Clean Seas Seafood Limited
Annual Report
2016-17
ABN: 61 094 380 435
Table of Contents
Company Overview
Chairman’s & Managing Director’s Report
Director’s Report
Auditor’s Independence Declaration
Corporate Governance Statement
Consolidated Statement of Profit or Loss
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
Corporate Directory
05
14
22
38
39
40
41
42
43
44
80
81
85
87
2 |
| 3
Clean Seas Yellowtail Kingfish farms, Port Lincoln
4 |
Company Overview
Background
Clean Seas is the global leader in full cycle breeding,
production and sale of Yellowtail Kingfish, and is
renowned world wide for its exceptionally high quality
Key Highlights 2016-17
New Processing Facility
• Completion of our newly built production
fish. Formed in 2000, and publicly listed in 2005, Clean
facility in Royal Park, Adelaide.
Seas has become the largest producer of aquaculture
Yellowtail Kingfish outside Japan. As well as our
superb quality, we are recognised for our innovations
in Yellowtail Kingfish farming, and our reliability in
supplying fresh fish to markets all over the world 52
weeks of the year. In 2016-17 our Yellowtail Kingfish
was voted “Best Fish” at the Australian Food awards for
second year in a row.
World Class Product
Spencer Gulf Hiramasa Yellowtail Kingfish’s firm white-
to-light-pink flesh boasts a sweet, rich, clean flavour
of consistently high standard. Spencer Gulf Hiramasa
Yellowtail Kingfish has long been renowned as a superb
sashimi fish, but it’s increasingly being acclaimed
worldwide for its extraordinary versatility. Japanese sushi
masters consider it the best fish in the world for sashimi.
Marketing Strategy
• Strategic review of brand.
• Rebrand of Spencer Gulf Hiramasa Kingfish.
• New marketing campaign Tale of Two Fish.
• Chef Ambassador program development
and expansion.
Sales Re-structure
• Strategic review and re-structure of sales.
Awards
• Awarded “Best Fish” by Australian Seafood
Awards for second year in a row.
Finance
• Returned to profitability one year ahead of
Turnaround Strategy
• $9.2 million increase in after-tax profit
• Sales revenue increased 18% to $35.4 million
• Share purchase plan and Placement raised
$8.7 million.
Spencer Gulf Hiramasa Kingfish, a world class product
| 5
Company Overview
Our Hatchery
Our hatchery is located at Arno Bay and our sea farm
operations are located in the Spencer Gulf, in a remote
location off the Eyre Peninsula town of Port Lincoln
in South Australia. At our hatchery, the cycle of life
commences with eggs from our selectively bred brood
stock. The eggs are carefully transferred to an incubator
where they hatch 48 hours later, before being
transferred to custom-designed larval rearing tanks.
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 4+kgs.
For the next 21 days, the larvae enjoy a diet of live
Sustainable Aquaculture Practices
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 which point they are transferred to sea.
Clean Seas is one of Australia’s leading producers
of sustainable seafood, and are globally reputed for
championing world’s best practice in Aquaculture.
Clean Seas has certification from internationally
renowned Friend of the Sea and are working towards
achieving accreditation from the world’s leading
certification, The Aquaculture Stewardship Council
Farm Operations
(ASC) in early 2018.
Once transferred to sea, the Yellowtail Kingfish reside
Our sustainable operations include compliance with
in the Spencer Gulf. By any measure, Spencer Gulf is
waste water parameters, reduction of escapes and
one of the cleanest bodies of water in Australia. There
bycatches to a negligible level, no impact on critical
is nothing between the water where the Yellowtail
habitat (e.g. mangroves and wetlands), no use of
Kingfish are raised and the Antarctic but the icy, vast
harmful antifoulants or growth hormones, compliance
expanse of the Southern Ocean.
with social accountability and gradual reduction of
carbon footprint. We are focused on safe work practices
and have recently been re-accredited for HACCP.
6 |
The Arno Bay hatchery, Port Lincoln farm and
our dedicated team.
Arno Bay Hatchery
| 7
The 2017 Spencer Gulf Hiramasa Kingfish brand campaign
8 |
Company Overview
Fully Integrated Supply Chain
New Production Facility
Spencer Gulf Hiramasa Kingfish is delivered fresh
In June 2017 Clean Seas commissioned a new in house
within 4-7 days of harvest. Our product is delivered
processing facility in Adelaide. This state of the art
to thousands of restaurants and chefs in 25 countries
facility provides end to end quality control across the
world wide, through more than 150 distributors.
supply chain from hatchery to customer.
Our world class hatchery infrastructure and farm leases
The facility has a significant capacity for future
have potential to more than triple production from
expansion, including production of new “value added”
the current 2,500 tonnes per year. With 15 years of
products planned from 2018/2019.
experience in breeding and farming, Clean Seas has an
entrenched first-mover advantage in Australia and key
export markets.
Latest Technology
The Royal Park Processing Facility will include the
latest rapid freezing technology (liquid nitrogen) and
Adelaide’s first minus 40º degree freezer facility.
Clean Seas new Adelaide based production facility.
| 9
Company Overview
2017 Marketing Campaign
Our Customers
In July 2017, Clean Seas rebranded and launched a
Our customers are leading seafood distributors and
new marketing campaign for Spencer Gulf Hiramasa
wholesalers in key cities across the world. We have
Kingfish. This followed a strategic review in 2016, which
direct relationships with more than 150 distributors
identified current branding did not reflect the product’s
and wholesalers world wide. Together, we develop long
key attributes and personality. The new marketing
term relationships with restaurants and key chefs.
campaign is focused on three strategic pillars:
Provenance, Culinary Excellence (including cold water
benefits), and Sustainability.
Our brand is featured on menus in the best restaurants
world wide. We have a long standing culture of
working closely with high end chefs in Australia and
around the world.
POWERFUL
Global Reach Map
4
34
18
14
33
10
15
27
24
20
22
28
9
8
11
2
7
5
16
29
19
13
23
3
31
12
17
32
5
30
25
26
1
21
Countries we
distribute to:
1. Australia
2. Austria
3. Bulgaria
4. Canada
5. China
6. Croatia
7. Czechia
8. Denmark
9. Finland
10. France
11. Germany
12. Greece
13. Hungary
14. Iceland
15. Ireland
16. Italy
17. Lebanon
28. Sweden
29. Switz
30. Thailand
31. Turkey
32. UAE
33. UK
34. USA
18. Mexico
19. Monaco
20. Morocco
21. New Zealand
22. Norway
23. Poland
24. Portugal
25. Singapore
26. South Korea
27. Spain
10 |
POWERFUL
DELICATE
Spencer Gulf Hiramasa Kingfish 2017 brand campaign
| 11
Chef Nicky Riemer
Chef Giovanni Pilu
12 |
Chef Victor Liong
Company Overview
Brand Ambassadors
Clean Seas have established close relationships
Our Story: Best In Class with a
compelling narrative
Chef Nicky Riemer
with a number of leading chefs who have become
Sensory research has confirmed our product as “Best in
ambassadors for Spencer Gulf Hiramasa Kingfish.
Class” with clear and distinct preference to competitive
Spencer Gulf Hiramasa Kingfish
chef ambassadors include:
Nicky Riemer - Bellota, Melbourne, Australia
Giovanni Pilu - Pilu at Freshwater,
Sydney, Australia
Victor Liong - Lee Ho Fook, Melbourne,
Australia
offering including Japanese product. In 2016-17 we were
voted “Best Fish” – by the Australian Food Awards for
the second year.
Leading international chefs get inspiration from
Spencer Gulf Hiramasa Kingfish. Whether served raw,
cured, smoked, grilled, fried, roasted or poached, chef’s
worldwide revere Hiramasa for its unparalleled quality
and consistency and versatility.
Its high fat content is superbly moist unadorned as
Shaun Presland - Rockpool Dining Group -
sashimi, yet rich enough to hold its own when paired
Sake Brand Executive Chef, Sydney, Australia
with more robust flavours. This high fat content also
Frank Shek - China Doll, Sydney, Australia
ensures that Hiramasa’s skin crisps brilliantly too. The
Juan Amador - Amador, Vienna, Austria
versatility of Hiramasa Kingfish makes it a fish for
every season.
Chef Shaun Presland
| 13
Chairman & Managing Director’s Report
Terry O’Brien – Chairman
David Head – Managing Director & CEO
On behalf of our Board and Management,
reflects growth in volume and selling prices while
we are pleased to present the 2017 Annual
Report for Clean Seas Seafood Limited (ASX:
CSS), formerly Clean Seas Tuna Ltd.
The past year has been a strong one for Clean Seas as
the Company has further consolidated its position as
the global leader in full cycle breeding, production and
sale of premium Yellowtail Kingfish.
driving new levels of operational efficiency, for which
Clean Seas’ staff and management deserve our thanks.
At the end of the period, the Company launched a
new marketing campaign with improved branding to
support sales growth in Australia, Europe and the US
and re-branded our premium grade product “Spencer
Gulf Hiramasa Kingfish”. This rebrand leverages our
unique story and is showing customers that Clean Seas
The year to 30 June 2017 has seen our Company achieve
is best in class with a compelling narrative.
improvements in several important areas: we returned
Customers’ perception of quality is all-important in the
to profit; sales increased by 29% on a normalised basis
premium market segments in which we operate. In
with growth in key export markets; and we undertook
this light, it is pleasing that sensory research conducted
measures to address our historic inventory imbalance.
during the year has confirmed consumers’ clear and
Clean Seas’ return to full-year profitability has come
one year ahead of the timetable outlined in the
Turnaround Strategy released in October 2016. This
distinct preference for our Spencer Gulf Hiramasa
Kingfish over competitor products.
