are also presented in profit or loss. Otherwise, the following requirements have generally been carried forward unchanged from AASB 139 into AASB 9: • classification and measurement of financial liabilities; and • derecognition requirements for financial assets and liabilities | 40 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Clean Seas Tuna Limited | Notes to the Consolidated Financial Statements 26 AASB 9 requirements regarding hedge accounting represent a substantial overhaul of hedge accounting that enable entities to better reflect their risk management activities in the financial statements. Furthermore, AASB 9 introduces a new impairment model based on expected credit losses. This model makes use of more forward-looking information and applies to all financial instruments that are subject to impairment accounting. The entity is yet to undertake a detailed assessment of the impact of AASB 9. AASB 1057 Application of Australian Accounting Standards (1 January 2016) In May 2015, the AASB decided to revise Australian Accounting Standards that incorporate IFRSs to minimise Australian-specific wording even further. The AASB noted that IFRSs do not contain application paragraphs that identify the entities and financial reports to which the Standards (and Interpretations) apply. As a result, the AASB decided to move the application paragraphs previously contained in each Australian Accounting Standard (or Interpretation), unchanged, into a new Standard AASB 1057 Application of Australian Accounting Standards. When this Standard is first adopted for the year ending 30 June 2017, there will be no impact on the financial statements. AASB 15 Revenue from Contracts with Customers (1 January 2018) AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15 (1 January 2018) AASB 2015-8 Amendments to Australian Accounting Standards – Effective Date of AASB 15 (1 January 2017) AASB 15: • replaces AASB 118 Revenue, AASB 111 Construction Contracts and some revenue-related Interpretations: − establishes a new revenue recognition model − changes the basis for deciding whether revenue is to be recognised over time or at a point in time − provides new and more detailed guidance on specific topics (e.g. multiple element arrangements, variable pricing, rights of return, warranties and licensing) − expands and improves disclosures about revenue In May 2015, the AASB issued ED 260 Income of Not-for-Profit Entities, proposing to replace the income recognition requirements of AASB 1004 Contributions and provide guidance to assist not- for-profit entities to apply the principles of AASB 15. The ED was open for comment until 14 August 2015 and the AASB is currently in the process of redeliberating its proposals with the aim of releasing the final amendments in late 2016. AASB 2014-5 incorporates the consequential amendments arising from the issuance of AASB 15. AASB 2015-8 amends the mandatory application date of AASB 15 Revenue from Contracts with Customers so that AASB 15 is required to be applied for annual reporting periods beginning on or after 1 January 2018 instead of 1 January 2017. It also defers the consequential amendments that were originally set out in AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15. The entity is yet to undertake a detailed assessment of the impact of AASB 15. However, based on the entity’s preliminary assessment, the Standard is not expected to have a material impact on the transactions and balances recognised in the financial statements when it is first adopted for the year ending 30 June 2019. 41 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 27 Notes to the Consolidated Financial Statements | Clean Seas Tuna Limited AASB 16 Leases (1 January 2019) AASB 16: • replaces AASB 117 Leases and some lease-related Interpretations • requires all leases to be accounted for ‘on-balance sheet’ by lessees, other than short-term and low value asset leases • provides new guidance on the application of the definition of lease and on sale and lease back accounting • largely retains the existing lessor accounting requirements in AASB 117 • requires new and different disclosures about leases The entity is yet to undertake a detailed assessment of the impact of AASB 16. However, based on the entity’s preliminary assessment, the likely impact on the first time adoption of the Standard for the year ending 30 June 2020 includes: • there will be a significant increase in lease assets and financial liabilities recognised on the balance sheet • the reported equity will reduce as the carrying amount of lease assets will reduce more quickly than the carrying amount of lease liabilities • EBIT in the statement of profit or loss and other comprehensive income will be higher as the implicit interest in lease payments for former off balance sheet leases will be presented as part of finance costs rather than being included in operating expenses • operating cash outflows will be lower and financing cash flows will be higher in the statement of cash flows as principal repayments on all lease liabilities will now be included in financing activities rather than operating activities. Interest can also be included within financing activities. AASB 2014-4 Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of Depreciation and Amortisation (1 January 2016) The amendments to AASB 116 prohibit the use of a revenue-based depreciation method for property, plant and equipment. Additionally, the amendments provide guidance in the application of the diminishing balance method for property, plant and equipment. The amendments to AASB 138 present a rebuttable presumption that a revenue-based amortisation method for intangible assets is inappropriate. This rebuttable presumption can be overcome (i.e. a revenue-based amortisation method might be appropriate) only in two (2) limited circumstances: 1 The intangible asset is expressed as a measure of revenue, for example when the predominant limiting factor inherent in an intangible asset is the achievement of a revenue threshold (for instance, the right to operate a toll road could be based on a fixed total amount of revenue to be generated from cumulative tolls charged); or 2 of the intangible asset are highly correlated. When these amendments are first adopted for the year ending 30 June 2017, there will be no material impact on the transactions and balances recognised in the financial statements. When it can be demonstrated that revenue and the consumption of the economic benefits AASB 2015-1 Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting Standards 2012-2014 Cycle (1 January 2016) These amendments arise from the issuance of Annual Improvements to IFRSs 2012-2014 Cycle in September 2014 by the IASB. Among other improvements, the amendments clarify that when an entity reclassifies an asset (or disposal group) directly from being held for sale to being held for distribution (or vice-versa), the accounting guidance in paragraphs 27-29 of AASB 5 Non-current Assets Held for Sale and Discontinued Operations does not apply. The amendments also state that when an entity determines that the asset (or disposal group) is no longer available for immediate distribution or that the distribution is no longer highly probable, it should cease held-for- distribution accounting and apply the guidance in paragraphs 27-29 of AASB 5. | 42 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Clean Seas Tuna Limited | Notes to the Consolidated Financial Statements 28 When these amendments are first adopted for the year ending 30 June 2017, there will be no material impact on the financial statements. AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101 (1 January 2016) The Standard makes amendments to AASB 101 Presentation of Financial Statements arising from the IASB’s Disclosure Initiative project. The amendments: • clarify the materiality requirements in AASB 101, including an emphasis on the potentially detrimental effect of obscuring useful information with immaterial information • clarify that AASB 101’s specified line items in the statement(s) of profit or loss and other comprehensive income and the statement of financial position can be disaggregated • add requirements for how an entity should present subtotals in the statement(s) of profit and loss and other comprehensive income and the statement of financial position • clarify that entities have flexibility as to the order in which they present the notes, but also emphasise that understandability and comparability should be considered by an entity when deciding that order • remove potentially unhelpful guidance in AASB 101 for identifying a significant accounting policy When these amendments are first adopted for the year ending 30 June 2017, there will be no material impact on the financial statements. AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107 (1 January 2017) AASB 2016-2 amends AASB 107 Statement of Cash Flows to require entities preparing financial statements in accordance with Tier 1 reporting requirements to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. When these amendments are first adopted for the year ending 30 June 2018, there will be no material impact on the financial statements. (cid:30)u(cid:43)(cid:43)ary o(cid:37) a(cid:34)(cid:34)ount(cid:40)n(cid:38) (cid:46)o(cid:42)(cid:40)(cid:34)(cid:40)e(cid:49) (cid:11) (cid:11)(cid:6)1 (cid:27)(cid:52)era(cid:42)(cid:42) (cid:34)on(cid:49)(cid:40)derat(cid:40)on(cid:49) The consolidated financial statements have been prepared using the significant accounting policies and measurement bases summarised below. (cid:11)(cid:6)2 (cid:18)a(cid:49)(cid:40)(cid:49) o(cid:37) (cid:34)on(cid:49)o(cid:42)(cid:40)dat(cid:40)on The Group financial statements consolidate those of the Parent Company and its subsidiary as of 30 June 2016. The Parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. All subsidiaries have a reporting date of 30 June. All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of subsidiaries 43 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 29 Notes to the Consolidated Financial Statements | Clean Seas Tuna Limited have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable. (cid:11)(cid:6)3 (cid:18)u(cid:49)(cid:40)ne(cid:49)(cid:49) (cid:34)o(cid:43)(cid:33)(cid:40)nat(cid:40)on The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred. The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognised in the acquiree’s financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values. Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of: (a) fair value of consideration transferred, (b) the recognised amount of any non-controlling interest in the acquire, and (c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (ie gain on a bargain purchase) is recognised in profit or loss immediately. (cid:11)(cid:6)(cid:11) Fore(cid:40)(cid:38)n (cid:34)urren(cid:34)y tran(cid:49)(cid:42)at(cid:40)on (cid:26)unctional and presentation currency The consolidated financial statements are presented in Australian Dollars (‘$AUD’), which is also the functional currency of the Parent Company. (cid:26)oreign currency transactions and balances Foreign currency transactions are translated into the functional currency of the respective Group entity, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the re-measurement of monetary items at year end exchange rates are recognised in profit or loss. Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the exchange rates at the date of the transaction), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined. (cid:11)(cid:6)(cid:12) (cid:30)e(cid:38)(cid:43)ent re(cid:46)ort(cid:40)n(cid:38) The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors in assessing performance and determining the allocation of resources. The Group’s two operating segments are: • Finfish Sales: All finfish grow out and sales other than propagated Southern Bluefin Tuna. Currently the segment includes Yellowtail Kingfish, Mulloway and some wild caught Tuna. All fish produced are aggregated as one reportable segment as the fish are similar in nature, | 44 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Clean Seas Tuna Limited | Notes to the Consolidated Financial Statements 30 they are grown and distributed to similar types of customers and they are subject to a similar regulatory environment. • Tuna Operations: Propagated Southern Bluefin Tuna operations are treated as a separate segment. All costs associated with the breeding, grow out and sales of SBT are aggregated into one reportable segment. This segment is currently scaled back apart from some strategic research projects. Each of these operating segments is managed separately as they require different technologies, resources and capabilities and are at a different stage of development. All inter-segment transfers are carried out at arm's length prices. The measurement policies the Group uses for segment reporting under AASB 8 are the same as those used in its financial statements. Corporate assets which are not directly attributable to the business activities of any operating segment are not allocated to a segment. There have been no changes from prior periods in the measurement methods used to determine reported segment profit or loss. (cid:11)(cid:6)6 (cid:29)e(cid:52)enue Revenue arises from the sale of goods and the rendering of services. It is measured by reference to the fair value of consideration received or receivable, excluding sales taxes, rebates, and trade discounts. (cid:35)ale of goods Sale of goods is recognised when the Group has transferred to the buyer the significant risks and rewards of ownership. Rendering of services Revenue from the rendering of a service is recognised upon the delivery of the service to the customers. Interest and dividend income Interest income and expenses are reported on an accrual basis using the effective interest method. (cid:11)(cid:6)(cid:14) (cid:27)(cid:46)erat(cid:40)n(cid:38) e(cid:54)(cid:46)en(cid:49)e(cid:49) Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin. (cid:11)(cid:6)(cid:15) (cid:18)orro(cid:53)(cid:40)n(cid:38) (cid:34)o(cid:49)t(cid:49) Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed in the period in which they are incurred and reported in finance costs (see Note 8). 45 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 31 Notes to the Consolidated Financial Statements | Clean Seas Tuna Limited (cid:23)ntan(cid:38)(cid:40)(cid:33)(cid:42)e a(cid:49)(cid:49)et(cid:49) (cid:11)(cid:6)(cid:16) Recognition of intangible assets Acquired intangi(cid:16)le assets Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and install the specific software. Acquired fish quotas and water leases and licences are capitalised on the basis of costs incurred to acquire. Brand names and customer lists acquired in a business combination that qualify for separate recognition are recognised as intangible assets at their fair values (see Note 4.3). (cid:35)ubsequent measurement All intangible assets are accounted for using the cost model whereby capitalised costs are amortised on a straight-line basis over their estimated useful lives, where these assets are considered finite. Residual values and useful lives are reviewed at each reporting date. In addition, they are subject to impairment testing as described in Note 4.12. The following useful lives are applied: • • Primary Industries and Regions South Australia (PIRSA) water leases and licences: indefinite Southern Bluefin Tuna quota: indefinite When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference between the proceeds and the carrying amount of the asset, and is recognised in profit or loss within other income or other expenses. (cid:11)(cid:6)10 (cid:28)ro(cid:46)erty(cid:4) (cid:46)(cid:42)ant and e(cid:47)u(cid:40)(cid:46)(cid:43)ent (cid:29)and and buildings Freehold land and buildings are recognised at their cost less accumulated depreciation and impairment losses. As no finite useful life for land can be determined, related carrying amounts are not depreciated. Plant and equipment Plant and equipment is initially recognised at acquisition cost or manufacturing cost, including any costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by the Group’s management. Plant and equipment also includes leasehold property held under a finance lease (see Note 4.11). These assets are subsequently measured using the cost model, being cost less subsequent depreciation and impairment losses. Depreciation is recognised on a straight-line basis to write down the cost less estimated residual value of buildings, plant and equipment. The following depreciation rates are applied: buildings: 2.5% - 5% vessels: 5% – 7.5% cages and nets: 10% - 33% • • • • motor vehicles: 12.5% - 15% • computers: 25% - 33% • other plant and equipment: 5% - 33% | 46 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Clean Seas Tuna Limited | Notes to the Consolidated Financial Statements 32 In the case of leasehold property, expected useful lives are determined by reference to comparable owned assets or over the term of the lease, if shorter. Material residual value estimates and estimates of useful life are updated as required, but at least annually. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss within other income or other expenses. (cid:11)(cid:6)11 (cid:25)ea(cid:49)ed a(cid:49)(cid:49)et(cid:49) (cid:26)inance leases The economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards of ownership of the leased asset. Where the Group is a lessee in this type of arrangement, the related asset is recognised at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the lease payments plus incidental payments, if any. A corresponding amount is recognised as a finance lease liability. Leases of land and buildings are classified separately and are split into a land and a building element, in accordance with the relative fair values of the leasehold interests at the date the asset is recognised initially. See Note 4.10 for the depreciation methods and useful lives for assets held under finance lease. The corresponding finance lease liability is reduced by lease payments net of finance charges. The interest element of lease payments represents a constant proportion of the outstanding capital balance and is charged to profit or loss, as finance costs over the period of the lease. (cid:32)perating leases All other leases are treated as operating leases. Where the Group is a lessee, payments on operating lease agreements are recognised as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred. (cid:11)(cid:6)12 (cid:23)(cid:43)(cid:46)a(cid:40)r(cid:43)ent te(cid:49)t(cid:40)n(cid:38) o(cid:37) other (cid:40)ntan(cid:38)(cid:40)(cid:33)(cid:42)e a(cid:49)(cid:49)et(cid:49) and (cid:46)ro(cid:46)erty(cid:4) (cid:46)(cid:42)ant and e(cid:47)u(cid:40)(cid:46)(cid:43)ent For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which management monitors goodwill. Cash-generating units to which goodwill has been allocated (determined by the Group’s management as equivalent to its operating segments) are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and value-in-use. To determine the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly 47 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 33 Notes to the Consolidated Financial Statements | Clean Seas Tuna Limited linked to the Group’s latest approved budget, adjusted as necessary to exclude the effects of future reorganisations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect management’s assessment of respective risk profiles, such as market and asset-specific risks factors. Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that cash-generating unit. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment charge is reversed if the cash-generating unit’s recoverable amount exceeds its carrying amount. (cid:11)(cid:6)13 F(cid:40)nan(cid:34)(cid:40)a(cid:42) (cid:40)n(cid:49)tru(cid:43)ent(cid:49) Recognition, Initial (cid:30)easurement and Derecognition Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument, and are measured initially at fair value adjusted by transactions costs, except for those carried at fair value through profit or loss, which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities are described below. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. Classification and (cid:35)ubsequent (cid:30)easurement of (cid:26)inancial (cid:21)ssets For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified into the following categories upon initial recognition: loans and receivables financial assets at Fair Value Through Profit or Loss (‘FVTPL’) • • • Held-To-Maturity (‘HTM’) investments; or • Available-For-Sale (‘AFS’) financial assets All financial assets except for those at FVTPL are subject to review for impairment at least at each reporting date to identify whether there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described below. All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses. (cid:7)oans and recei(cid:34)a(cid:16)les Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Group’s trade and most other receivables fall into this category of financial instruments. | 48 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Clean Seas Tuna Limited | Notes to the Consolidated Financial Statements 34 Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default. Receivables that are not considered to be individually impaired are reviewed for impairment in groups, which are determined by reference to the industry and region of a counterparty and other shared credit risk characteristics. The impairment loss estimate is then based on recent historical counterparty default rates for each identified group. Financial assets at F(cid:14)(cid:12)P(cid:7) Financial assets at FVTPL include financial assets that are either classified as held for trading or that meet certain conditions and are designated at FVTPL upon initial recognition. All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting requirements apply (see below). Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists. (cid:5)(cid:12)(cid:8) in(cid:34)estments HTM investments are non-derivative financial assets with fixed or determinable payments and fixed maturity other than loans and receivables. Investments are classified as HTM if the Group has the intention and ability to hold them until maturity. HTM investments are measured subsequently at amortised cost using the effective interest method. If there is objective evidence that the investment is impaired, determined by reference to external credit ratings, the financial asset is measured at the present value of estimated future cash flows. Any changes to the carrying amount of the investment, including impairment losses, are recognised in profit or loss. AFS financial assets AFS financial assets are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets. All AFS financial assets are measured at fair value. Gains and losses are recognised in other comprehensive income and reported within the AFS reserve within equity, except for impairment losses and foreign exchange differences on monetary assets, which are recognised in profit or loss. When the asset is disposed of or is determined to be impaired the cumulative gain or loss recognised in other comprehensive income is reclassified from the equity reserve to profit or loss and presented as a reclassification adjustment within other comprehensive income. Interest calculated using the effective interest method and dividends are recognised in profit or loss within ‘finance income’ (see Note 4.6). Reversals of impairment losses for AFS debt securities are recognised in profit or loss if the reversal can be objectively related to an event occurring after the impairment loss was recognised. For AFS equity investments impairment reversals are not recognised in profit loss and any subsequent increase in fair value is recognised in other comprehensive income. 