14 |
Chairman & Managing Director’s Report
Board of Directors – From top left; Mr. Marcus Stehr, Dr. Hagen Stehr, Mr. Nick Burrows, Mr. Paul Robinson, Mr. Paul Steere,
From bottom left; Mr. David Head, Mr. Terry O’Brien
Financial Results
We achieved strong improvement in receipts from
customers and net operating cash flow in FY17. Receipts
from customers increased by $9.5 million (+35%).
The Company has achieved this sales growth at a time
when farm gate prices have lifted in all markets. Net
farm gate prices for large fresh fish, which represented
75% of the Company’s volume, increased by 18% in
Net operating cash flow, excluding the FY 16 R&D Tax
from June 2016 to June 2017, to $13.56 per kg whole
Incentive Refund, improved by $5.1 million (+60%)
weight equivalent.
compared to FY16 as we achieved strong sales growth
and efficiency gains on farm.
Sales
While sales to Asia declined in FY17 due to Clean
Seas’ discontinuation of its planned distribution
arrangement with Beston Global Food Company
Limited (ASX: BFC), the Company is actively exploring
Double-digit sales growth in Australia, Europe and
new distribution opportunities in the region.
North America in FY17 resulted in a 29% increase in
annual sales volumes on a normalised basis (excluding
the impact of one-off clearance sales in FY16):
In Australia, Clean Seas saw the first farm gate price
increases since April 2013. Export market prices
increased progressively, with both European and US
- Australian sales increased 16% to 1,268 tonnes; and
farm gates for large fresh Kingfish increasing by more
- Export sales increased 10% to 1,019 tonnes.
than 20%.
| 15
Clean Seas Yellowtail Kingfish Farm, Port Lincoln
16 |
Chairman & Managing Director’s Report
Fish Health and Fish Growth
New Processing Facilities
Clean Seas’ Kingfish continued to maintain excellent
Clean Seas developed new processing facilities
health and survival rates which are consistently at
with the latest processing capabilities during the
world’s best practice levels.
year at Royal Park in Adelaide, South Australia. Site
Fish growth is seasonal and is usually minimal in
the July to October period due to lower seawater
temperatures in the Spencer Gulf. Growth early in
works are complete and the new processing facility
was commissioned in June 2017 with processing
commenced in late July 2017.
the year was below average, influenced by seawater
The Royal Park facility is now processing virtually all
temperatures that were more than one degree cooler
fish for the Australian market and has commenced
than average. This appears to have been a “once in a
phasing in export processing. This has brought end-to-
generation” event caused by the failure of the warmer
end quality control and will generate significant cost
waters of the Leeuwin Current, which flows from the
savings from which the Company expects to benefit in
Indian Ocean down the Western Australian Coastline
H2 FY18 and beyond.
along the Great Australian Bight, to reach the Spencer
Gulf and provide the warmer Spring water to the Gulf.
The Company has recently acquired, and in Q2 FY18 will
install, the latest rapid-freezing technology. This offers
These conditions, resulting in lower than expected
the potential to materially increase the Company’s
biomass growth, helped to address the structural
market opportunities while lowering its cost of
imbalance the Company experienced in FY16, which
processing and freight. This technology significantly
resulted from lower than expected mortality rates and
reduces the freezing time and temperature which will
high levels of fingerling intakes in 2013 and 2014 when
improve freshness, texture and quality.
Clean Seas was recovering from taurine-deficient feed
and mortality rates that had peaked at around 80%.
While Clean Seas will remain focussed on its ability
to deliver the highest quality fresh Kingfish product
Sea temperatures reverted closer to average in
globally, the flexibility provided by rapid freezing will
January with Q3 reporting average to above-average
enable Clean Seas to meet customer demand for
seawater temperatures. This, combined with ongoing
premium quality frozen product and help smooth out
improvements in farm practices, caused fish growth
any future imbalances between the rate of biomass
to increase significantly, and in H2 FY17, fish growth
growth and the ongoing expansion of market demand
exceeded expectations. This saw the Company recover
as the Company continues to increase production.
approximately 70% of the growth shortfall experienced
The Company will commission its new rapid freezing
in H1 FY17.
technology later in 2017 ahead of first production in Q3
Clean Seas recorded net fish growth of 2,459 tonnes
for FY17 with 30 June 2017 biomass of 2,699 tonnes.
This positions the Company well to meet increasing
demand in both the Australian and export markets.
FY18.
| 17
Chairman & Managing Director’s Report
Marketing and brand awareness
Clean Seas was recognised at the 2017 Australian Food
Awards, with Spencer Gulf Hiramasa Kingfish voted
“Best Fish” for the second consecutive year.
Clean Seas launched a new marketing campaign
with improved branding and renewed focus on the
Company’s Spencer Gulf provenance and culinary
excellence. The Company will support this campaign
with a sales activation program in Australia and Europe
in H1 FY18, after which it will expand to address the
large US market opportunity.
exceeding the $6.0 million target which had been
fully underwritten. The Company also received
commitments for a Placement to sophisticated and
professional investors for $2.5 million. The Placement
was increased from the original target of $2 million
to accommodate an increased investment in the
Company by a European-based global aquaculture
fund and some key existing Australasian shareholders.
Proceeds from the SPP and Placement were used to
establish our in-house processing facility currently
operating in Adelaide, upgrade farm infrastructure,
new sales and marketing initiatives, debt reduction and
The Company is also implementing new packaging,
to supplement working capital.
featuring high-quality printing on recyclable waxed
cardboard. This new design will enable better branding
opportunities compared to the previous unbranded
white polystyrene boxes, and with considerable
environmental benefits. While these boxes will be more
expensive, improved design and strength will deliver
overall reduction in freight costs.
CORPORATE
Share Purchase Plan and Placement
On 27 October 2016, the Company announced a Share
Purchase Plan (SPP) underwritten to $6 million and
a Placement of up to $2 million to sophisticated and
professional investors once the SPP was complete.
The SPP closed in late November with applications
received from shareholders for $6.2 million,
Board Changes
In December, Clean Seas’ founder Dr Hagen Stehr
announced his intention to retire by June 2018. Dr
Stehr was re-elected to the Clean Seas Board at the
2016 AGM. Dr Stehr will provide ample notice of his
retirement date.
Terry O’Brien was appointed to the Board in February
2017 and became Independent Non-Executive
Chairman in May 2017. The Company’s previous
Chairman, Paul Steere, remains on the Board as an
Independent Non-Executive Director and has also
advised the Board of his intention to retire by June 2018,
along with Dr Stehr.
18 |
Spencer Gulf Hiramasa Kingfish at Lee Ho Fook,
Melbourne Australia
| 19
Spencer Gulf, Eyre Peninsula, South Australia
20 |
Chairman & Managing Director’s Report
Name change
Clean Seas Tuna Ltd became Clean Seas Seafood
Limited after shareholders approved the change at
the 2016 AGM. Although Clean Seas retains Southern
Live fish growth of circa 3,100 tonnes – 600 tonnes
more than FY17 – will support growth in future sales
targets, but will require further investment in working
capital.
Bluefin Tuna broodstock and undertakes R&D
The Board remain confident there is a great
on a scaled back basis with the option for future
opportunity to continue the Company’s profitable
development, the name change reflects the Company’s
growth for what shapes as an exciting future over the
immediate focus on addressing the attractive
coming months and years.
opportunity to grow sales and profits as the world’s
leading fully integrated breeder, producer and marketer
of Yellowtail Kingfish.
Outlook
We take this opportunity to thank our management
and staff for their efforts over the past year, as well as
our fellow Directors for their support. The momentous
effort put in by everyone has been clear in what we
have been able to achieve operationally, which has
The Company anticipates further increases in sales,
exceeded all expectations.
farm gate prices and profit in FY18.
We look forward to updating you as Clean Seas’ growth
Our revenue growth, which we have guided at +21% to
+33% in FY18, will be driven by our targeted customer
initiatives and operational turnaround continue to
build shareholder value over the coming months.
activation program, passionate sales representation in
Terry O’Brien
Australia, Europe and North America and innovation in
Chairman
new products, made possible through our new state-
of-the-art facilities in Adelaide.
At the same time, we expect a significant further
improvement in profitability as revenue growth
combines with improved farm gates from higher
selling prices and cost reductions in processing and
logistics.
David J Head
Managing Director and CEO
| 21
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
1
Clean Seas Seafood Limited | Directors’ Report
Directors’ Report
The Directors of Clean Seas Seafood Limited (‘Clean Seas’) present their Report together with the
financial statements of the Consolidated Entity, being Clean Seas Seafood Limited (‘the Company’) and its
Controlled Entity (‘the Group’) for the for the year ended 30 June 2017.
Directors
The following persons held office as Directors of Clean Seas during and since the end of the financial
year:
• Mr Terry O’Brien - Appointed as Director on 3 February 2017 and elected Chairman on 10 May 2017;
• Mr Paul Steere (Chairman to 10 May 2017);
• Mr Nick Burrows;
•
• Mr Marcus Stehr;
• Mr David Head (Managing Director & CEO); and
• Mr Paul Robinson – Alternate Director for Dr Hagen Stehr.
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 Spencer Gulf Hiramasa 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 profit after tax for the year of $0.202 million which
compares to a $8.982 million loss in FY16.
Significant positive outcomes of the FY17 year included:
•
Sales volumes increased 13% to 2,287 tonnes, which was a 29% increase on a normalised basis
excluding the impact of one-off clearance sales in FY16;
Revenue increased 18% to $35.4 million;
Improvement in farm gate revenue with price increases in the Company’s major markets;
Achieved a H2 FY17 profit after tax of $5.2 million, up from $1.8 million in H2 FY16;
Continued excellent Yellowtail Kingfish survival rates, health and growth;
Yellowtail Kingfish biomass at year end increased 8% to 2,699 tonnes;
•
•
•
•
•
22 |
Clean Seas Seafood Limited | Directors’ Report
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
2
Clean Seas Seafood Limited | Directors’ Report
•
•
Establishment of an in-house processing plant at Royal Park in Adelaide, South Australia, with
commissioning commenced in June 2017 and phased in production commenced in late July 2017;
and
Development of a new marketing campaign and Spencer Gulf Hiramasa Kingfish branding reflecting
strong and unique provenance. A new brand video, the Tale of Two Fish, and a series of short
videos with Australian and internationally acclaimed chefs, combined with an international
activation program will be key contributors to planned sales growth in FY18 and beyond.
Sales expansion was achieved in the key Australian, European and North American markets with strong
sales of fresh Spencer Gulf Hiramasa Kingfish to premium markets reflecting continued recognition of
the quality of our product. Sales to Asia declined due to the distribution arrangement with Beston Global
Foods that was announced in July 2016 not yielding any material sales in FY17 following the 176 tonne
sale in June 2016. The Company is exploring new options for distribution in the Asian region and
resolution of the dispute with Beston remains in progress.
Fish husbandry costs reduced 6% to $19.5 million whilst biomass increased 8% to 2,699 tonnes. This cost
reduction was mainly attributable to reduced feed costs and other efficiencies.
The Royal Park processing plant is a major strategic initiative for the Company. This will, for the first time,
give Clean Seas full control of this part of the supply chain, delivering opportunities to improve the
freshness and quality of product delivered to customers, explore new product development and reduce
processing costs. In August 2017 all whole fish processing for the Australian market is being undertaken
at Royal Park and when international accreditations are finalised over coming months, all global
processing will take place at Royal Park. We are also introducing industry leading technology with rapid
freezing and a minus 40 storage freezer being installed, which is expected to create new distribution
opportunities in premium global markets.
Research and development activities into Southern Bluefin Tuna continued during the year on a scaled
back basis, with the broodstock being maintained and options for future development continuing to be
under review.
The litigation against Gibson’s Limited, trading as Skretting Australia, in relation to taurine deficient feed
supplied from December 2008 to July 2012 has progressed during FY17, with discovery and other
necessary processes advancing. 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.
Significant changes in the state of affairs
Mr Terry O’Brien was appointed as a Director on 3 February 2017 and elected by the Board as Chairman
on 10 May 2017. In line with the announcement at the Company’s 2016 AGM, Mr Paul Steere will
continue as a Non-Executive Director prior to retiring from the Board. Dr Hagen Stehr also announced at
the 2016 AGM that he would retire from the Board during his current term. The Board will be
progressing the identification of potential new Directors over the coming year.
| 23
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Directors’ Report
3
Events arising since the end of the reporting 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.
Likely developments, business strategies and prospects
The Company is continuing to implement its strategic plan, with significant growth and profit
improvement initiatives identified. These initiatives include:
•
International roll out of the new Spencer Gulf Hiramasa Kingfish branding and associated
marketing campaign;
An international activation program targeting leading dining establishments and their chefs;
Further increases in farm gate revenue, with price increases supported by the new marketing
campaign and cost reductions across the supply chain;
Transfer of global processing to the Company’s Royal Park facility, upon receipt of international
accreditations. This will further reduce post-farm gate costs and facilitate new product
development and improvements in quality;
Improved farming efficiencies from scale, technology and ongoing research and development;
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;
Leveraging in-house infrastructure at Arno Bay for targeted research to underpin improving feed
conversion ratios (FCR) 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.
•
•
•
•
•
•
•
Clean Seas is targeting sales volumes in FY18 of 2,650 to 2,850 tonnes, a 15%+ increase from the 2,287
tonnes in FY17. This is targeted to generate sales revenue of $43 to $47 million, a 21%+ increase from
the $35.4 million in FY17. Over subsequent years the company expects to further increase sales to 3,500
tonnes and beyond. The Group currently has the water leases and licences and hatchery capacity to
produce up to 7,300 tonnes per annum.
Information on Directors and Key Management
Mr Terrence (Terry) O’Brien – Chairman, Independent Non-Executive Director
Mr O’Brien was appointed to the Company Board on 3 February 2017 and was elected Chairman by the
Board on 10 May 2017. He is also, from 1 July 2017, Chairman of the Remuneration and Nominations
Committee and a member of the Finance, Audit and Risk Management (‘FARM’) Committee.
Mr O’Brien was, from 2001 until 2017, the Managing Director of Simplot Australia Pty Limited, the US
owned, but Australian centric, food processor and marketer. Amongst Simplot’s stable of brands are
John West, Birdseye, Leggo’s, Edgell and Lean Cuisine. He was also the Chairman of the Australian Food
and Grocery Council for five years to August 2017.
Since announcing his retirement in early 2017, Terry is transitioning to a portfolio career. He is a Director
of Food Innovation Australia Limited, a Government company supporting the food and agribusiness
24 |
Clean Seas Seafood Limited | Directors’ Report
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
4
Clean Seas Seafood Limited | Directors’ Report
sector. He is also a Director of Foodbank Australia, a not for profit provider of food aid to Australian
families in need.
An accountant by training, Terry has been active in finance and management roles in the textile industry
for ten years and in the food industry for over thirty years having spent approximately nine years at
Cadbury Schweppes and twenty-four years at Simplot. At Simplot Terry has been responsible for a
number of divestments and acquisitions, which alongside organic growth has seen Simplot sales increase
nearly threefold during his tenure as Managing Director to become approximately 25% of the global JR
Simplot agribusiness company.
Mr O’Brien is a Fellow of CPA Australia and a Fellow of the Australian Institute of Company Directors.
Mr Paul Steere – Independent Non-Executive Director
Mr Steere was appointed to the Company Board on 20 May 2010 and was Chairman from 22 May 2012 to
10 May 2017. He was also Chairman of the Remuneration and Nominations Committee to 30 June 2017
(ceased being a member from 1 July 2017) and continues as 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:
•
•
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;
| 25
Clean Seas Seafood Limited | Directors’ Report
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
5
•
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.
•
In 1997 Dr Stehr 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 Dr Stehr was awarded the Australian Centenary Medal.
In 2010 Dr Stehr received an honorary doctorate from the University of the Sunshine Coast in recognition
of his internationally significant contribution to sustainable fishing industries.
In 2014 Dr Stehr 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
and the Remuneration and Nominations Committee and was a member of the FARM Committee to 30
June 2017.
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 Fellow of the
Australian Institute of Company Directors.
Mr. Stehr has more than 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);
Industry member of Southern Bluefin Tuna Fishery Management Advisory Committee; and
Director of Seafood Industry Australia
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, Chartered
Accountants Australia and New Zealand, 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.
26 |
Clean Seas Seafood Limited | Directors’ Report
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Directors’ Report
6
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;
•
Non-Executive Director of Metro Tasmania Pty Ltd;
•
Non-Executive Director of Australian Seafood Industries Pty Ltd;
•
Director of Peloton Global Pty Ltd (parent entity of Value Adviser Associates Pty Ltd) and its
subsidiary Climate Capital Pty Ltd;
Director of TAFE Directors Australia Inc; 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 Chartered Accountants Australia and New Zealand with 15 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 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.
| 27
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Directors’ Report
7
Directors’ meetings
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:
Board Meetings
FARM Committee (2)
Remuneration and
Nominations Committee
Director’s name
A
B
A
B
A
B
Paul Steere
Nick Burrows
Hagen Stehr (1)
Marcus Stehr
David Head
12
12
12
12
12
12
11
12
11
12
4
4
-
4
-
4
4
4
3
4
3
3
-
3
-
3
3
2
3
3
Terry O’Brien (3)
2
(1) Paul Robinson attended 12 Board meetings and 4 FARM meetings by invitation as Alternate
2
5
6
-
-
Director for Hagen Stehr.
(2) FARM Committee is the Finance, Audit and Risk Management Committee.
(3) Appointed 3 February 2017, however was invited to attend 1 Board meeting as observer prior to
appointment.
Where:
column A is the number of meetings the Director was entitled to attend as a member
column B is the number of meetings the Director attended (all Directors are entitled to attend
Committee meetings)
Unissued shares under option
There are no unissued ordinary shares of Clean Seas under option at the date of this report. The
Company issued 18,847,188 share rights during the financial year as part of the FY17 LTI Equity Incentive
Plan. Further details are provided in the Remuneration Report. None of these share rights have vested as
at the date of this report.