49 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 35 Notes to the Consolidated Financial Statements | Clean Seas Tuna Limited Classification and subsequent measurement of financial liabilities The Group’s financial liabilities include borrowings, trade and other payables and derivative financial instruments. Financial liabilities are measured subsequently at amortised cost using the effective interest method, except for financial liabilities held for trading or designated at FVTPL, that are carried subsequently at fair value with gains or losses recognised in profit or loss. All derivative financial instruments that are not designated and effective as hedging instruments are accounted for at FVTPL. All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income. Derivative financial instruments and hedge accounting Derivative financial instruments are accounted for at FVTPL except for derivatives designated as hedging instruments in cash flow hedge relationships, which requires a specific accounting treatment. To qualify for hedge accounting, the hedging relationship must meet several strict conditions with respect to documentation, probability of occurrence of the hedged transaction and hedge effectiveness. For the reporting periods under review, the Group has designated certain forward currency contracts as hedging instruments in cash flow hedge relationships. These arrangements have been entered into to mitigate currency exchange risk arising from sales denominated in foreign currency. All derivative financial instruments used for hedge accounting are recognised initially at fair value and reported subsequently at fair value in the statement of financial position. To the extent that the hedge is effective, changes in the fair value of derivatives designated as hedging instruments in cash flow hedges are recognised in other comprehensive income and included within the cash flow hedge reserve in equity. Any ineffectiveness in the hedge relationship is recognised immediately in profit or loss. At the time the hedged item affects profit or loss, any gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss and presented as a reclassification adjustment within other comprehensive income. However, if a non-financial asset or liability is recognised as a result of the hedged transaction, the gains and losses previously recognised in other comprehensive income are included in the initial measurement of the hedged item. If a forecast transaction is no longer expected to occur any related gain or loss recognised in other comprehensive income is transferred immediately to profit or loss. If the hedging relationship ceases to meet the effectiveness conditions, hedge accounting is discontinued and the related gain or loss is held in the equity reserve until the forecast transaction occurs. (cid:11)(cid:6)1(cid:11) (cid:23)n(cid:52)entor(cid:40)e(cid:49) Inventories are stated at the lower of cost and net realisable value. Cost includes all expenses directly attributable to the manufacturing process as well as suitable portions of related production overheads, based on normal operating capacity. Costs of ordinarily interchangeable items are assigned using the first in, first out cost formula. Net realisable value is the estimated selling price in the ordinary course of business less any applicable selling expenses. | 50 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Clean Seas Tuna Limited | Notes to the Consolidated Financial Statements 36 (cid:11)(cid:6)1(cid:12) (cid:23)n(cid:34)o(cid:43)e ta(cid:54)e(cid:49) Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other comprehensive income or directly in equity. Current income tax assets and/or liabilities comprise those obligations to, or claims from, the Australian Taxation Office (‘ATO’) and other fiscal authorities relating to the current or prior reporting periods that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with investments in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised against future taxable income, based on the Group’s forecast of future operating results which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. Deferred tax liabilities are always provided for in full. The Group does not currently recognise deferred tax assets and liabilities due to uncertainty regarding the utilisation of prior year losses in future years. Deferred tax assets and liabilities are offset only when the Group has a right and intention to set off current tax assets and liabilities from the same taxation authority. Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or loss, except where they relate to items that are recognised in other comprehensive income (such as the revaluation of land) or directly in equity, in which case the related deferred tax is also recognised in other comprehensive income or equity, respectively. Clean Seas Tuna Limited and its wholly-owned Australian controlled entity have implemented the tax consolidation legislation from 1 July 2007. As a consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the consolidated financial statements. (cid:11)(cid:6)16 (cid:19)a(cid:49)h and (cid:34)a(cid:49)h e(cid:47)u(cid:40)(cid:52)a(cid:42)ent(cid:49) Cash and cash equivalents comprise cash on hand and demand deposits, together with other short- term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. 51 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 37 Notes to the Consolidated Financial Statements | Clean Seas Tuna Limited (cid:11)(cid:6)1(cid:14) (cid:26)on(cid:5)(cid:34)urrent a(cid:49)(cid:49)et(cid:49) and (cid:42)(cid:40)a(cid:33)(cid:40)(cid:42)(cid:40)t(cid:40)e(cid:49) (cid:34)(cid:42)a(cid:49)(cid:49)(cid:40)(cid:37)(cid:40)ed a(cid:49) he(cid:42)d (cid:37)or (cid:49)a(cid:42)e and d(cid:40)(cid:49)(cid:34)ont(cid:40)nued o(cid:46)erat(cid:40)on(cid:49) When the Group intends to sell a non-current asset or a group of assets (a disposal group), and if sale within twelve (12) months is highly probable, the asset or disposal group is classified as ‘held for sale’ and presented separately in the statement of financial position. Liabilities are classified as ‘held for sale’ and presented as such in the statement of financial position if they are directly associated with a disposal group. Assets classified as ‘held for sale’ are measured at the lower of their carrying amounts immediately prior to their classification as held for sale and their fair value less costs to sell. However, some ‘held for sale’ assets such as financial assets or deferred tax assets, continue to be measured in accordance with the Group's accounting policy for those assets. Once classified as ‘held for sale’, the assets are not subject to depreciation or amortisation. Any profit or loss arising from the sale or re-measurement of discontinued operations is presented as part of a single line item, profit or loss from discontinued operations. (cid:11)(cid:6)1(cid:15) (cid:20)(cid:47)u(cid:40)ty and re(cid:49)er(cid:52)e(cid:49) Share capital represents the fair value of shares that have been issued. Any transaction costs associated with the issuing of shares are deducted from share capital, net of any related income tax benefits. Retained earnings include all current and prior period retained profits. All transactions with owners of the Parent are recorded separately within equity. (cid:11)(cid:6)1(cid:16) (cid:20)(cid:43)(cid:46)(cid:42)oyee (cid:33)ene(cid:37)(cid:40)t(cid:49) (cid:35)hort(cid:8)term employee benefits Short-term employee benefits are benefits, other than termination benefits, that are expected to be settled wholly within twelve (12) months after the end of the period in which the employees render the related service. Examples of such benefits include wages and salaries, non-monetary benefits and annual leave. Short-term employee benefits are measured at the undiscounted amounts expected to be paid when the liabilities are settled. (cid:32)ther long(cid:8)term employee benefits The Group’s liabilities for long service leave are included in other long term benefits as they are not expected to be settled wholly within twelve (12) months after the end of the period in which the employees render the related service. They are measured at the present value of the expected future payments to be made to employees. The expected future payments incorporate anticipated future wage and salary levels, experience of employee departures and periods of service, and are discounted at rates determined by reference to market yields at the end of the reporting period on high quality corporate bonds (2015: government bonds) that have maturity dates that approximate the timing of the estimated future cash outflows. Any re-measurements arising from experience adjustments and changes in assumptions are recognised in profit or loss in the periods in which the changes occur. The Group presents employee benefit obligations as current liabilities in the statement of financial position if the Group does not have an unconditional right to defer settlement for at least twelve (12) months after the reporting period, irrespective of when the actual settlement is expected to take place. | 52 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Clean Seas Tuna Limited | Notes to the Consolidated Financial Statements 38 Post(cid:8)employment (cid:22)enefit Plans The Group provides post-employment benefits through various defined contribution plans. Defined Contribution Plans The Group pays fixed contributions into independent entities in relation to various plans for individual employees. The Group has no legal or constructive obligations to pay contributions in addition to its fixed contributions, which are recognised as an expense in the period that relevant employee services are received. (cid:11)(cid:6)20 (cid:30)hare(cid:5)(cid:33)a(cid:49)ed e(cid:43)(cid:46)(cid:42)oyee re(cid:43)unerat(cid:40)on The Group does not currently operate equity-settled share-based remuneration plans for its employees. All goods and services received in exchange for the grant of any share-based payment are measured at their fair values. Where employees are rewarded using share-based payments, the fair values of employees’ services are determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example profitability and sales growth targets and performance conditions). All share-based remuneration is ultimately recognised as an expense in profit or loss with a corresponding credit to share option reserve. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting. Upon exercise of share options, the proceeds received net of any directly attributable transaction costs are allocated to share capital. (cid:11)(cid:6)21 (cid:28)ro(cid:52)(cid:40)(cid:49)(cid:40)on(cid:49)(cid:4) (cid:34)ont(cid:40)n(cid:38)ent (cid:42)(cid:40)a(cid:33)(cid:40)(cid:42)(cid:40)t(cid:40)e(cid:49) and (cid:34)ont(cid:40)n(cid:38)ent a(cid:49)(cid:49)et(cid:49) Provisions for product warranties, legal disputes, onerous contracts or other claims are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic resources will be required from the Group and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. Restructuring provisions are recognised only if a detailed formal plan for the restructuring has been developed and implemented, or management has at least announced the plan’s main features to those affected by it. Provisions are not recognised for future operating losses. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of 53 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 39 Notes to the Consolidated Financial Statements | Clean Seas Tuna Limited obligations as a whole. Provisions are discounted to their present values, where the time value of money is material. Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision. No liability is recognised if an outflow of economic resources as a result of present obligation is not probable. Such situations are disclosed as contingent liabilities, unless the outflow of resources is remote in which case no liability is recognised. (cid:11)(cid:6)22 (cid:18)(cid:40)o(cid:42)o(cid:38)(cid:40)(cid:34)a(cid:42) a(cid:49)(cid:49)et(cid:49) Biological assets comprise live fish held for sale and broodstock. Live fish held for sale are valued at their fair value less costs to sell in accordance with AASB141 Agriculture. Estimated fair values are based on actual selling prices achieved in the three weeks following the reporting date and other relevant factors assessed as impacting fair value in accordance with AASB141. Broodstock are valued at their fair value less costs to sell in accordance with AASB141 Agriculture. Estimated fair values take into account the valuation of live fish held for sale and estimated value as broodstock. As the tuna research program is currently scaled back, the Board has adopted a conservative approach by valuing southern bluefin tuna broodstock at market value. In the Directors’ opinion, insurance cover is currently not available at commercially acceptable rates for the live Yellowtail Kingfish held for sale or the broodstock. The Directors have therefore chosen to actively manage the risks as the preferred alternative. (cid:11)(cid:6)23 (cid:29)e(cid:49)ear(cid:34)h and de(cid:52)e(cid:42)o(cid:46)(cid:43)ent ta(cid:54) (cid:40)n(cid:34)ent(cid:40)(cid:52)e re(cid:37)und Refund amounts received or receivable under the Federal Government’s Research and Development Tax Incentive are recognised on an accrual basis. The corporate tax rate component is recognised as a tax expense credit. Any additional component, being the incentive component, is recognised as a government grant. (cid:11)(cid:6)2(cid:11) (cid:22)ood(cid:49) and (cid:30)er(cid:52)(cid:40)(cid:34)e(cid:49) (cid:31)a(cid:54) (cid:2)(cid:22)(cid:30)(cid:31)(cid:3) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST components of investing and financing activities, which are disclosed as operating cash flows. (cid:11)(cid:6)2(cid:12) (cid:29)ound(cid:40)n(cid:38) o(cid:37) a(cid:43)ount(cid:49) The Parent Entity has applied the relief available to it under ASIC Class Order 2016/191 and accordingly, amounts in the financial statements and directors’ report have been rounded off to the nearest $1,000, or in certain cases, the nearest dollar. | 54 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Clean Seas Tuna Limited | Notes to the Consolidated Financial Statements 40 (cid:11)(cid:6)26 (cid:30)(cid:40)(cid:38)n(cid:40)(cid:37)(cid:40)(cid:34)ant (cid:43)ana(cid:38)e(cid:43)ent (cid:41)ud(cid:38)e(cid:43)ent (cid:40)n a(cid:46)(cid:46)(cid:42)y(cid:40)n(cid:38) a(cid:34)(cid:34)ount(cid:40)n(cid:38) (cid:46)o(cid:42)(cid:40)(cid:34)(cid:40)e(cid:49) When preparing the financial statements, management undertakes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses. (cid:35)ignificant management (cid:47)udgement The following are significant management judgements in applying the accounting policies of the Group that have the most significant effect on the financial statements. Fair (cid:34)alue of li(cid:34)e fish held for sale Management values live fish held for sale at their fair value less costs to sell in accordance with AASB141 Agriculture. Estimated fair values are based on actual selling prices achieved in the three weeks following the reporting date and other relevant factors assessed as impacting fair value in accordance with AASB141. These estimates may vary from net sale proceeds ultimately achieved. Research and de(cid:34)elopment ta(cid:36) incenti(cid:34)e refund The estimated amount recognised is based on detailed analysis of expenditure incurred and advice from the Group’s adviser. The actual amount to be claimed is finalised after completion of the audited accounts and preparation of the Group’s income tax return. Recognition of deferred ta(cid:36) assets The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Group’s future taxable income against which the deferred tax assets can be utilised. In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in relevant tax jurisdictions (see Note 4.15). (cid:25)stimation uncertainty Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different. (cid:6)mpairment In assessing impairment, management estimates the recoverable amount of each asset or cash- generating unit based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate (see Note 4.12). (cid:13)seful li(cid:34)es of deprecia(cid:16)le assets Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and other forms of obsolescence. (cid:6)n(cid:34)entories Management estimates the net realisable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realisation of these inventories may be affected by market-driven changes that may reduce future selling prices. 55 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 41 Notes to the Consolidated Financial Statements | Clean Seas Tuna Limited (cid:27)(cid:46)erat(cid:40)n(cid:38) (cid:30)e(cid:38)(cid:43)ent(cid:49) (cid:12) Management currently identifies the Group’s two segments as finfish sales and tuna operations as detailed in Note 4.5. These operating segments are monitored by the Group’s chief operating decision maker and strategic decisions are made on the basis of adjusted segment operating results. Segment information for the reporting period is as follows: (cid:29)evenue (cid:26)rom external customers (cid:26)rom other segments Segment revenues (cid:32)ther income Net gain from changes in value of fish (cid:26)ish husbandry expense (cid:25)mployee benefits expense (cid:26)ish processing and selling expense (cid:26)ro(cid:63)en Inventory C(cid:32)(cid:27)(cid:35) (cid:26)ro(cid:63)en Inventory (cid:21)d(cid:47)ustment to NR(cid:37) Depreciation and amortisation (cid:32)ther expenses (cid:26)inance costs and income Finfish Sales 2016 $’000 30,089 (cid:8) 30,089 436 1,986 (20,894) (6,283) (7,026) (2,148) (1,247) (1,721) (2,735) (cid:8) Segment operating loss (cid:34)efore ta(cid:54) (9,543) Tuna Operations (cid:32)nallocated 2016 $’000 2016 $’000 (cid:8) (cid:8) - 37 (cid:8) (cid:8) (10) (cid:8) (cid:8) (cid:8) (100) (224) (cid:8) (297) (cid:8) (cid:8) - (cid:8) (cid:8) (cid:8) (cid:8) (cid:8) (cid:8) (cid:8) (cid:8) (cid:8) (88) (88) Total 2016 $’000 30,089 (cid:8) 30,089 473 1,986 (20,894) (6,293) (7,026) (2,148) (1,247) (1,821) (2,959) (88) (9,928) Segment assets 2016 48,723 411 598 49,732 (cid:29)evenue (cid:26)rom external customers (cid:26)rom other segments Segment revenues (cid:32)ther income Net gain from changes in value of fish (cid:26)ish husbandry expense (cid:25)mployee benefits expense (cid:26)ish processing and selling expense Depreciation and amortisation (cid:32)ther expenses (cid:26)inance costs and income Segment operating profit (cid:34)efore ta(cid:54) Finfish Sales 2015 $’000 18,481 (cid:8) 18,481 1,401 11,378 (17,372) (5,678) (3,870) (1,571) (1,368) (7) 1,394 Tuna Operations (cid:32)nallocated 2015 $’000 2015 $’000 (cid:8) (cid:8) - 135 (cid:8) (cid:8) (67) (cid:8) (134) (411) (cid:8) (477) (cid:8) (cid:8) - (cid:8) (cid:8) (cid:8) (cid:8) (cid:8) (cid:8) (cid:8) 116 116 Total 2015 $’000 18,481 (cid:8) 18,481 1,536 11,378 (17,372) (5,745) (3,870) (1,705) (1,779) 109 1,033 Segment assets 2015 50,461 2,570 1,513 54,544 No segment liabilities are disclosed because there is no measure of segment liabilities regularly reported to the chief operating decision maker. Unallocated operating income and expense consists of net interest and unallocated assets consist of cash and cash equivalents. | 56 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Clean Seas Tuna Limited | Notes to the Consolidated Financial Statements 42 Revenues from external customers in the Group’s domicile, Australia, as well as its major other markets have been identified on the basis of the customer’s geographical location. Non-current assets are allocated based on their physical location. The Group’s revenues from external customers and its non-current assets are divided into the following geographical areas: (cid:21)ustralia (cid:32)ther countries Total (cid:29)evenue 2016 $’000 Non-current assets 2016 $’000 (cid:29)evenue 2015 $’000 Non-current assets 2015 $’000 17,011 13,078 30,089 16,274 - 16,274 13,224 5,257 18,481 16,533 (cid:8) 16,533 During 2016 $3,027k or 10% (2015: $1,750k or 9%) of the Group’s revenues depended on a single customer in the finfish sales segment. (cid:29)e(cid:52)enue 6 Revenue for the reporting periods consist of the following: (cid:35)ale of fresh fish products (cid:35)ale of fro(cid:63)en fish products (cid:32)ther revenue (cid:27)ther (cid:40)n(cid:34)o(cid:43)e (cid:14) Other income for the reporting periods consist of the following: R&D tax incentive refund (cid:64) 15(cid:3) incentive component (cid:27)ain (cid:9) (loss) on disposal of property, plant and equipment F(cid:40)nan(cid:34)e (cid:40)n(cid:34)o(cid:43)e and (cid:37)(cid:40)nan(cid:34)e (cid:34)o(cid:49)t(cid:49) (cid:15) Finance income for the reporting periods consist of the following: Interest income from cash and cash equivalents Finance costs for the reporting periods consist of the following: Interest expenses for borrowings at amortised cost(cid:20) • finance leases • other borrowings 2016 $’000 25,972 4,029 88 30,089 2015 $’000 18,122 63 296 18,481 2016 $’000 473 - 473 2016 $’000 7 7 2015 $’000 1,538 (2) 1,536 2015 $’000 116 116 2016 $’000 2015 $’000 7 88 95 7 (cid:8) 7 57 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 43 Notes to the Consolidated Financial Statements | Clean Seas Tuna Limited (cid:23)n(cid:34)o(cid:43)e ta(cid:54) e(cid:54)(cid:46)en(cid:49)e (cid:16) The major components of tax expense and the reconciliation of the expected tax expense based on the domestic effective tax rate of 30% (2015: 30%) and the reported tax expense in profit or loss are as follows: Profit (cid:9) ((cid:29)oss) before tax Domestic tax rate for Clean (cid:35)eas (cid:36)una (cid:29)imited (cid:22)(cid:54)pected ta(cid:54) e(cid:54)pense (cid:8) (income) (cid:21)d(cid:47)ustment for R&D tax incentive refund (cid:64) 30(cid:3) corporate tax rate component Current year tax expense added to (cid:9) (offset against) prior year tax losses (cid:21)d(cid:47)ustment for tax(cid:8)exempt income (cid:19)ctual ta(cid:54) e(cid:54)pense (cid:8) (income) (cid:36)ax expense comprises(cid:20) • R&D tax incentive refund (cid:64) 30(cid:3) corporate tax rate component • Deferred tax expense Ta(cid:54) e(cid:54)pense (cid:8) (income) 2016 $’000 (9,928) 30(cid:3) (2,978) (946) 3,120 (142) (946) (946) - (946) 2015 $’000 1,033 30(cid:3) 310 (3,075) 151 (461) (3,075) (3,075) (cid:8) (3,075) Due to uncertainty regarding the utilisation of prior year tax losses in future years, the tax losses are not recognised as an asset. Carried forward tax losses as at 30 June 2016 are approximately $85.0 million (30 June 2015: $78.5 million). 10 (cid:19)a(cid:49)h and (cid:34)a(cid:49)h e(cid:47)u(cid:40)(cid:52)a(cid:42)ent(cid:49) Cash and cash equivalents include the following components: Cash at ban(cid:48) and in hand Deposits at call Total 11 (cid:31)rade and other re(cid:34)e(cid:40)(cid:52)a(cid:33)(cid:42)e(cid:49) Trade and other receivables consist of the following: (cid:36)rade receivables, gross (cid:21)llowance credit losses Trade receiva(cid:34)les (cid:32)ther receivables R&D (cid:36)ax Incentive Refund receivable Total 2016 $’000 598 - 598 2016 $’000 3,426 (20) 3,406 293 - 3,699 2015 $’000 1,143 370 1,513 2015 $’000 1,444 (20) 1,424 203 4,613 6,240 All amounts are short-term. The net carrying value of trade receivables is considered a reasonable approximation of fair value. | 58 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Clean Seas Tuna Limited | Notes to the Consolidated Financial Statements 44 The movement in the allowance for credit losses can be reconciled as follows: (cid:29)econciliation of allo(cid:53)ance credit losses (cid:20)alance at 1 July (cid:21)mounts written off (cid:9) (uncollectable) Impairment loss Impairment loss reversed (cid:20)alance 30 June 2016 $’000 20 - - - 20 2015 $’000 20 (cid:8) (cid:8) (cid:8) 20 An analysis of unimpaired trade receivables that are past due is given in Note 31.3. F(cid:40)nan(cid:34)(cid:40)a(cid:42) a(cid:49)(cid:49)et(cid:49) and (cid:42)(cid:40)a(cid:33)(cid:40)(cid:42)(cid:40)t(cid:40)e(cid:49) 12 12(cid:6)1 (cid:19)ate(cid:38)or(cid:40)e(cid:49) o(cid:37) (cid:37)(cid:40)nan(cid:34)(cid:40)a(cid:42) a(cid:49)(cid:49)et(cid:49) and (cid:42)(cid:40)a(cid:33)(cid:40)(cid:42)(cid:40)t(cid:40)e(cid:49) Note 4.13 provides a description of each category of financial assets and financial liabilities and the related accounting policies. 59 | Notes to the Consolidated Financial Statements | Clean Seas Tuna Limited l a t o T 0 0 0 ’ $ 8 9 5 9 9 6 , 3 7 9 2 , 4 l a t o T 0 0 0 ’ $ 1 0 1 , 3 1 3 1 , 3 2 3 2 , 6 l a t o T 0 0 0 ’ $ (cid:9) 1 (cid:11) (cid:4) 1 0 (cid:10) (cid:8) (cid:4) (cid:12) (cid:9) (cid:11) (cid:13) (cid:4) (cid:13) l a t o T 0 0 0 ’ $ 0 (cid:11) (cid:8) 1 9 (cid:13) (cid:4) 1 1 (cid:10) 0 (cid:4) (cid:8) 0 0 0 ’ $ 8 9 5 9 9 6 , 3 7 9 2 , 4 0 0 0 ’ $ 0 0 0 ’ $ 0 0 0 ’ $ - - - - - - - - - 0 1 1 1 t s o c d e s i t r o m a t a s t e s s a l a i c n a n F i i g n g d e h r o f d e s u s e v i t a v i r e D L P T V F t a s t e s s A I C O T V F t a s t e s s A s e t o N 0 0 0 ’ $ s e i t i l i b a i l r e h t O # 0 0 0 ’ $ 0 0 0 ’ $ 0 0 0 ’ $ L P T V F t a s e i t i l i b a i l r e h t O * L P T V F t a d e t a n g i s e D * i g n g d e h r o f d e s u s e v i t a v i r e D * s e t o N s t l n e a v u q e i h s a c d n a h s a C s t e s s a l a i c n a n F i 6 1 0 2 e n u J 0 3 l s e b a v e c e r i r e h t o d n a e d a r T s l a t o T s e i t i l i b a i l l a i c n a n F i 6 1 0 2 e n u J 0 3 5 4 s t n e m e t a t S l a i c n a n i F d e t a d i l o s n o C – d e t i m i L a n u T s a e S n a e l C 6 1 0 2 e n u J 0 3 d e d n e r a e y e h t r o F : s w o l l o f s a e r a y r o g e t a c h c a e n i s e i t i l i b a i l l a i c n a n i f d n a s t e s s a l a i c n a n i f f o s t n u o m a g n i y r r a c e h T 1 0 1 , 3 1 3 1 , 3 2 3 2 , 6 - - - 6 4 - - - - - - s t n e m e t a t S 8 1 9 1 i l a i c n a n F d e t a d i l o s n o C – d e t i i m L a n u T s a e S n a e l C 6 1 0 2 e n u J 0 3 d e d n e r a e y i s g n w o r r o B e h t r o F l s e b a y a p r e h t o d n a e d a r T 0 0 0 ’ $ (cid:9) 1 (cid:11) (cid:4) 1 0 (cid:10) (cid:8) (cid:4) (cid:12) (cid:9) (cid:11) (cid:13) (cid:4) (cid:13) 0 0 0 ’ $ 0 0 0 ’ $ 0 0 0 ’ $ (cid:5) (cid:5) (cid:5) (cid:5) (cid:5) (cid:5) (cid:5) (cid:5) (cid:5) 0 1 1 1 t s o c d e s i t r o m a t a s t e s s a l a i c n a n F i i g n g d e h r o f d e s u s e v i t a v i r e D L P T V F t a s t e s s A I C O T V F t a s t e s s A s e t o N 0 0 0 ’ $ s e i t i l i b a i l r e h t O # 0 0 0 ’ $ 0 0 0 ’ $ 0 0 0 ’ $ L P T V F t a s e i t i l i b a i l r e h t O * L P T V F t a d e t a n g i s e D * i g n g d e h r o f d e s u s e v i t a v i r e D * s e t o N 0 (cid:11) (cid:8) 1 9 (cid:13) (cid:4) 1 1 (cid:10) 0 (cid:4) (cid:8) (cid:5) (cid:5) (cid:5) (cid:5) (cid:5) (cid:5) (cid:5) (cid:5) (cid:5) 8 1 9 1 t s o c d e s i t r o m a e u a v l r i a f t a t a d e i r r a C d e i r r a C * # s l a t o T s t e s s a l a i c n a n F i 5 1 0 2 e n u J 0 3 s t l n e a v u q e i h s a c d n a h s a C l s e b a v e c e r i r e h t o d n a e d a r T s l a t o T l s e b a y a p r e h t o d n a e d a r T s e i t i l i b a i l l a i c n a n F i 5 1 0 2 e n u J 0 3 i s g n w o r r o B s l a t o T t s o c d e s i t r o m a e u a v l r i a f t a t a d e i r r a C d e i r r a C * # . 