Shares issued during or since the end of the year as a result of exercise
No shares have been issued during or since the end of the financial year as a result of the exercise of
options or share rights.
28 |
Clean Seas Seafood Limited | Directors’ Report
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
8
Clean Seas Seafood Limited | Directors’ Report
Remuneration Report (audited)
The Directors of Clean Seas Seafood 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:
Principles used to determine the nature and amount of remuneration
a
b Details of remuneration
c
Service agreements
d
Bonuses included in remuneration; and
e
Other information.
a Principles used to determine the 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.
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. During FY17 Guerdon Associates Pty Ltd provided advice and
Value Adviser Associates Pty Ltd provided independent valuation services in relation to the LTI Equity
Incentive Plan.
Non-Executive Director Remuneration
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 where
applicable) 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.
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 $500,000, which was set at the 2016 AGM
on 28 November 2016. This ‘fee pool’ is only available to Non-Executive Directors, as Board membership
| 29
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Directors’ Report
9
Clean Seas Seafood Limited | Directors’ Report
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 were paid for Board Committee membership in FY17, however from 1
July 2017 Committee fees will be paid at $7,500 per annum for a Committee Chairman and $5,000 per
annum for other Committee members.
Senior Executive Remuneration
The remuneration structure adopted by the Group for FY17 consists of the following components:
•
•
•
fixed remuneration being annual salary and benefits;
short term incentives, being cash bonuses; and
long term incentives, being share based remuneration, in the case of the Managing Director & CEO
and the CFO & Company Secretary.
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.
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.
Short Term Incentive (STI)
The Group’s performance measures involve the use of annual performance objectives, metrics and
performance appraisals. Financial targets are based on net operating profit after tax (NOPAT). 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 FY17 are summarised as follows:
• Managing Director and CEO: NOPAT in FY17, sales volume, sales farm gate, processing plant
•
establishment and capital raise outcome; and
CFO and Company Secretary: NOPAT in FY17, capital raise outcome, processing plant establishment
and personal targets related to the position.
Long Term Incentive (LTI)
A share based LTI Equity Incentive Plan for the Managing Director and CEO (Mr David Head) was
submitted to and approved by shareholders at the 2016 Annual General Meeting. Details were set out in
the Notice of Meeting. The LTI is based on share rights being granted and further details are provided in
section (e) of the Remuneration Report.
30 |
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
10
Clean Seas Seafood Limited | Directors’ Report
Performance Reviews
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.
Voting and comments made at the Company’s last Annual General Meeting
The resolution for adoption of the Remuneration Report for the financial year ending 30 June 2016 was
passed by 83.8% of votes in a poll at the Company’s 2016 Annual General Meeting. The Company
received no specific feedback on its Remuneration Report at the Annual General Meeting.
Consequences of performance on shareholder wealth
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:
Item
Basic EPS (cents)
Profit / (loss) before tax ($’000)
Profit / (loss) after tax ($’000)
Net Assets ($’000)
Share price at 30 June (cents)
2017
2016
2015
2014(*)
2013(*)
0.02
202
202
51,553
4.6
(0.81)
(9,928)
(8,982)
42,917
3.4
0.37
1,033
4,108
0.94
6,597
9,156
51,899
47,791
5.9
4.9
(5.18)
(32,405)
(28,301)
29,433
1.3
(*) Restated to reflect change in R&D tax incentive refund accounting
| 31
Clean Seas Seafood 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
l
a
t
o
T
s
t
h
g
i
r
e
r
a
h
S
d
e
s
a
b
-
e
r
a
h
S
s
t
n
e
m
y
a
p
n
o
i
t
a
n
m
r
e
T
i
s
t
i
f
e
n
e
b
n
o
i
t
a
n
m
r
e
T
i
s
t
n
e
m
y
a
p
m
r
e
t
-
g
n
o
L
s
t
i
f
e
n
e
b
e
c
i
v
r
e
s
g
n
o
L
e
v
a
e
l
l
t
n
e
m
y
o
p
m
e
-
t
s
o
P
s
t
i
f
e
n
e
b
n
o
i
t
a
u
n
n
a
r
e
p
u
S
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
y
r
a
t
e
n
o
m
-
n
o
N
s
t
i
f
e
n
e
b
h
s
a
C
s
u
n
o
b
l
y
r
a
a
s
h
s
a
C
s
e
e
f
d
n
a
r
a
e
Y
:
l
l
w
o
e
b
e
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
l
f
o
t
n
e
m
e
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
)
$
(
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
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
d
o
o
f
a
e
S
s
a
e
S
n
a
e
l
C
7
1
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
F
32 |
-
-
-
-
-
-
-
-
-
-
-
-
-
-
%
1
4
%
3
3
%
6
2
-
-
-
%
7
%
6
2
-
0
0
0
,
5
3
0
0
0
,
5
1
1
0
0
0
,
0
2
1
0
0
0
,
0
6
0
0
0
,
0
6
0
0
0
,
0
6
0
0
0
,
0
6
0
0
0
,
0
6
0
0
0
,
0
6
-
-
4
1
6
,
0
2
7
3
6
6
,
5
4
2
-
7
5
6
,
2
2
2
5
1
0
,
7
0
3
7
8
4
,
9
2
2
4
5
2
,
8
8
0
4
8
,
4
1
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
4
8
,
3
2
4
9
9
,
7
4
1
3
8
8
,
5
4
4
,
1
7
4
6
2
1
2
,
,
1
-
9
3
8
,
1
7
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
3
4
8
1
7
,
1
6
2
5
,
2
3
2
1
,
1
-
4
6
7
4
4
2
,
4
0
2
3
,
2
-
-
-
-
-
-
-
-
-
-
6
0
2
,
5
6
0
2
,
5
0
0
0
,
5
3
8
0
8
,
4
1
-
7
6
9
,
0
2
6
1
4
,
9
1
0
8
6
,
0
2
3
3
0
,
7
1
7
7
,
6
1
5
5
6
,
6
6
2
3
4
,
8
7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
r
o
t
c
e
r
i
D
e
h
t
h
t
i
w
d
e
t
a
i
c
o
s
s
a
y
n
a
p
m
o
c
a
o
t
d
a
p
s
e
e
f
i
s
r
o
t
c
e
r
i
D
)
3
(
7
1
0
2
y
a
M
0
1
o
t
n
a
m
r
i
a
h
C
)
2
(
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0
0
0
,
0
8
3
3
5
,
7
4
1
-
-
4
4
8
,
6
5
7
7
3
,
4
0
2
0
0
0
,
0
8
-
0
0
0
,
5
3
0
0
0
,
5
1
1
0
0
0
,
0
2
1
0
0
0
,
0
6
0
0
0
,
0
6
0
0
0
,
0
6
0
0
0
,
0
6
4
9
7
,
4
5
4
9
7
,
4
5
-
-
9
6
3
,
8
8
3
2
2
4
,
0
5
1
-
0
9
6
,
1
0
2
4
8
3
,
4
0
2
4
8
6
,
7
0
2
1
2
2
,
1
8
5
0
3
,
7
9
1
8
6
7
,
8
9
9
5
9
8
1
5
0
,
,
1
7
1
0
2
6
1
0
2
7
1
0
2
6
1
0
2
7
1
0
2
6
1
0
2
7
1
0
2
6
1
0
2
7
1
0
2
6
1
0
2
7
1
0
2
6
1
0
2
s
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
-
n
o
N
)
1
(
n
e
i
r
B
O
y
r
r
e
T
’
e
e
y
o
p
m
E
l
t
n
e
d
n
e
p
e
d
n
I
,
n
a
m
r
i
a
h
C
)
2
(
e
r
e
e
t
S
l
u
a
P
t
n
e
d
n
e
p
e
d
n
I
s
w
o
r
r
u
B
k
c
i
N
t
n
e
d
n
e
p
e
d
n
I
)
3
(
r
h
e
t
S
n
e
g
a
H
r
o
t
c
e
r
i
D
e
t
a
n
r
e
t
l
A
n
o
s
n
b
o
R
i
l
u
a
P
r
h
e
t
S
s
u
c
r
a
M
7
1
0
2
6
1
0
2
7
1
0
2
6
1
0
2
7
1
0
2
6
1
0
2
7
1
0
2
6
1
0
2
7
1
0
2
6
1
0
2
O
E
C
&
r
o
t
c
e
r
i
D
g
n
g
a
n
a
M
i
)
4
(
d
a
e
H
d
i
v
a
D
&
O
F
C
-
e
n
r
e
t
a
M
e
n
y
a
W
y
r
a
t
e
r
c
e
S
y
n
a
p
m
o
C
)
5
(
r
e
t
s
o
F
g
a
r
C
i
e
v
i
t
u
c
e
x
E
f
e
h
C
i
l
&
s
e
a
S
M
G
–
y
e
m
o
o
T
s
e
l
i
M
)
6
(
g
n
i
t
e
k
r
a
M
l
a
t
o
T
7
1
0
2
l
a
t
o
T
6
1
0
2
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
r
e
b
m
e
v
o
N
4
d
e
n
g
i
s
e
R
)
6
(
6
1
0
2
y
r
a
u
n
a
J
8
2
d
e
r
i
t
e
R
)
5
(
6
1
0
2
y
r
a
u
n
a
J
8
2
d
e
t
n
o
p
p
A
i
7
1
0
2
y
a
M
0
1
n
a
m
l
r
i
a
h
C
d
e
t
c
e
e
d
n
a
7
1
0
2
y
r
a
u
r
b
e
F
3
n
o
r
o
t
c
e
r
i
D
d
e
t
n
o
p
p
A
i
)
1
(
)
4
(
Clean Seas Seafood Limited | Directors’ Report
Clean Seas Seafood Limited | Directors’ Report
e
h
t
f
o
s
n
o
i
s
i
v
o
r
p
r
o
a
m
e
h
T
j
.