1 3 e t o N n i n e v i g s i s e i c i l o p d n a s e v i t c e j b o t n e m e g a n a m k s i r i g n d u l c n i , s k s i r t n e m u r t s n i l a i c n a n i f s ’ p u o r G e h t f o n o i t p i r c s e d A . | 60 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Clean Seas Tuna Limited | Notes to the Consolidated Financial Statements 47 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 48 12.2 Derivative financial instruments cages, mortality counts and reconciliation of the perpetual records after physical counts and on cage The Group from time to time uses forward foreign exchange contracts to mitigate exchange rate exposure arising from forecast sales in EUR and other currencies. All forward exchange contracts are designated as hedging instruments in cash flow hedges in accordance with AASB 139. During FY16 no gains or losses were recognised in other comprehensive income or reclassified from equity into profit or loss within revenue (2015: nil). 12.3 Other financial assets and liabilities The carrying amount of the following financial assets and liabilities is considered a reasonable approximation of fair value: • • • • cash and cash equivalents; trade and other receivables; trade and other payables; and borrowings. Inventories 13 Inventories consist of the following: Frozen fish products Fish feed Other 14 Biological assets - current Live Yellowtail Kingfish – Held for Sale Carrying amount at beginning of period Adjusted for: Gain from physical changes at fair value less costs to sell Decrease due to harvest for sale as fresh Net gain recognised in profit and loss Decrease due to harvest for processing to frozen inventory Carrying amount at end of period 2016 $’000 2,640 1,274 174 4,088 2016 $’000 27,598 22,116 (20,130) 1,986 (4,548) 25,036 2015 $’000 768 1,656 27 2,451 2015 $’000 17,001 25,621 (14,243) 11,378 (781) 27,598 The closing biomass comprised 2,508 tonnes at an average weight of 2.5kg. This comprised 1,730 tonnes of 2015 year class (YC15) at an average weight of 3.7kg and 778 tonnes of YC16 at an average weight of 1.5kg (2015: 2,304 tonnes at 2.2kg comprising 1,517 tonnes of YC14 at 3.9kg and 787 tonnes of YC15 at 1.2kg). During FY16 harvests totalled 2,393 tonnes (FY15: 1,154 tonnes). There is inherent uncertainty in the biomass estimate and resultant live fish valuation. This is common to all such valuations and best practice methodology is used to facilitate reliable estimates. Biomass is estimated using a model that simulates fish growth. Actual growth will invariably differ to some extent, which is monitored and stock records adjusted via harvest counts and weights, periodic sample weight checks, physical counts on transfer to sea cages and subsequent splitting of 61 | closeout. 1(cid:12) (cid:28)ro(cid:48)ert(cid:57)(cid:4) (cid:48)lant and e(cid:49)ui(cid:48)ment Details of the Group’s property, plant and equipment and their carrying amount are as follows: Land (cid:4) (cid:38)lant (cid:4) (cid:24)uildings (cid:27)(cid:61)uipment (cid:35)arina Lease (cid:26)ams (cid:4) Fishponds $’000 $’000 $’000 $’000 (cid:43)ransfers (cid:3) Other (cid:37)ovements (2,000) (364) 11,797 77 (7,961) 19,455 1,485 4,709 2,000 364 (cid:26)alance 30 (cid:34)une 2016 3,913 25,649 (cid:29)ross carrying amount (cid:26)alance 1 (cid:34)uly 2015 Additions Disposals (cid:26)epreciation and impairment (cid:26)alance 1 (cid:34)uly 2015 Disposals (cid:43)ransfers (cid:3) Other (cid:37)ovements Depreciation (cid:26)alance 30 (cid:34)une 2016 Carrying amount 30 June 2016 (cid:29)ross carrying amount (cid:26)alance 1 (cid:34)uly 2014 Additions Disposals (cid:43)ransfers (cid:3) Other (cid:37)ovements (cid:26)epreciation and impairment Disposals Depreciation (cid:26)alance 30 (cid:34)une 2015 Carrying amount 30 June 2015 Total $’000 33,616 1,562 (5,616) 29,562 (cid:9) (cid:9) 5,616 (1,821) (16,559) 13,003 Total $’000 32,072 1,700 (cid:9) (156) 148 (1,705) (20,354) 13,262 (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (4,694) (13,296) (2,000) (364) (20,354) 3,832 (365) (1,227) 2,686 (580) (1,456) (15,332) 10,317 2,000 364 Land (cid:4) (cid:38)lant (cid:4) (cid:24)uildings (cid:27)(cid:61)uipment $’000 $’000 (cid:35)arina Lease $’000 (cid:26)ams (cid:4) Fishponds $’000 2,000 364 (cid:9) (cid:9) (cid:9) (cid:9) 11,854 287 (344) 17,854 1,413 344 (156) (450) (4,694) 7,103 148 (1,255) (13,296) 6,159 (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (2,000) (364) (cid:26)alance 30 (cid:34)une 2015 11,797 19,455 2,000 364 33,616 (cid:26)alance 1 (cid:34)uly 2014 (4,244) (12,189) (2,000) (364) (18,797) All depreciation and impairment charges are included within depreciation, amortisation and impairment of non-financial assets. The Property, Plant and Equipment has been pledged as security for the Group’s bank borrowings (see Note 19). 1(cid:13) Biological assets (cid:58) non-current Finfish (cid:24)roodstoc(cid:55) Carrying amount at beginning of period (cid:40)urchases (cid:42)ales Carrying amount at end of period 2016 $’000 244 (cid:9) (cid:9) 244 2015 $’000 244 (cid:9) (cid:9) 244 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 48 Notes to the Consolidated Financial Statements | Clean Seas Tuna Limited cages, mortality counts and reconciliation of the perpetual records after physical counts and on cage closeout. 1(cid:12) Details of the Group’s property, plant and equipment and their carrying amount are as follows: (cid:28)ro(cid:48)ert(cid:57)(cid:4) (cid:48)lant and e(cid:49)ui(cid:48)ment Land (cid:4) (cid:24)uildings (cid:38)lant (cid:4) (cid:27)(cid:61)uipment (cid:35)arina Lease (cid:26)ams (cid:4) Fishponds $’000 $’000 $’000 $’000 (cid:29)ross carrying amount (cid:26)alance 1 (cid:34)uly 2015 Additions (cid:43)ransfers (cid:3) Other (cid:37)ovements Disposals 11,797 77 (7,961) (cid:9) 19,455 1,485 4,709 (cid:9) (cid:26)alance 30 (cid:34)une 2016 3,913 25,649 2,000 (cid:9) (2,000) (cid:9) (cid:9) 364 (cid:9) (364) (cid:9) (cid:9) Total $’000 33,616 1,562 (5,616) (cid:9) 29,562 (cid:26)epreciation and impairment (cid:26)alance 1 (cid:34)uly 2015 Disposals (cid:43)ransfers (cid:3) Other (cid:37)ovements Depreciation (cid:26)alance 30 (cid:34)une 2016 Carrying amount 30 June 2016 (cid:29)ross carrying amount (cid:26)alance 1 (cid:34)uly 2014 Additions (cid:43)ransfers (cid:3) Other (cid:37)ovements Disposals (4,694) (13,296) (2,000) (364) (20,354) (cid:9) 3,832 (365) (1,227) 2,686 (cid:9) (580) (1,456) (15,332) 10,317 (cid:9) 2,000 (cid:9) (cid:9) (cid:9) (cid:9) 364 (cid:9) (cid:9) (cid:9) Land (cid:4) (cid:24)uildings (cid:38)lant (cid:4) (cid:27)(cid:61)uipment $’000 $’000 (cid:35)arina Lease $’000 (cid:26)ams (cid:4) Fishponds $’000 11,854 287 (344) (cid:9) 17,854 1,413 344 (156) 2,000 364 (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) 5,616 (1,821) (16,559) 13,003 Total $’000 32,072 1,700 (cid:9) (156) (cid:26)alance 30 (cid:34)une 2015 11,797 19,455 2,000 364 33,616 (cid:26)epreciation and impairment (cid:26)alance 1 (cid:34)uly 2014 (4,244) (12,189) (2,000) (364) (18,797) Disposals Depreciation (cid:26)alance 30 (cid:34)une 2015 Carrying amount 30 June 2015 (cid:9) (450) (4,694) 7,103 148 (1,255) (13,296) 6,159 (cid:9) (cid:9) (2,000) (cid:9) (cid:9) (cid:9) (364) (cid:9) 148 (1,705) (20,354) 13,262 All depreciation and impairment charges are included within depreciation, amortisation and impairment of non-financial assets. The Property, Plant and Equipment has been pledged as security for the Group’s bank borrowings (see Note 19). 1(cid:13) Biological assets (cid:58) non-current Finfish (cid:24)roodstoc(cid:55) Carrying amount at beginning of period (cid:40)urchases (cid:42)ales Carrying amount at end of period 2016 $’000 244 (cid:9) (cid:9) 244 2015 $’000 244 (cid:9) (cid:9) 244 | 62 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 49 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 50 Clean Seas Tuna Limited | Notes to the Consolidated Financial Statements Intangible assets 1(cid:14) Details of the Group’s intangible assets and their carrying amounts are as follows: (cid:36)et carrying amount (cid:26)alance at 1 (cid:34)uly 2015 Amortisation and impairment (cid:36)et carrying amount 30 June 2016 (cid:26)alance at 1 (cid:34)uly 2014 Amortisation and impairment Carrying amount 30 June 2015 (cid:38)(cid:31)(cid:40)S(cid:23) Leases and Licences $’000 Southern (cid:24)luefin Tuna (cid:39)uota $’000 2,827 (cid:9) 2,827 2,827 (cid:9) 2,827 200 (cid:9) 200 200 (cid:9) 200 Total $’000 3,027 (cid:9) 3,027 3,027 (cid:9) 3,027 At each reporting date the Directors review intangible assets for impairment. No impairment was assessed as necessary in 2016 (2015: nil). 1(cid:15) (cid:31)rade and other (cid:48)a(cid:57)ables Trade and other payables consist of the following: (cid:27)urrent: • • trade paya(cid:48)les related party paya(cid:48)les • other paya(cid:48)les Total trade and other payables 2016 $’000 2,202 52 847 3,101 2015 $’000 966 18 807 1,791 All amounts are short-term. The carrying values of trade payables and other payables are considered to be a reasonable approximation of fair value. 1(cid:16) Borro(cid:55)ings Borrowings consist of the following: Current(cid:22) • (cid:26)an(cid:57) (cid:43)rade Finance Facility • Finance lease (note 30) • Other (cid:73) insurance premium funding Total borrowings – current (cid:36)on(cid:9)current(cid:22) • Finance lease (note 30) Total borrowings – non(cid:9)current 2016 $’000 2,900 96 67 3,063 68 68 2015 $’000 (cid:9) 66 100 166 84 84 The Group has a secured $7.0m Trade Finance Facility with Commonwealth Bank of Australia. This is an ongoing facility subject to annual review and is secured against all Group assets. As a consequence of the unanticipated biological asset and inventory write-down at 31 December 2015, 63 | the Company received a waiver on one of the banking covenants. This covenant has subsequently been amended and the Company has satisfied all covenants at 30 June 2016. 2(cid:7) (cid:28)rovisions The carrying amounts and movements in the provisions account are as follows: Carrying amount 1 July 2015 Additional provisions Amount utilised Carrying amount 30 June 2016 Current employee benefit provision (cid:36)on(cid:9)current employee benefit provision (cid:23)nnual Leave Long Service Leave $’000 $’000 278 301 (198) 381 381 (cid:9) 21 (cid:21)m(cid:48)lo(cid:57)ee remuneration 21.1 (cid:21)m(cid:48)lo(cid:57)ee benefits e(cid:56)(cid:48)ense Expenses recognised for employee benefits are analysed below: Total $’000 604 332 (202) 734 545 189 2015 $’000 4,919 400 27 399 326 31 (4) 353 164 189 2016 $’000 5,327 427 130 409 6,293 5,745 21.2 (cid:30)hare-based em(cid:48)lo(cid:57)ee remuneration As at 30 June 2016 the Group does not have a share-based payment scheme for employee (cid:42)alaries and (cid:69)ages (cid:42)uperannuation (cid:73) Defined contri(cid:48)ution plans (cid:36)eave entitlement accrual adjustment Other on(cid:9)costs Total remuneration. 22 (cid:21)(cid:49)uit(cid:57) 22.1 (cid:30)hare ca(cid:48)ital The share capital of Clean Seas Tuna Limited consists only of fully paid ordinary shares; the shares do not have a par value. All shares are equally eligible to receive dividends and the repayment of capital and represent one vote at a shareholders’ meeting. (cid:42)hares issued and fully paid: • at (cid:48)eginning of the year • share issue 2016 Shares 2015 Shares 2016 $’000 2015 $’000 1,105,282,736 1,105,282,736 157,736 157,736 (cid:9) (cid:9) (cid:9) (cid:9) Total contributed e(cid:61)uity at 30 June 1,105,282,736 1,105,282,736 157,736 157,736 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 50 Notes to the Consolidated Financial Statements | Clean Seas Tuna Limited the Company received a waiver on one of the banking covenants. This covenant has subsequently been amended and the Company has satisfied all covenants at 30 June 2016. 