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
l
t
n
e
m
y
o
p
m
e
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
:
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
e
r
e
h
T
l
I
T
L
–
k
s
i
r
t
A
I
T
S
-
k
s
i
r
t
A
n
o
i
t
a
r
e
n
u
m
e
r
d
e
x
i
F
e
m
a
N
%
0
5
%
3
2
%
4
1
%
8
1
%
6
3
%
9
5
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
s
t
n
e
m
e
e
r
g
a
e
c
i
v
r
e
S
c
e
n
r
e
t
a
M
e
n
y
a
W
d
a
e
H
d
i
v
a
D
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
d
o
o
f
a
e
S
s
a
e
S
n
a
e
l
C
7
1
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
F
:
l
w
o
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
e
r
l
s
t
n
e
m
e
e
r
g
a
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
l
c
i
h
e
V
r
o
t
o
M
e
c
n
a
w
o
l
l
A
l
$
y
r
a
a
s
e
s
a
B
e
m
a
N
s
h
t
n
o
m
9
s
h
t
n
o
m
3
i
g
n
o
g
n
O
i
g
n
o
g
n
O
s
e
Y
o
N
0
0
0
3
7
3
,
0
0
0
6
0
2
,
e
n
r
e
t
a
M
e
n
y
a
W
d
a
e
H
d
i
v
a
D
.
| 33
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood 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 FY17, 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 FY17
and will be paid in FY18.
Included in
remuneration
($’000)
Percentage vested
during the year
Percentage
forfeited
during the year
147,533
56,844
90.4%
84.0%
9.6%
16.0%
Other Key Management Personnel
David Head
Wayne Materne
e Other information
Shares held by Key Management Personnel
The number of ordinary shares in the Company during the 2017 reporting period held by each of the
Group’s Key Management Personnel, including their related parties, is set out below:
Year ended 30 June 2017 – Ordinary Shares’000
Personnel
T O’Brien (1)
P Steere (2)
H Stehr (3)
N Burrows (2)
M Stehr (2)
P Robinson (2)
D Head (3)
W Materne
Totals
Balance at
start
of year
Granted as
remuneration
Received on
exercise
Other changes
Held at the end
of
reporting period
-
457
101,115
431
730
1,750
3,881
-
108,364
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,000
448
4,925
448
448
448
4,925
-
13,642
2,000
905
106,040
879
1,178
2,198
8,806
-
122,006
(1) Changes are on market purchases
(2) Changes arise from participation in Share Purchase Plan
(3) Changes arise from participation in Share Purchase Plan and Director Placement
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.
Share Rights held by Key Management Personnel
Share rights granted under the LTI Equity Incentive Plan are set out below:
34 |
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
14
Clean Seas Seafood Limited | Directors’ Report
Year ended 30 June 2017 – Share Rights’000
Personnel
D Head
W Materne
Totals
Balance at
start
of year
Granted as
remuneration
Exercised
Lapsed
-
-
-
16,232
2,615
18,847
-
-
-
Held at the end
of
reporting period
-
-
-
16,232
2,615
18,847
The share rights will vest if specified performance targets are achieved and the executive remains
employed by the Company for three years including the year for which the share rights were granted, or
in other circumstances agreed with the executive or at the discretion of the Board. Each share right on
exercise converts to one ordinary share, subject to adjustment in specified circumstances. No amount is
payable on vesting or exercise. No share rights have vested or been exercised as at the date of this
report.
Other Transactions with Key Management Personnel
The Group's related parties comprise its key management and entities associated with key management.
The largest shareholder in Clean Seas Seafood Limited is Australian Tuna Fisheries Pty Ltd (ATF). ATF and
its associated entities controlled 7.7% of issued shares at 30 June 2017 (2016: 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 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 and associated expenses
2017
$’000
2016
$’000
17
350
19
77
11
380
13
56
The following balances are outstanding as at the reporting date in relation to transactions with related
parties:
Current Payables
• Australian Tuna Fisheries Pty Ltd
• Stehr Group Pty Ltd
• PSMMR Pty Ltd
End of audited Remuneration Report.
2017
$’000
2016
$’000
40
7
9
37
-
15
| 35
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Directors’ Report
15
Environmental legislation
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, 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.
The Royal Park processing plant is licenced by the South Australian Environment Protection Authority
under Part 6 of the Environment Protection Act 1993 to operate as a fish processing works. The
Licensee must be aware of and comply with their obligations under the Environment Protection Act
1993, the Environment Protection Regulations 2009, the Environment Protection Policies made
under the Environment Protection Act 1993 and the requirements of any National Environment
Protection Measure which operates as an Environment Protection Policy under the Environment
Protection Act 1993. Clean Seas has not recorded any breaches of the licence requirements.
Indemnities given to and insurance premiums paid for Directors 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.
36 |
Clean Seas Seafood Limited | Directors’ Report
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
16
Clean Seas Seafood Limited | Directors’ Report
Non-audit services
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.
Proceedings of behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a
party, for the purpose of taking responsibility on behalf of the Company for all or part of those
proceedings.
Rounding 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.
Terry O’Brien
Chairman
31 August 2017
| 37
Clean Seas Seafood Limited | Auditor’s Independence Declaration
Auditor’s Independence Declaration
to the Directors of Clean Seas Seafood Limited
Grant Thornton House
Level 3
170 Frome Street
Adelaide, SA 5000
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
Grant Thornton House
Level 3
170 Frome Street
Adelaide, SA 5000
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
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor
for the audit of Clean Seas Tuna Limited for the year ended 30 June 2017, I declare that, to the
best of my knowledge and belief, there have been:
a
b
Auditor’s Independence Declaration
to the Directors of Clean Seas Seafood Limited
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor
for the audit of Clean Seas Tuna Limited for the year ended 30 June 2017, I declare that, to the
best of my knowledge and belief, there have been:
GRANT THORNTON AUDIT PTY LTD
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
a
Chartered Accountants
b
no contraventions of any applicable code of professional conduct in relation to the audit.
J L Humphrey
GRANT THORNTON AUDIT PTY LTD
Partner - Audit & Assurance
Chartered Accountants
Adelaide, 31 August 2017
J L Humphrey
Partner - Audit & Assurance
Adelaide, 31 August 2017
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
38 |
‘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.
Clean Seas Seafood Limited | Auditor’s Independence Declaration
Clean Seas Seafood Limited | Corporate Governance Statement
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
18
Corporate Governance Statement
The Board is committed to achieving and demonstrating the highest standards of corporate governance.
As such, Clean Seas Seafood 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 2017 is dated as at
30 June 2017 and was approved by the Board on 31 August 2017. The Corporate Governance Statement
is available on Clean Seas’ website at www.cleanseas.com.au/main/investor-information/corporate-
governance.
| 39
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Consolidated Statement of Profit or Loss
19
Clean Seas Seafood Limited | Consolidated Statement of Financial Position
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 30 June 2017
Revenue
Other income
Net gain arising from changes in fair value of biological
assets
Fish husbandry expense
Employee benefits expense
Fish processing and selling expense
Cost of goods sold – Frozen inventory
Write-down to net realisable value - Frozen inventory
Depreciation and amortisation expense
Other expenses
Profit / (Loss) before finance items and tax
Finance costs
Finance income
Profit / (Loss) before tax
Income tax benefit / (expense)
Profit / (Loss) for the year from continuing operations
Other comprehensive income for the year, net of tax
Total comprehensive income / (loss) for the year
Notes
6
7
14
21.1
15
8
8
9
2017
$’000
35,397
-
9,941
2016
$’000
30,089
473
1,986
(19,529)
(20,894)
(7,181)
(8,999)
(3,031)
(1,343)
(1,997)
(2,956)
302
(112)
12
202
-
202
-
202
(6,293)
(7,026)
(2,148)
(1,247)
(1,821)
(2,959)
(9,840)
(95)
7
(9,928)
946
(8,982)
-
(8,982)
Earnings per share from continuing operations:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
23.1
23.1
0.02
0.02
(0.81)
(0.81)
Note: This statement should be read in conjunction with the notes to the financial statements.