2(cid:7) (cid:28)rovisions The carrying amounts and movements in the provisions account are as follows: (cid:23)nnual Leave $’000 Long Service Leave $’000 Carrying amount 1 July 2015 Additional provisions Amount utilised Carrying amount 30 June 2016 Current employee benefit provision (cid:36)on(cid:9)current employee benefit provision 278 301 (198) 381 381 (cid:9) 21 (cid:21)m(cid:48)lo(cid:57)ee remuneration 21.1 (cid:21)m(cid:48)lo(cid:57)ee benefits e(cid:56)(cid:48)ense Expenses recognised for employee benefits are analysed below: (cid:42)alaries and (cid:69)ages (cid:42)uperannuation (cid:73) Defined contri(cid:48)ution plans (cid:36)eave entitlement accrual adjustment Other on(cid:9)costs Total Total $’000 604 332 (202) 734 545 189 2015 $’000 4,919 400 27 399 326 31 (4) 353 164 189 2016 $’000 5,327 427 130 409 6,293 5,745 21.2 (cid:30)hare-based em(cid:48)lo(cid:57)ee remuneration As at 30 June 2016 the Group does not have a share-based payment scheme for employee remuneration. 22 (cid:21)(cid:49)uit(cid:57) 22.1 (cid:30)hare ca(cid:48)ital The share capital of Clean Seas Tuna Limited consists only of fully paid ordinary shares; the shares do not have a par value. All shares are equally eligible to receive dividends and the repayment of capital and represent one vote at a shareholders’ meeting. (cid:42)hares issued and fully paid: • at (cid:48)eginning of the year • share issue 2016 Shares 2015 Shares 2016 $’000 2015 $’000 1,105,282,736 1,105,282,736 157,736 157,736 (cid:9) (cid:9) (cid:9) (cid:9) Total contributed e(cid:61)uity at 30 June 1,105,282,736 1,105,282,736 157,736 157,736 | 64 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Clean Seas Tuna Limited | Notes to the Consolidated Financial Statements 51 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 52 23 (cid:21)arnings (cid:48)er share and dividends 23.1 (cid:21)arnings (cid:48)er share Both the basic and diluted earnings per share have been calculated using the profit attributable to shareholders of Clean Seas Tuna Limited as the numerator (ie no adjustments to profit were necessary in 2016 or 2015). The reconciliation of the weighted average number of shares for the purposes of diluted earnings per share to the weighted average number of ordinary shares used in the calculation of basic earnings per share is as follows: Amounts in thousand shares: • (cid:69)eighted average num(cid:48)er of shares used in (cid:48)asic earnings per share 1,105,283 1,105,283 • shares deemed to (cid:48)e issued for no consideration in respect of share (cid:48)ased payments (cid:9) (cid:9) (cid:44)eighted average number of shares used in diluted earnings per share 1,105,283 1,105,283 2016 2015 23.2 Dividends Dividends (cid:40)aid and (cid:40)roposed (cid:26)ividends declared during the year 23.3 (cid:22)ran(cid:43)ing credits (cid:43)he amount of the fran(cid:57)ing credits availa(cid:48)le for su(cid:48)se(cid:63)uent reporting periods are: • (cid:48)alance at the end of the reporting period • • • fran(cid:57)ing credits that (cid:69)ill arise from the payment of the amount of provision for income ta(cid:70) fran(cid:57)ing de(cid:48)its that (cid:69)ill arise from the payment of dividends recognised as a lia(cid:48)ility at the end of the reporting period fran(cid:57)ing credits that (cid:69)ill arise from the receipt of dividends recognised as receiva(cid:48)les at the end of reporting period 2016 $’000 (cid:9) 2015 $’000 (cid:9) (cid:38)arent 2016 $’000 2015 $’000 (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) 65 | 24 (cid:29)econciliation of cash flo(cid:55)s from o(cid:48)erating activities (cid:38)rofit for the period Adjustments for: • depreciation, amortisation and impairment • net interest received included in investing and financing Net changes in (cid:69)or(cid:57)ing capital: • change in inventories • change in trade and other receiva(cid:48)les • change in prepayments • change in (cid:48)iological assets • change in trade and other paya(cid:48)les • change in other employee o(cid:48)ligations • changes offset in investing (cid:36)et cash from operating activities 2(cid:12) (cid:17)uditor remuneration (cid:23)udit and review of financial statements (cid:37)ther services • • ta(cid:70)ation compliance ta(cid:70)ation consulting Total other service remuneration Total auditor’s remuneration 2016 $’000 (8,982) 1,821 88 (1,637) 2,541 21 2,713 1,159 130 (208) 2016 $’000 73 12 30 42 115 2015 $’000 4,108 1,706 (109) (1,639) (1,193) 496 (10,597) 118 27 (cid:9) 2015 $’000 72 10 17 27 99 (2,354) (7,083) 2(cid:13) (cid:29)elated (cid:48)art(cid:57) transactions and (cid:43)e(cid:57) management (cid:48)ersonnel disclosures The Group's related parties comprise its key management and entities associated with key management. The Remuneration Report in the Directors’ Report sets out the remuneration of directors and specified executives. The largest shareholder in Clean Seas Tuna Limited is Australian Tuna Fisheries Pty Ltd (ATF). ATF and its associated entities controlled 9.1% of issued shares at 30 June 2016 (2015: 9.1%) and it is associated with Stehr Group Pty Ltd and Sanchez Tuna Pty Ltd. All transactions with related parties are negotiated on a commercial arms length basis. These transactions were as follows: Australian (cid:43)una Fisheries (cid:40)ty (cid:36)td: • (cid:41)eceipts for ice, e(cid:70)penses, (cid:42)(cid:26)(cid:43) (cid:63)uota lease and contract la(cid:48)our • (cid:40)ayments for to(cid:69)ing, contract la(cid:48)our, fish feed, marina and net shed rent, fish and electricity (cid:42)tehr Group (cid:40)ty (cid:36)td • (cid:40)ayments for office rent (cid:40)(cid:42)(cid:37)(cid:37)(cid:41) (cid:40)ty (cid:36)td (associated (cid:69)ith (cid:40)aul (cid:41)o(cid:48)inson (cid:73) Alternate Director) • (cid:40)ayments for consulting services 2016 $’000 2015 $’000 11 380 13 56 11 326 10 36 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 52 Notes to the Consolidated Financial Statements | Clean Seas Tuna Limited 24 (cid:29)econciliation of cash flo(cid:55)s from o(cid:48)erating activities (cid:38)rofit for the period Adjustments for: • depreciation, amortisation and impairment • net interest received included in investing and financing Net changes in (cid:69)or(cid:57)ing capital: • change in inventories • change in trade and other receiva(cid:48)les • change in prepayments • change in (cid:48)iological assets • change in trade and other paya(cid:48)les • change in other employee o(cid:48)ligations • changes offset in investing (cid:36)et cash from operating activities 2(cid:12) (cid:17)uditor remuneration (cid:23)udit and review of financial statements (cid:37)ther services • ta(cid:70)ation compliance ta(cid:70)ation consulting • Total other service remuneration Total auditor’s remuneration 2016 $’000 (8,982) 1,821 88 (1,637) 2,541 21 2,713 1,159 130 (208) 2015 $’000 4,108 1,706 (109) (1,639) (1,193) 496 (10,597) 118 27 (cid:9) (2,354) (7,083) 2016 $’000 73 12 30 42 115 2015 $’000 72 10 17 27 99 2(cid:13) (cid:29)elated (cid:48)art(cid:57) transactions and (cid:43)e(cid:57) management (cid:48)ersonnel disclosures The Group's related parties comprise its key management and entities associated with key management. The Remuneration Report in the Directors’ Report sets out the remuneration of directors and specified executives. The largest shareholder in Clean Seas Tuna Limited is Australian Tuna Fisheries Pty Ltd (ATF). ATF and its associated entities controlled 9.1% of issued shares at 30 June 2016 (2015: 9.1%) and it is associated with Stehr Group Pty Ltd and Sanchez Tuna Pty Ltd. All transactions with related parties are negotiated on a commercial arms length basis. These transactions were as follows: Australian (cid:43)una Fisheries (cid:40)ty (cid:36)td: • (cid:41)eceipts for ice, e(cid:70)penses, (cid:42)(cid:26)(cid:43) (cid:63)uota lease and contract la(cid:48)our • (cid:40)ayments for to(cid:69)ing, contract la(cid:48)our, fish feed, marina and net shed rent, fish and electricity (cid:42)tehr Group (cid:40)ty (cid:36)td • (cid:40)ayments for office rent (cid:40)(cid:42)(cid:37)(cid:37)(cid:41) (cid:40)ty (cid:36)td (associated (cid:69)ith (cid:40)aul (cid:41)o(cid:48)inson (cid:73) Alternate Director) • (cid:40)ayments for consulting services 2016 $’000 2015 $’000 11 380 13 56 11 326 10 36 | 66 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Clean Seas Tuna Limited | Notes to the Consolidated Financial Statements 53 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 54 The following balances are outstanding as at the reporting date in relation to transactions with related parties: (cid:27)urrent (cid:40)aya(cid:48)les • Australian (cid:43)una Fisheries (cid:40)ty (cid:36)td • (cid:40)(cid:42)(cid:37)(cid:37)(cid:41) (cid:40)ty (cid:36)td 2016 $’000 37 15 2015 $’000 18 (cid:9) The totals of remuneration paid or payable to the key management personnel of the Group during the year are as follows: (cid:42)hort(cid:9)term employee (cid:48)enefits (cid:40)ost(cid:9)employment (cid:48)enefits (cid:36)ong(cid:9)term (cid:48)enefits (cid:43)ermination (cid:48)enefits (cid:43)otal (cid:41)emuneration 2016 $’000 1,123 78 14 9 2015 $’000 906 62 7 99 1,224 1,074 The Remuneration Report contained in the Directors’ Report contains details of the remuneration paid or payable to each member of the Group’s key management personnel for the year ended 30 June 2016. 2(cid:14) (cid:19)ontingent assets and liabilities Clean Seas announced in June 2015 that it had commenced litigation against Gibson’s Limited, trading as Skretting Australia, in relation to feed supplied from FY09 to FY12 which contained insufficient taurine. This resulted in mortalities and suppressed growth in the Yellowtail Kingfish stocks which caused substantial trading losses. In July 2016 Clean Seas announced that it had received the Independent Expert Forensic Accountant’s Report which assessed the quantum of the Group’s claim at $34.5 million to $39.1 million excluding interest and costs. Gibson’s Limited are defending the proceedings and have denied all liability to the Group. A trial date is yet to be set. No amounts have been recognised in these accounts in relation to potential compensation or future litigation costs. The Group also has unrecognised carry forward tax losses. This contingent asset is discussed in Note 9. There are no other material contingent assets or liabilities. 2(cid:15) (cid:19)a(cid:48)ital commitments (cid:40)roperty, plant and e(cid:63)uipment 2016 $’000 197 197 2015 $’000 50 50 Capital commitments relate to items of plant and equipment where funds have been committed but the assets not yet received. 67 | 2(cid:16) Interests in subsidiaries 2(cid:16).1 (cid:19)om(cid:48)osition of the (cid:23)rou(cid:48) Set out below are details of the subsidy held directly by the Group: (cid:36)ame of the Subsidiary (cid:27)lean (cid:42)eas A(cid:63)uaculture Gro(cid:69)out (cid:40)ty (cid:36)td Country of incorporation and principal place of business Australia (cid:29)roup proportion of ownership interests (cid:38)rincipal activity 30 June 2016 30 June 2015 Gro(cid:69)out and sale of (cid:46)ello(cid:69)tail (cid:35)ingfish 100(cid:3) 100(cid:2) 2(cid:16).2 Interests in unconsolidated structured entities The Group has no interests in unconsolidated structured entities. 3(cid:7) (cid:25)eases 3(cid:7).1 (cid:22)inance leases as lessee The Group holds a number of motor vehicles under finance lease arrangements. The net carrying amount of these assets is $173k (2015: $197k). The Group’s finance lease liabilities, which are secured by the related assets held under finance leases, are classified as follows: 2016 $’000 2015 $’000 96 68 66 84 Finance lease liabilities (cid:27)urrent: finance lease lia(cid:48)ilities Non(cid:9)current: finance lease lia(cid:48)ilities • • follows: 30 June 2016 (cid:36)ease payments Finance charges (cid:36)et present values 30 June 2015 (cid:36)ease payments Finance charges (cid:36)et present values Future minimum finance lease payments at the end of each reporting period under review were as (cid:35)inimum lease payments due (cid:44)ithin 1 year 1(cid:9)5 years (cid:23)fter 5 years $’000 $’000 $’000 103 (7) 96 72 (6) 66 70 (2) 68 87 (3) 84 (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) Total $’000 173 (9) 164 159 (9) 150 31 (cid:22)inancial instrument ris(cid:43) 31.1 (cid:29)is(cid:43) management ob(cid:42)ectives and (cid:48)olicies The Group is exposed to various risks in relation to financial instruments. The Group’s financial assets and liabilities by category are summarised in Note 12.1. The main types of risks are market risk, credit risk and liquidity risk. The Group’s risk management is coordinated at its head office, in close cooperation with the Board of Directors, and focuses on actively managing those risks to secure the Group’s short to medium- term cash flows. Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 54 Notes to the Consolidated Financial Statements | Clean Seas Tuna Limited Interests in subsidiaries 2(cid:16) 2(cid:16).1 (cid:19)om(cid:48)osition of the (cid:23)rou(cid:48) Set out below are details of the subsidy held directly by the Group: (cid:36)ame of the Subsidiary (cid:27)lean (cid:42)eas A(cid:63)uaculture Gro(cid:69)out (cid:40)ty (cid:36)td Country of incorporation and principal place of business Australia (cid:29)roup proportion of ownership interests (cid:38)rincipal activity 30 June 2016 30 June 2015 Gro(cid:69)out and sale of (cid:46)ello(cid:69)tail (cid:35)ingfish 100(cid:3) 100(cid:2) 2(cid:16).2 Interests in unconsolidated structured entities The Group has no interests in unconsolidated structured entities. (cid:25)eases 3(cid:7) 3(cid:7).1 (cid:22)inance leases as lessee The Group holds a number of motor vehicles under finance lease arrangements. The net carrying amount of these assets is $173k (2015: $197k). The Group’s finance lease liabilities, which are secured by the related assets held under finance leases, are classified as follows: Finance lease liabilities (cid:27)urrent: finance lease lia(cid:48)ilities • Non(cid:9)current: • finance lease lia(cid:48)ilities 2016 $’000 2015 $’000 96 68 66 84 Future minimum finance lease payments at the end of each reporting period under review were as follows: 30 June 2016 (cid:36)ease payments Finance charges (cid:36)et present values 30 June 2015 (cid:36)ease payments Finance charges (cid:36)et present values (cid:35)inimum lease payments due (cid:44)ithin 1 year $’000 1(cid:9)5 years $’000 (cid:23)fter 5 years $’000 103 (7) 96 72 (6) 66 70 (2) 68 87 (3) 84 (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) Total $’000 173 (9) 164 159 (9) 150 (cid:22)inancial instrument ris(cid:43) 31 31.1 (cid:29)is(cid:43) management ob(cid:42)ectives and (cid:48)olicies The Group is exposed to various risks in relation to financial instruments. The Group’s financial assets and liabilities by category are summarised in Note 12.1. The main types of risks are market risk, credit risk and liquidity risk. The Group’s risk management is coordinated at its head office, in close cooperation with the Board of Directors, and focuses on actively managing those risks to secure the Group’s short to medium- term cash flows. | 68 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Clean Seas Tuna Limited | Notes to the Consolidated Financial Statements 55 The Group does not engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Group is exposed are described below. 31.2 (cid:26)ar(cid:43)et ris(cid:43) anal(cid:57)sis The Group is exposed to market risk through its use of financial instruments and specifically to currency risk, interest rate risk and certain other price risks, which result from both its operating and investing activities. Foreign currency sensitivity Most of the Group’s transactions are carried out in Australian dollars (AUD). Exposures to currency exchange rates mainly arise from the Group’s overseas sales, which are currently primarily denominated in Euro (EUR). To mitigate the Group’s exposure to foreign currency risk, non-AUD cash flows are monitored, customer payments are credited to foreign currency bank accounts and converted to AUD on a managed basis and forward exchange contracts may be entered into in accordance with the Group’s risk management policies. Where the amounts to be paid and received in a specific currency are expected to largely offset one another, no further hedging activity is undertaken. Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are disclosed below. The amounts shown are those reported to key management translated into AUD at the closing rate: 30 June 2016 • financial assets financial lia(cid:48)ilities • Total e(cid:68)posure 30 June 2015 • • financial assets financial lia(cid:48)ilities Total e(cid:68)posure Short term e(cid:68)posure Long term e(cid:68)posure (cid:27)(cid:43)(cid:40) (cid:43)S(cid:26) (cid:23)$’000 (cid:23)$’000 (cid:37)ther (cid:23)$’000 (cid:27)(cid:43)(cid:40) (cid:43)S(cid:26) (cid:23)$’000 (cid:23)$’000 (cid:37)ther (cid:23)$’000 1,205 (cid:9) 1,205 444 (cid:9) 444 407 (cid:9) 407 69 (cid:9) 69 (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) The following table illustrates the sensitivity of profit and equity in regards to the Group’s financial assets and financial liabilities and the AUD / EUR exchange rate ‘all other things being equal’. It assumes a +/- 5% change in this exchange rate for the year ended at 30 June 2016 (2015: 5%). The sensitivity analysis is based on the impact on the Group’s valuation of live fish held for sale. (cid:38)rofit and (cid:27)(cid:61)uity (cid:31)ncrease 5(cid:3) (cid:26)ecrease 5(cid:3) (cid:31)ncrease (cid:11) ((cid:26)ecrease) (cid:23)$’000 (cid:23)$’000 30 (cid:34)une 2016 30 (cid:34)une 2015 (550) (500) 630 540 Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group’s exposure to currency risk. 69 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 56 Notes to the Consolidated Financial Statements | Clean Seas Tuna Limited (cid:33)nterest rate sensitivity The Group’s policy is to minimise interest rate cash flow risk exposures on long-term financing. 31.3 (cid:19)redit ris(cid:43) anal(cid:57)sis Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group is exposed to this risk for various financial instruments, for example by granting trade credit to customers and investing surplus funds. The Group’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at the reporting date, as summarised below: Classes of financial assets (cid:27)arrying amounts: • cash and cash e(cid:63)uivalents • trade and other receiva(cid:48)les 2016 $’000 598 3,699 4,297 2015 $’000 1,513 6,240 7,753 The Group continuously monitors defaults of customers and other counterparties, identified either individually or by group and incorporates this information into its credit risk controls. Where available at reasonable cost, external credit ratings and/or reports on customers and other counterparties are obtained and used. The Group’s policy is to deal only with creditworthy counterparties. The Group’s management considers that all of the above financial assets that are not impaired or past due for each of the 30 June reporting dates under review are of good credit quality. At 30 June, the Group has certain trade receivables that have not been settled by the contractual due date but are not considered to be impaired. The amounts at 30 June analysed by the length of time past due, are: Not more three (3) months (cid:37)ore than three (3) months (cid:48)ut not more than si(cid:70) (6) months (cid:37)ore than si(cid:70) (6) months (cid:48)ut not more than one (1) year (cid:37)ore than one (1) year Total 2016 $’000 883 89 (cid:9) (cid:9) 972 2015 $’000 262 2 (cid:9) (cid:9) 264 In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. Trade receivables consist of a large number of customers in various industries and geographical areas. Based on historical information about customer default rates management consider the credit quality of trade receivables that are not past due or impaired to be good. The credit risk for cash and cash equivalents is considered negligible, since the counterparties are reputable banks with high quality external credit ratings. | 70 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Clean Seas Tuna Limited | Notes to the Consolidated Financial Statements 57 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 58 The following table shows the Levels within the hierarchy of non-financial assets measured at fair value on a recurring basis at 30 June 2016: 30 June 2016 (cid:26)iological assets (cid:9) current (cid:26)iological assets (cid:73) non(cid:9)current (cid:42)outhern (cid:48)luefin tuna (cid:63)uota (cid:43)otal 30 June 2015 (cid:26)iological assets (cid:9) current (cid:26)iological assets (cid:73) non(cid:9)current (cid:42)outhern (cid:48)luefin tuna (cid:63)uota (cid:43)otal Level 1 $’000 Level 3 $’000 Level 2 $’000 25,036 244 200 25,480 Level 2 $’000 27,598 244 200 28,042 (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) Total $’000 25,036 244 200 25,480 Total $’000 27,598 244 200 28,042 (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) Level 1 $’000 Level 3 $’000 The fair values of the biological assets are determined in accordance with Note 4.22. 33 (cid:19)a(cid:48)ital management (cid:48)olicies and (cid:48)rocedures The Group’s capital management objectives are: • • to ensure the Group’s ability to continue as a going concern; and to provide an adequate return to shareholders Management assesses the Group’s capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group considers the issue of new shares, dividends, return of capital to shareholders and sale of assets to reduce debt. The Group has satisfied its covenant obligations for the Commonwealth Bank of Australia $7m Trade Finance Facility at 30 June 2016. 31.4 (cid:25)i(cid:49)uidit(cid:57) ris(cid:43) anal(cid:57)sis Liquidity risk is the risk that the Group might be unable to meet its obligations. The Group manages its liquidity needs by monitoring scheduled debt servicing payments for long-term financial liabilities as well as forecast cash inflows and outflows due in day-to-day business. The data used for analysing these cash flows is consistent with that used in the contractual maturity analysis below. Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on the basis of a rolling monthly projection. Net cash requirements are compared to available cash and borrowing facilities in order to determine headroom or any shortfalls. This analysis shows that available borrowing facilities are expected to be sufficient over the lookout period. As at 30 June 2016, the Group’s non-derivative financial liabilities have contractual maturities (including interest payments where applicable) as summarised below: Current (cid:36)on(cid:9)current (cid:44)ithin 6 months $’000 6 (cid:9) 12 months $’000 1 (cid:9) 5 years $’000 5(cid:7) years $’000 30 June 2016 (cid:43)rade and other paya(cid:48)les Finance lease o(cid:48)ligations Other (cid:48)orro(cid:69)ings Total 2,950 52 67 3,069 (cid:9) 51 2,900 2,951 (cid:9) 70 (cid:9) 70 This compares to the maturity of the Group’s non-derivative financial liabilities in the previous reporting periods as follows: Current (cid:36)on(cid:9)current (cid:44)ithin 6 months $’000 6 (cid:9) 12 months $’000 1 (cid:9) 5 years $’000 5(cid:7) years $’000 30 June 2015 (cid:43)rade and other paya(cid:48)les Finance lease o(cid:48)ligations Other (cid:48)orro(cid:69)ings Total 1,791 36 100 1,927 (cid:9) 36 (cid:9) 36 (cid:9) 87 (cid:9) 87 (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) (cid:9) The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying values of the liabilities at the reporting date. (cid:22)air value measurement 32 32.1 (cid:22)air value measurement of non-financial instruments Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows: • Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities • Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly • Level 3: unobservable inputs for the asset or liability 71 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 58 Notes to the Consolidated Financial Statements | Clean Seas Tuna Limited The following table shows the Levels within the hierarchy of non-financial assets measured at fair value on a recurring basis at 30 June 2016: 30 June 2016 (cid:26)iological assets (cid:9) current (cid:26)iological assets (cid:73) non(cid:9)current (cid:42)outhern (cid:48)luefin tuna (cid:63)uota (cid:43)otal 30 June 2015 (cid:26)iological assets (cid:9) current (cid:26)iological assets (cid:73) non(cid:9)current (cid:42)outhern (cid:48)luefin tuna (cid:63)uota (cid:43)otal Level 1 $’000 (cid:9) (cid:9) (cid:9) (cid:9) Level 1 $’000 (cid:9) (cid:9) (cid:9) (cid:9) Level 2 $’000 25,036 244 200 25,480 Level 2 $’000 27,598 244 200 28,042 Level 3 $’000 (cid:9) (cid:9) (cid:9) (cid:9) Level 3 $’000 (cid:9) (cid:9) (cid:9) (cid:9) Total $’000 25,036 244 200 25,480 Total $’000 27,598 244 200 28,042 The fair values of the biological assets are determined in accordance with Note 4.22. 