40 |
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Consolidated Statement of Financial Position
20
Consolidated Statement of
Financial Position
As at 30 June 2017
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
Equity
Notes
2017
$’000
2016
$’000
10
11
13
14
15
16
17
18
19
20
19
20
524
3,832
3,521
418
32,105
40,400
13,985
244
3,027
17,256
57,656
4,083
330
726
5,139
832
132
964
6,103
51,553
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
Equity attributable to owners of the Parent:
•
•
•
share capital
share rights reserve
accumulated losses
Total equity
22
22
165,998
157,736
172
-
(114,617)
(114,819)
51,553
42,917
Note: This statement should be read in conjunction with the notes to the financial statements.
| 41
Clean Seas Seafood Limited | Consolidated Statement of Changes in Equity
Clean Seas Seafood Limited | Consolidated Statement of Cash Flows
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
21
Consolidated Statement of
Changes in Equity
For the year ended 30 June 2017
Balance at 1 July 2015
Loss for the year
Balance at 30 June 2016
Profit for the year
Share purchase plan and placement
Share rights reserve movement
Balance at 30 June 2017
Notes
Share
capital
$’000
157,736
-
157,736
-
8,262
-
165,998
Share
rights
reserve
$’000
-
-
-
-
-
172
172
Accumulated
Losses
$’000
(105,837)
(8,982)
(114,819)
202
-
-
(114,617)
Total
equity
$’000
51,899
(8,982)
42,917
202
8,262
172
51,553
Note: This statement should be read in conjunction with the notes to the financial statements.
42 |
Clean Seas Seafood Limited | Consolidated Statement of Changes in Equity
Clean Seas Seafood Limited | Consolidated Statement of Cash Flows
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
22
Consolidated Statement of
Cash Flows
For the year ended 30 June 2017
Operating activities
Receipts from customers
Payments to suppliers excluding feed
Payments for feed
Payments to employees
R&D tax incentive refund
Notes
2017
$’000
2016
$’000
36,130
(19,657)
(13,333)
(6,464)
-
26,674
(14,405)
(14,521)
(6,133)
6,031
(2,354)
Net cash used in operating activities
24
(3,324)
Investing activities
Purchase of property, plant and equipment
Interest received
Net cash used in investing activities
Financing activities
Gross proceeds from issue of shares
Share issue expenses
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
(2,453)
(1,391)
14
7
(2,439)
(1,384)
8,970
(708)
1,648
(4,138)
(83)
5,689
(74)
598
524
-
-
8,580
(5,669)
(88)
2,823
(915)
1,513
598
8
10
Note: This statement should be read in conjunction with the notes to the financial statements.
| 43
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Notes to the Financial Statements
23
Clean Seas Seafood Limited | Notes to the Financial Statements
Notes to the Consolidated
Financial Statements
Nature of operations
1
Clean Seas Seafood 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 relating to Southern Bluefin Tuna
General information and statement of compliance
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 Seafood
Limited is a for-profit entity for the purpose of preparing the financial statements.
Clean Seas Seafood 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 2017 were approved and authorised
for issue by the Board of Directors on 31 August 2017.
3
Changes in accounting policies
3.1
New and revised standards that are effective for these financial statements
A number of new and revised standards became effective for the first time to annual periods beginning
on or after 1 July 2016. Information on the more significant standards is presented below.
AASB 2014-4 Amendments to Australian Accounting Standards – Clarification of Acceptable Methods
of Depreciation and Amortisation
The amendments to AASB 116 prohibit the use of a revenue-based depreciation method for property,
plant and equipment. Additionally, the amendments provide guidance in the application of the
diminishing balance method for property, plant and equipment.
The 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:
•
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
44 |
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
24
Clean Seas Seafood Limited | Notes to the Financial Statements
•
when it can be demonstrated that revenue and the consumption of the economic benefits of
the intangible asset are highly correlated.
AASB 2014-4 is applicable to annual reporting periods beginning on or after 1 January 2016.
The adoption of these amendments has not had a material impact on the Group.
AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to
AASB 101
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
AASB 2015-2 is applicable to annual reporting periods beginning on or after 1 January 2016.
The adoption of these amendments has not had a material impact on the Group.
3.2
Accounting Standards issued but not yet effective and not being adopted early by the Group
The accounting standards that have not been early adopted for the year ended 30 June 2017, 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.
| 45
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Notes to the Financial Statements
25
Clean Seas Seafood Limited | Notes to the Financial Statements
AASB 9 Financial Instruments (2014)
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.
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, however the preliminary
assessment is that it will not have a material impact.
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)
46 |
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
26
Clean Seas Seafood Limited | Notes to the Financial Statements
− expands and improves disclosures about revenue
The entity is yet to undertake a detailed assessment of the impact of AASB 15. However, based on the
entity’s preliminary assessment, the Standard is not expected to have a material impact on the
transactions and balances recognised in the financial statements when it is first adopted for the year
ending 30 June 2019.
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 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.
AASB 2016-5 Amendments to Australian Accounting Standards – Classification and
Measurement of Share based Payment Transactions
This Standard amends AASB 2 Share-based Payment to address:
a. The accounting for the effects of vesting and non-vesting conditions on the measurement of cash-
settled share-based payments;
b. The classification of share-based payment transactions with a net settlement feature for withholding
tax obligations; and
c. The accounting for a modification to the terms and conditions of a share-based payment that changes
the classification of the transaction from cash-settled to equity-settled.
| 47
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Notes to the Financial Statements
27
Clean Seas Seafood Limited | Notes to the Financial Statements
Summary of accounting policies
Overall considerations
4
4.1
The consolidated financial statements have been prepared using the significant accounting policies and
measurement bases summarised below.
Basis of consolidation
4.2
The Group financial statements consolidate those of the Parent Company and its subsidiary as of 30 June
2017. 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 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.
Foreign currency translation
4.3
Functional and presentation currency
The consolidated financial statements are presented in Australian Dollars (‘$AUD’), which is also the
functional currency of the Parent Company.
Foreign 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.
Segment reporting
4.4
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, 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
48 |
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
28
Clean Seas Seafood Limited | Notes to the Financial Statements
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.
Revenue
4.5
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.
Sale 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 income
Interest income and expenses are reported on an accrual basis using the effective interest method.
Operating expenses
4.6
Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their
origin.
Borrowing costs
4.7
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).
4.8
Intangible assets
Recognition of intangible assets
Acquired intangible 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.
| 49
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Notes to the Financial Statements
29
Clean Seas Seafood Limited | Notes to the Financial Statements
Subsequent 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.
Property, plant and equipment
4.9
Land 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 4.10). 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%
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.
50 |
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
30
Clean Seas Seafood Limited | Notes to the Financial Statements
Leased assets
4.10
Finance 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 4.9 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.
Operating 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.
Impairment testing of other intangible assets and property, plant and equipment
4.11
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.
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 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.
Financial instruments
4.12
Recognition, Initial Measurement and Derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions of the financial instrument, and are measured initially at fair value adjusted 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.
| 51
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Notes to the Financial Statements
31
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 Subsequent Measurement of Financial Assets
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.
Loans and receivables
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.
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 FVTPL
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.
52 |
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
32
Clean Seas Seafood Limited | Notes to the Financial Statements
HTM investments
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 4.5).
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.
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.
Inventories
4.13
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.
Income taxes
4.14
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.
| 53
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Notes to the Financial Statements
33
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 Seafood 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.
Cash and cash equivalents
4.15
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.
Equity and reserves
4.16
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.
Share rights reserve represents, in accordance with AASB 2 Share-based Payment, the allocated fair value
at grant date of share rights that have been granted and remain outstanding at the reporting date. The
54 |
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
34
Clean Seas Seafood Limited | Notes to the Financial Statements
value determined is recognised evenly over the financial years in which services are provided as specified
by the performance period for each grant of share rights, subject to subsequent revision of the number
of share rights expected to vest and the number that ultimately vest. The recognised value of share
rights that vest and are exercised is transferred to share capital on the issue of shares.
Retained earnings / accumulated losses include all current and prior period retained profits and losses.
All transactions with owners of the Parent are recorded separately within equity.
Employee benefits
4.17
Short-term employee benefits
Short-term employee benefits are benefits, other than termination benefits, that are expected to be
settled wholly within twelve (12) months after the end of the period in which the employees render the
related service. Examples of such benefits include wages and salaries, non-monetary benefits and annual
leave. Short-term employee benefits are measured at the undiscounted amounts expected to be paid
when the liabilities are settled.
Other long-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 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.
Post-employment Benefit 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.
Share-based employee remuneration
4.18
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 earnings per share growth targets and performance conditions).
| 55
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Notes to the Financial Statements
35
Clean Seas Seafood Limited | Notes to the Financial Statements
All share-based remuneration is ultimately recognised as an expense in profit or loss with a
corresponding credit to share rights 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
rights expected to vest.
Non-market vesting conditions are included in assumptions about the number of share rights that are
expected to become exercisable. Estimates are subsequently revised if there is any indication that the
number of share rights 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 rights ultimately exercised are different to that estimated on vesting.
Upon exercise of share rights, the proceeds received and the accumulated amount in the share rights
reserve applicable to those share rights, net of any directly attributable transaction costs, are allocated
to share capital.
4.19 Provisions, contingent liabilities and contingent assets
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 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.
4.20 Biological assets
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 the number and size of fish held at the reporting date,
actual selling prices achieved in the three weeks following the reporting date and other relevant factors,
including allowance for future mortality, assessed as impacting fair value in accordance with AASB141.
56 |
Clean Seas Seafood Limited | Notes to the Financial Statements
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
36
Clean Seas Seafood Limited | Notes to the Financial Statements
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 estimated 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 and review this on an annual basis.
4.21 Research and development tax incentive refund
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.
4.22 Goods and Services Tax (GST)
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.
4.23 Rounding of amounts
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.
Significant management judgement in applying accounting policies
4.24
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.
Significant management judgement
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 value of live fish held for sale and broodstock
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 the number and size of fish held at the reporting date,
actual selling prices achieved in the three weeks following the reporting date and other relevant factors,
including allowance for future mortality, assessed as impacting fair value in accordance with AASB141.
These estimates may vary from net sale proceeds ultimately achieved.
Broodstock has been held at the same value as the prior year as Directors believe it is representative of
its fair value as at the reporting date.
| 57
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Notes to the Financial Statements
37
Recognition of deferred tax 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 4.14).
Estimation 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.
Impairment
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 4.11).
Useful lives of depreciable 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.
Inventories
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.
Operating Segments
5
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:
58 |
Clean Seas Seafood Limited | Notes to the Financial Statements
| 59
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Notes to the Financial Statements
39
Clean Seas Seafood Limited | Notes to the Financial Statements
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.
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:
Australia
Other countries
Total
Revenue Non-current assets
2017
$’000
2017
$’000
Revenue Non-current assets
2016
$’000
2016
$’000
19,916
15,481
35,397
17,256
-
17,256
17,011
13,078
30,089
16,274
-
16,274
During 2017 $4.85 million or 14% (2016: $3.03 million or 10%) of the Group’s revenues depended on a
single customer in the finfish sales segment.
Revenue
6
Revenue for the reporting periods consist of the following:
Sale of fresh fish products
Sale of frozen fish products
Other revenue
Other income
7
Other income for the reporting periods consist of the following:
R&D tax incentive refund – 15% incentive component
Finance income and finance costs
8
Finance income for the reporting periods consist of the following:
Interest income from cash and cash equivalents
60 |
2017
$’000
31,269
4,126
2
35,397
2016
$’000
25,972
4,029
88
30,089
2017
$’000
-
-
2017
$’000
12
12
2016
$’000
473
473
2016
$’000
7
7
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
40
Clean Seas Seafood Limited | Notes to the Financial Statements
Finance costs for the reporting periods consist of the following:
Interest expenses for borrowings at amortised cost:
• finance leases
• other borrowings
2017
$’000
32
80
112
2016
$’000
7
88
95
Income tax expense
9
The major components of tax expense and the reconciliation of the expected tax expense based on the
domestic effective tax rate of 30% (2016: 30%) and the reported tax expense in profit or loss are as
follows:
Profit / (Loss) before tax
Domestic tax rate for Clean Seas Seafood Limited
Expected tax expense / (income)
Adjustment for R&D tax incentive refund – 30% corporate tax rate
component
Current year tax expense added to / (offset against) prior year tax losses
Adjustment for tax-exempt income
Actual tax expense / (income)
Tax expense comprises:
• R&D tax incentive refund – 30% corporate tax rate component
• Deferred tax expense
Tax expense / (income)
2017
$’000
202
30%
61
-
(61)
-
-
-
-
-
2016
$’000
(9,928)
30%
(2,978)
(946)
3,120
(142)
(946)
(946)
-
(946)
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 and non-refundable R&D tax offsets as at 30 June 2017
are approximately $88.0 million (30 June 2016: $85.0 million).
Cash and cash equivalents
10
Cash and cash equivalents include the following components:
Cash at bank and in hand
Deposits at call
Total
These at call amounts were not held in interest bearing accounts.
2017
$’000
524
-
524
2016
$’000
598
-
598
| 61
Clean Seas Seafood Limited | Notes to the Financial Statements
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Trade and other receivables
11
Trade and other receivables consist of the following:
Trade receivables, gross
Allowance credit losses
Trade receivables
Other receivables
Total
41
2016
$’000
3,426
(20)
3,406
293
3,699
2017
$’000
3,571
(50)
3,521
311
3,832
All amounts are short-term. The net carrying value of trade receivables is considered a reasonable
approximation of fair value.
The movement in the allowance for credit losses can be reconciled as follows:
Reconciliation of allowance credit losses
Balance at 1 July
Amounts written off / (uncollectable)
Additional provision recognised
Impairment loss reversed
Balance 30 June
2017
$’000
20
(36)
66
-
50
2016
$’000
20
-
-
-
20
An analysis of unimpaired trade receivables that are past due is given in Note 31.3.
Financial assets and liabilities
Categories of financial assets and liabilities
12
12.1
Note 4.12 provides a description of each category of financial assets and financial liabilities and the
related accounting policies.
62 |
Clean Seas Seafood Limited | Notes to the Financial Statements
l
a
t
o
T
0
0
0
’
$
4
2
5
2
3
8
,
3
6
5
3
,
4
l
a
t
o
T
0
0
0
’
$
3
8
0
,
4
2
6
1
,
1
5
4
2
,
5
0
0
0
’
$
s
e
i
t
i
l
i
b
a
i
l
r
e
h
t
O
#
L
P
T
V
F
0
0
0
’
$
t
a
s
e
i
t
i
l
i
b
a
i
l
r
e
h
t
O
*
0
0
0
’
$
0
0
0
’
$
L
P
T
V
F
t
a
d
e
t
a
n
g
i
s
e
D
*
g
n
i
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
d
e
s
i
t
r
o
m
a
t
a
s
t
e
s
s
a
l
a
i
c
n
a
n
i
F
r
o
f
d
e
s
u
s
e
v
i
t
a
v
i
r
e
D
t
s
o
c
0
0
0
’
$
4
2
5
2
3
8
,
3
6
5
3
,
4
0
0
0
’
$
g
n
i
g
d
e
h
0
0
0
’
$
0
0
0
’
$
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
1
1
1
l
s
e
b
a
v
i
e
c
e
r
r
e
h
t
o
d
n
a
e
d
a
r
T
l
s
t
n
e
a
v
i
u
q
e
h
s
a
c
d
n
a
h
s
a
C
s
l
a
t
o
T
s
t
e
s
s
a
l
a
i
c
n
a
n
i
F
7
1
0
2
e
n
u
J
0
3
:
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
3
8
0
,
4
2
6
1
,
1
5
4
2
,
5
-
-
-
-
-
-
-
-
-
8
1
9
1
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
i
F
7
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
t
a
d
e
i
r
r
a
C
e
u
a
v
l
r
i
a
f
t
a
d
e
i
r
r
a
C
*
#
2
4
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
d
o
o
f
a
e
S
s
a
e
S
n
a
e
l
C
7
1
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
F
| 63
Clean Seas Seafood Limited | Notes to the Financial Statements
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
,
0
0
0
’
$
s
e
i
t
i
l
i
b
a
i
l
r
e
h
t
O
#
L
P
T
V
F
0
0
0
’
$
t
a
s
e
i
t
i
l
i
b
a
i
l
r
e
h
t
O
*
0
0
0
’
$
0
0
0
’
$
L
P
T
V
F
t
a
d
e
t
a
n
g
i
s
e
D
*
g
n
i
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
d
e
s
i
t
r
o
m
a
t
a
s
t
e
s
s
a
l
a
i
c
n
a
n
i
F
r
o
f
d
e
s
u
s
e
v
i
t
a
v
i
r
e
D
t
s
o
c
0
0
0
’
$
8
9
5
9
9
6
3
,
7
9
2
4
,
0
0
0
’
$
g
n
i
g
d
e
h
0
0
0
’
$
0
0
0
’
$
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
1
1
1
l
s
e
b
a
v
i
e
c
e
r
r
e
h
t
o
d
n
a
e
d
a
r
T
l
s
t
n
e
a
v
i
u
q
e
h
s
a
c
d
n
a
h
s
a
C
s
l
a
t
o
T
s
t
e
s
s
a
l
a
i
c
n
a
n
i
F
6
1
0
2
e
n
u
J
0
3
3
4
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
d
o
o
f
a
e
S
s
a
e
S
n
a
e
l
C
7
1
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
F
64 |
1
0
1
3
,
1
3
1
3
,
2
3
2
6
,
-
-
-
-
-
-
-
-
-
.
1
3
e
t
o
N
n
i
n
e
v
i
g
s
i
s
e
i
c
i
l
j
o
p
d
n
a
s
e
v
i
t
c
e
b
o
t
n
e
m
e
g
a
n
a
m
k
s
i
r
g
n
d
u
l
c
n
i
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
8
1
9
1
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
i
F
6
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
t
a
d
e
i
r
r
a
C
e
u
a
v
l
r
i
a
f
t
a
d
e
i
r
r
a
C
*
#
Clean Seas Seafood Limited | Notes to the Financial Statements
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
44
Clean Seas Seafood Limited | Notes to the Financial Statements
12.2 Derivative financial instruments
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. No forward foreign
exchange contracts were in place at 30 June 2017 (2016: nil).
During FY17 no gains or losses were recognised in other comprehensive income or reclassified from
equity into profit or loss within revenue (2016: 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
2017
$’000
2,175
1,248
98
3,521
2017
$’000
25,036
33,953
(24,012)
9,941
(2,872)
32,105
2016
$’000
2,640
1,274
174
4,088
2016
$’000
27,598
22,116
(20,130)
1,986
(4,548)
25,036
The closing biomass comprised 2,699 tonnes at an average weight of 2.2kg. This comprised 98 tonnes of
2015 year class (YC15) at an average weight of 6.3kg, 1,504 tonnes of YC16 at an average weight of 4.3kg
and 1,097 tonnes of YC17 at an average weight of 1.2kg (2016: 2,508 tonnes at 2.5kg comprising 1,730
tonnes of YC15 at 3.7kg and 778 tonnes of YC16 at 1.5kg). During FY17 harvests totalled 2,294 tonnes
(FY16: 2,393 tonnes).
| 65
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Notes to the Financial Statements
45
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 cages, mortality counts and
reconciliation of the perpetual records after physical counts and on cage closeout.