33 (cid:19)a(cid:48)ital management (cid:48)olicies and (cid:48)rocedures The Group’s capital management objectives are: • • to ensure the Group’s ability to continue as a going concern; and to provide an adequate return to shareholders Management assesses the Group’s capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group considers the issue of new shares, dividends, return of capital to shareholders and sale of assets to reduce debt. The Group has satisfied its covenant obligations for the Commonwealth Bank of Australia $7m Trade Finance Facility at 30 June 2016. | 72 Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 Clean Seas Tuna Limited | Notes to the Consolidated Financial Statements 59 34 (cid:28)arent entit(cid:57) information Information relating to Clean Seas Tuna Limited (‘the Parent Entity’): Statement of financial position (cid:27)urrent assets (cid:43)otal assets (cid:27)urrent lia(cid:48)ilities (cid:43)otal lia(cid:48)ilities Net assets (cid:33)ssued capital (cid:41)etained earnings (cid:43)otal e(cid:63)uity Statement of profit or loss and other comprehensive income (cid:40)rofit for the year Other comprehensive income (cid:43)otal comprehensive income 2016 $’000 747 38,679 3,931 4,053 34,626 157,736 2015 $’000 5,595 37,660 1,045 1,073 36,587 157,736 (123,110) (121,149) 34,626 36,587 (1,961) (cid:9) (1,961) 1,551 (cid:9) 1,551 The Parent Entity has capital commitments of $nil to purchase plant and equipment (2015: $18k). Refer Note 28 for further details of the commitment. The Parent Entity has not entered into a Deed of Cross Guarantee. Refer Note 27 in relation to contingent assets and liabilities. 3(cid:12) (cid:28)ost-re(cid:48)orting date events No adjusting or significant non-adjusting events have occurred between the reporting date and the date of authorisation. 73 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 60 Directors’ Declaration | Clean Seas Tuna Limited Directors’ Declaration Directors’ Declaration c In the opinion of the Directors of Clean Seas Tuna Limited: a The consolidated financial statements and notes of Clean Seas Tuna Limited are in accordance with the Corporations Act 2001, including: i Giving a true and fair view of its financial position as at 30 June 2016 and of its performance for the financial year ended on that date; and ii Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and b There are reasonable grounds to believe that Clean Seas Tuna Limited will be able to pay its debts as and when they become due and payable. d The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 2016. e Note 2 confirms that the consolidated financial statements also comply with International Financial Reporting Standards. Signed in accordance with a resolution of the Directors: Paul Steere Chairman Dated the 31st day of August 2016 | 74 (cid:3) (cid:3) (cid:47)(cid:72)(cid:89)(cid:72)(cid:79)(cid:3)(cid:20)(cid:15)(cid:3) (cid:25)(cid:26)(cid:3)(cid:42)(cid:85)(cid:72)(cid:72)(cid:81)(cid:75)(cid:76)(cid:79)(cid:79)(cid:3)(cid:53)(cid:71)(cid:3) (cid:58)(cid:68)(cid:92)(cid:89)(cid:76)(cid:79)(cid:79)(cid:72)(cid:3)(cid:54)(cid:36)(cid:3)(cid:24)(cid:19)(cid:22)(cid:23)(cid:3) (cid:3) (cid:38)(cid:82)(cid:85)(cid:85)(cid:72)(cid:86)(cid:83)(cid:82)(cid:81)(cid:71)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:29)(cid:3)(cid:3) (cid:42)(cid:51)(cid:50)(cid:3)(cid:37)(cid:82)(cid:91)(cid:3)(cid:20)(cid:21)(cid:26)(cid:19)(cid:3) (cid:36)(cid:71)(cid:72)(cid:79)(cid:68)(cid:76)(cid:71)(cid:72)(cid:3)(cid:54)(cid:36)(cid:3)(cid:24)(cid:19)(cid:19)(cid:20)(cid:3) (cid:3) (cid:55)(cid:3)(cid:25)(cid:20)(cid:3)(cid:27)(cid:3)(cid:27)(cid:22)(cid:26)(cid:21)(cid:3)(cid:25)(cid:25)(cid:25)(cid:25)(cid:3) (cid:41)(cid:3)(cid:25)(cid:20)(cid:3)(cid:27)(cid:3)(cid:27)(cid:22)(cid:26)(cid:21)(cid:3)(cid:25)(cid:25)(cid:26)(cid:26)(cid:3) (cid:40)(cid:3)(cid:76)(cid:81)(cid:73)(cid:82)(cid:17)(cid:86)(cid:68)(cid:35)(cid:68)(cid:88)(cid:17)(cid:74)(cid:87)(cid:17)(cid:70)(cid:82)(cid:80)(cid:3) (cid:58)(cid:3)(cid:90)(cid:90)(cid:90)(cid:17)(cid:74)(cid:85)(cid:68)(cid:81)(cid:87)(cid:87)(cid:75)(cid:82)(cid:85)(cid:81)(cid:87)(cid:82)(cid:81)(cid:17)(cid:70)(cid:82)(cid:80)(cid:17)(cid:68)(cid:88)(cid:3) (cid:3) (cid:3) (cid:47)(cid:72)(cid:89)(cid:72)(cid:79)(cid:3)(cid:20)(cid:15)(cid:3) (cid:25)(cid:26)(cid:3)(cid:42)(cid:85)(cid:72)(cid:72)(cid:81)(cid:75)(cid:76)(cid:79)(cid:79)(cid:3)(cid:53)(cid:71)(cid:3) (cid:58)(cid:68)(cid:92)(cid:89)(cid:76)(cid:79)(cid:79)(cid:72)(cid:3)(cid:54)(cid:36)(cid:3)(cid:24)(cid:19)(cid:22)(cid:23)(cid:3) (cid:3) (cid:38)(cid:82)(cid:85)(cid:85)(cid:72)(cid:86)(cid:83)(cid:82)(cid:81)(cid:71)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:29)(cid:3)(cid:3) (cid:42)(cid:51)(cid:50)(cid:3)(cid:37)(cid:82)(cid:91)(cid:3)(cid:20)(cid:21)(cid:26)(cid:19)(cid:3) (cid:36)(cid:71)(cid:72)(cid:79)(cid:68)(cid:76)(cid:71)(cid:72)(cid:3)(cid:54)(cid:36)(cid:3)(cid:24)(cid:19)(cid:19)(cid:20)(cid:3) (cid:3) (cid:55)(cid:3)(cid:25)(cid:20)(cid:3)(cid:27)(cid:3)(cid:27)(cid:22)(cid:26)(cid:21)(cid:3)(cid:25)(cid:25)(cid:25)(cid:25)(cid:3) (cid:41)(cid:3)(cid:25)(cid:20)(cid:3)(cid:27)(cid:3)(cid:27)(cid:22)(cid:26)(cid:21)(cid:3)(cid:25)(cid:25)(cid:26)(cid:26)(cid:3) (cid:40)(cid:3)(cid:76)(cid:81)(cid:73)(cid:82)(cid:17)(cid:86)(cid:68)(cid:35)(cid:68)(cid:88)(cid:17)(cid:74)(cid:87)(cid:17)(cid:70)(cid:82)(cid:80)(cid:3) (cid:58)(cid:3)(cid:90)(cid:90)(cid:90)(cid:17)(cid:74)(cid:85)(cid:68)(cid:81)(cid:87)(cid:87)(cid:75)(cid:82)(cid:85)(cid:81)(cid:87)(cid:82)(cid:81)(cid:17)(cid:70)(cid:82)(cid:80)(cid:17)(cid:68)(cid:88)(cid:3) (cid:3) (cid:3) Clean Seas Tuna Limited | Independent Auditor’s Report (cid:3) Independent Auditor’s Report (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:3) (cid:44)(cid:49)(cid:39)(cid:40)(cid:51)(cid:40)(cid:49)(cid:39)(cid:40)(cid:49)(cid:55)(cid:3)(cid:36)(cid:56)(cid:39)(cid:44)(cid:55)(cid:50)(cid:53)(cid:183)(cid:54)(cid:3)(cid:53)(cid:40)(cid:51)(cid:50)(cid:53)(cid:55)(cid:3) (cid:55)(cid:50)(cid:3)(cid:55)(cid:43)(cid:40)(cid:3)(cid:48)(cid:40)(cid:48)(cid:37)(cid:40)(cid:53)(cid:54)(cid:3)(cid:50)(cid:41)(cid:3)(cid:38)(cid:47)(cid:40)(cid:36)(cid:49)(cid:3)(cid:54)(cid:40)(cid:36)(cid:54)(cid:3)(cid:55)(cid:56)(cid:49)(cid:36)(cid:3)(cid:47)(cid:44)(cid:48)(cid:44)(cid:55)(cid:40)(cid:39)(cid:3) (cid:3) (cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3) (cid:58)(cid:72)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:79)(cid:72)(cid:68)(cid:81)(cid:3)(cid:54)(cid:72)(cid:68)(cid:86)(cid:3)(cid:55)(cid:88)(cid:81)(cid:68)(cid:3)(cid:47)(cid:76)(cid:80)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3) 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(cid:68)(cid:83)(cid:83)(cid:79)(cid:76)(cid:72)(cid:86)(cid:17)(cid:3)  Independent Auditor’s Report | Clean Seas Tuna Limited (cid:3) (cid:3) (cid:3) (cid:36)(cid:88)(cid:71)(cid:76)(cid:87)(cid:82)(cid:85)(cid:183)(cid:86)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:82)(cid:81)(cid:86)(cid:76)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3) 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(cid:45)(cid:3)(cid:47)(cid:3)(cid:43)(cid:88)(cid:80)(cid:83)(cid:75)(cid:85)(cid:72)(cid:92)(cid:3) (cid:51)(cid:68)(cid:85)(cid:87)(cid:81)(cid:72)(cid:85)(cid:3)(cid:16)(cid:3)(cid:36)(cid:88)(cid:71)(cid:76)(cid:87)(cid:3)(cid:9)(cid:3)(cid:36)(cid:86)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) (cid:3) (cid:36)(cid:71)(cid:72)(cid:79)(cid:68)(cid:76)(cid:71)(cid:72)(cid:15)(cid:3)(cid:22)(cid:20)(cid:3)(cid:36)(cid:88)(cid:74)(cid:88)(cid:86)(cid:87)(cid:3)(cid:21)(cid:19)(cid:20)(cid:25)(cid:3) (cid:3) (cid:3) 77 | Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 ASX Additional Information | Clean Seas Tuna Limited 64 ASX Additional Information ASX Additional Information Additional information required by the ASX Limited Listing Rules and not disclosed elsewhere in this report is set out below. The information is effective as at 19 August 2016. Ordinar(cid:57) share ca(cid:48)ital (cid:2)(cid:49)uoted(cid:3) 1,105,282,736 fully paid ordinary shares are held by 7,647 shareholders. (cid:30)ubstantial shareholders The number of shares held by substantial shareholders and their associates are set out below: (cid:42)hareholder Australian Tuna Fisheries Pty Ltd: Num(cid:48)er of (cid:42)hares 101,114,972 (cid:32)oting (cid:29)ights Ordinary Shares: On a show of hands, every member present at a meeting in person or by proxy shall have one vote and upon a poll each fully paid share shall have one vote. (cid:26)istribution of e(cid:61)uity security holders – (cid:37)rdinary shares Holding 1 (cid:9) 1,000 1,001 (cid:9) 5,000 5,001 (cid:9) 10,000 10,001 (cid:9) 100,000 100,001(cid:7) Total (cid:36)umber of holders 534 1,088 922 3,547 1,556 7,647 There were 2,611 holders of less than a marketable parcel of 10,639 ordinary shares, holding a total of 11,550,882 ordinary shares. | 78 Clean Seas Tuna Limited | ASX Additional Information Clean Seas Tuna Limited – Consolidated Financial Statements For the year ended 30 June 2016 65 Twenty (20) largest shareholders Australian (cid:43)una Fisheries (cid:40)ty (cid:36)td (cid:34) (cid:40) (cid:37)organ Nominees Australia (cid:36)imited (cid:32)(cid:42)(cid:26)(cid:27) (cid:27)ustody Nominees (Australia) (cid:36)imited (cid:27)iticorp Nominees (cid:40)ty (cid:36)imited (cid:37)r (cid:45)ianghui (cid:27)hen (cid:37)r (cid:34)ason (cid:27)onrad (cid:42)(cid:63)uire (cid:23)(cid:43)he (cid:34)as(cid:63)ui A(cid:11)(cid:27)(cid:24) (cid:37)r (cid:29)rmanno Feliciani (cid:41)o(cid:69)e (cid:32)eaney (cid:42)uper Fund (cid:40)ty (cid:36)td (cid:23)(cid:41)o(cid:69)e (cid:32)eaney (cid:42)uper Fund A(cid:11)(cid:27)(cid:24) (cid:37)r (cid:34)amie (cid:36)e(cid:69)is 4 (cid:29)yes (cid:36)imited (cid:23)(cid:44)orsley Family A(cid:11)(cid:27)(cid:24) (cid:37)r (cid:32)agen (cid:32)einz (cid:42)tehr (cid:3) (cid:37)rs Anna (cid:42)tehr (cid:23)(cid:32) (cid:3) A (cid:42)tehr (cid:42)uper Fund A(cid:11)(cid:27)(cid:24) (cid:37)r (cid:37)ichael (cid:34)ohn O(cid:4)Neill (cid:3) (cid:37)rs (cid:41)e(cid:48)ecca (cid:34)oan O(cid:4)Neill (cid:23)(cid:40)rotea (cid:42)oft(cid:69)are (cid:42)tf (cid:42)(cid:11)F A(cid:11)(cid:27)(cid:24) (cid:44)alpole (cid:29)nterprises (cid:40)ty (cid:36)td (cid:41)dl(cid:57) (cid:40)ty (cid:36)td (cid:23)(cid:41)ed (cid:36)a(cid:57)e (cid:42)(cid:11)F A(cid:11)(cid:27)(cid:24) (cid:37)r (cid:26)ruce (cid:37)aton (cid:32)ans And Del(cid:69)yn (cid:40)ty (cid:36)imited (cid:42)implot Australia (cid:40)ty (cid:36)imited (cid:37)r (cid:36)eon Gaffney (cid:37)rs (cid:32)ui(cid:9)(cid:27)hen (cid:43)sai (cid:37)rdinary shares (cid:36)umber of shares held (cid:38)ercentage of issued shares 93,665,903 56,184,974 17,552,069 17,073,047 12,199,668 11,500,000 10,833,333 9,000,000 8,800,000 8,750,000 7,199,069 7,100,000 6,106,704 6,000,000 5,936,863 5,349,465 5,231,250 5,050,665 4,700,000 8(cid:10)5(cid:2) 5(cid:10)1(cid:2) 1(cid:10)6(cid:2) 1(cid:10)5(cid:2) 1(cid:10)1(cid:2) 1(cid:10)0(cid:2) 1(cid:10)0(cid:2) 0(cid:10)8(cid:2) 0(cid:10)8(cid:2) 0(cid:10)8(cid:2) 0(cid:10)7(cid:2) 0(cid:10)6(cid:2) 0(cid:10)6(cid:2) 0(cid:10)5(cid:2) 0(cid:10)5(cid:2) 0(cid:10)5(cid:2) 0(cid:10)5(cid:2) 0(cid:10)5(cid:2) 0(cid:10)4(cid:2) (cid:46)ong (cid:33)nternational (cid:33)nvestments (cid:40)ty (cid:36)td (cid:23)(cid:46)ong (cid:42)(cid:11)F A(cid:11)(cid:27)(cid:24) Total 4,449,465 302,682,475 0(cid:10)4(cid:2) 27(cid:10)4(cid:3) (cid:30)ecurities (cid:21)(cid:56)change The Company is listed on the Australian Securities Exchange. On (cid:26)ar(cid:43)et Bu(cid:57) Bac(cid:43) There is no current on market buy back. 79 | Corporate Directory Directors Paul Steere Independent Non-Executive Chairman Nick Burrows Independent Non-Executive Director Dr Hagen Stehr AO Non-Executive Director Marcus Stehr Non-Executive Director David Head Managing Director and Chief Executive Officer Paul Robinson Alternate Non-Executive Director for H Stehr Company secretary Wayne Materne Executives David Head Managing Director and Chief Executive Officer Wayne Materne Chief Financial Officer & Company Secretary Principal registered office in Australia 7 North Quay Boulevard, Port Lincoln SA 5606 Ph: (08) 8621 2900 Fax: (08) 8621 2990 Email: reception@cleanseas.com.au Share register Boardroom Pty Ltd Level 12, 225 George Street / GPO Box 3993 Sydney NSW 2000 Ph: 1300 737 760 / +612 9290 9600 Fax: 1300 653 459 Email: enquiries@boardroomlimited.com.au Auditor Grant Thornton Audit Pty Ltd Level 1, 67 Greenhill Road Wayville SA 5034 Stock exchange listing Clean Seas Tuna Limited shares are listed on the Australian Securities Exchange (ASX: CSS) Website address www.cleanseas.com.au Corporate Directory | Clean Seas Tuna Limited | 80 81 | 

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