15
Details of the Group’s property, plant and equipment and their carrying amount are as follows:
Property, plant and equipment
Land &
Buildings
Plant &
Equipment
Marina
Lease
Dams &
Fishponds
$’000
$’000
$’000
$’000
Gross carrying amount
Balance 1 July 2016
Additions
Transfers & Other Movements
Disposals
3,913
-
-
-
25,649
2,979
-
(21)
Balance 30 June 2017
3,913
28,607
Depreciation and impairment
Balance 1 July 2016
Disposals
Transfers & Other Movements
Depreciation
Balance 30 June 2017
(1,227)
(15,332)
-
-
21
-
(86)
(1,911)
(1,313)
(17,222)
Carrying amount 30 June 2017
2,600
11,385
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$’000
29,562
2,979
-
(21)
32,520
(16,559)
21
-
(1,997)
(18,535)
13,985
Land &
Buildings
Plant &
Equipment
Marina
Lease
Dams &
Fishponds
$’000
$’000
$’000
$’000
Total
$’000
Gross carrying amount
Balance 1 July 2015
Additions
Transfers & Other Movements
Disposals
11,797
19,455
2,000
77
(7,961)
-
1,485
4,709
-
364
-
33,616
1,562
-
(2,000)
(364)
(5,616)
-
-
-
-
-
29,562
Balance 30 June 2016
3,913
25,649
Depreciation and impairment
Balance 1 July 2015
Disposals
Transfers & Other Movements
Depreciation
Balance 30 June 2016
Carrying amount 30 June 2016
(4,694)
(13,296)
(2,000)
(364)
(20,354)
-
3,832
(365)
-
(580)
(1,456)
(1,227)
(15,332)
2,686
10,317
-
2,000
-
-
-
-
364
-
-
-
-
5,616
(1,821)
(16,559)
13,003
66 |
Clean Seas Seafood Limited | Notes to the Financial Statements
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
46
Clean Seas Seafood Limited | Notes to the Financial Statements
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).
16
Biological assets – non-current
Finfish Broodstock
Carrying amount at beginning of period
Purchases
Sales
Carrying amount at end of period
2017
$’000
244
-
-
244
2016
$’000
244
-
-
244
Intangible assets
17
Details of the Group’s intangible assets and their carrying amounts are as follows:
PIRSA
Leases
and
Licences
$’000
Southern
Bluefin
Tuna
Quota
$’000
2,827
-
2,827
2,827
-
2,827
200
-
200
200
-
200
Total
$’000
3,027
-
3,027
3,027
-
3,027
Net carrying amount
Balance at 1 July 2016
Amortisation and impairment
Net carrying amount 30 June 2017
Balance at 1 July 2015
Amortisation and impairment
Net carrying amount 30 June 2016
At each reporting date the Directors review intangible assets for impairment. No impairment was
assessed as necessary in 2017 (2016: nil).
Trade and other payables
18
Trade and other payables consist of the following:
Current:
• trade payables
• related party payables
• other payables
Total trade and other payables
2017
$’000
2,039
100
1,944
4,083
2016
$’000
2,202
52
847
3,101
| 67
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Notes to the Financial Statements
47
All amounts are short-term. The carrying values of trade payables and other payables are considered to
be a reasonable approximation of fair value.
Borrowings
19
Borrowings consist of the following:
Current:
• Bank Trade Finance Facility
• Finance lease (note 30)
• Other – insurance premium funding
Total borrowings – current
Non-current:
• Finance lease (note 30)
Total borrowings – non-current
2017
$’000
-
263
67
330
832
832
2016
$’000
2,900
96
67
3,063
68
68
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. The Company satisfied
all covenants at 30 June 2017 and 30 June 2016.
The Group also has a $2.0m secured Lease Finance Facility with Commonwealth Bank of Australia, of
which $0.98m was utilised at 30 June 2017.
Provisions
20
The carrying amounts and movements in the provisions account are as follows:
Carrying amount 1 July 2016
Additional provisions
Amount utilised
Carrying amount 30 June 2017
Current employee benefit provision
Non-current employee benefit provision
Annual Leave
$’000
Long Service
Leave
$’000
381
536
(408)
509
509
-
353
65
(69)
349
217
132
Total
$’000
734
601
(477)
858
726
132
68 |
Clean Seas Seafood Limited | Notes to the Financial Statements
Clean Seas Seafood Limited | Notes to the Financial Statements
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
48
Employee remuneration
Employee benefits expense
21
21.1
Expenses recognised for employee benefits are analysed below:
Salaries and wages
Superannuation – Defined contribution plans
Leave entitlement accrual adjustment
Short term incentive
Long term incentive – Share rights
Other on-costs
Total
2017
$’000
5,301
457
544
286
172
421
2016
$’000
5,217
427
130
110
-
409
7,181
6,293
Share-based employee remuneration
21.2
The Company granted a total of 18,847,188 FY17 LTI Share Rights to two senior executives during the
year (2016: nil). The share rights will vest if specified performance targets are achieved and the
executive remains employed by the Company for three years including the year for which the share
rights were granted, or in other circumstances agreed with the executive or at the discretion of the
Board. Each share right on exercise converts to one ordinary share, subject to adjustment in specified
circumstances. On exercise of share rights, a dividend equivalent issue of additional shares replicates the
benefit of any dividends paid on ordinary shares during the performance period. No amount is payable
on vesting or exercise. No share rights have vested, been exercised or lapsed as at the date of this report.
The Share Rights were independently valued by Value Adviser Associates Pty Ltd on 16 August 2017 and
one-third of the valuation has been expensed in FY17. A further one-third will be expensed in each of
FY18 and FY19, subject to further review of the number of Share Rights expected to vest, in accordance
with AASB 2 Share Based Payment. The Share Rights valuation is based on the fair value at grant date of
the equity instruments granted. This includes the Clean Seas share price on the 28 November 2016 grant
date being 3.5 cents, no adjustment being required for future dividends, achievement of one of the two
performance targets in FY17, assessment of the probability of achievement of the second (EPS)
performance target in FY19 considering 12 years of historic data and 2 years of forecast data to
determine expected volatility, a standard deviation of $0.0085 based on the three most recent historic
years and two forecast years, and use of a Monte Carlo simulation with 500,000 iterations.
Equity
Share capital
22
22.1
The share capital of Clean Seas Seafood 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.
2017
Shares
2016
Shares
2017
$’000
2016
$’000
Shares issued and fully paid:
• at beginning of the year
• share issue
1,105,282,736 1,105,282,736
157,736
157,736
267,760,712
-
8,262
-
Total contributed equity at 30 June 1,373,043,448 1,105,282,736
165,998
157,736
| 69
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Notes to the Financial Statements
49
All shares issued during the year were issued at 3.35 cents per share. The issues were;
•
Share purchase plan: 184,083,998 shares issued on 25 November 2016, to raise $6.17 million before
expenses
Placement: 74,721,492 shares issued on 25 November 2016, to raise $2.50 million before expenses
Directors’ placement: 8,955,222 shares issued on 28 December 2016, to raise $0.30 million before
expenses
•
•
Share rights reserve
22.2
The Company has granted share rights to certain executives as part of their remuneration arrangements
as a Long Term Incentive (LTI). Share rights outstanding are as follows:
2017
2016
Share rights
Share rights
2017
$’000
2016
$’000
Share rights outstanding:
• at beginning of the year
• granted during the year – FY17
LTI
• exercised during the year
• lapsed during the year
-
18,847,188
-
-
Total share rights at 30 June
18,847,188
Details of these Share Rights are provided at note 21.2.
-
-
-
-
-
-
172
-
-
172
-
-
-
-
-
Earnings per share and dividends
Earnings per share
23
23.1
Both the basic and diluted earnings per share have been calculated using the profit attributable to
shareholders of Clean Seas Seafood Limited as the numerator (i.e. no adjustments to profit were
necessary in 2017 or 2016).
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:
• weighted average number of shares used in basic earnings per share
• shares deemed to be issued for no consideration in respect of share
based payments
2017
2016
1,264,396
1,105,283
11,102
-
Weighted average number of shares used in diluted earnings per share
1,275,498
1,105,283
23.2 Dividends
Dividends Paid and Proposed
Dividends declared during the year
70 |
2017
$’000
-
2016
$’000
-
Clean Seas Seafood Limited | Notes to the Financial Statements
Clean Seas Seafood Limited | Notes to the Financial Statements
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
50
23.3
Franking credits
The amount of the franking credits available for subsequent reporting
periods are:
• balance at the end of the reporting period
• franking credits that will arise from the payment of the amount of
provision for income tax
• franking debits that will arise from the payment of dividends
recognised as a liability at the end of the reporting period
• franking credits that will arise from the receipt of dividends recognised
as receivables at the end of reporting period
24
Reconciliation of cash flows from operating activities
Profit for the period
Adjustments for:
• depreciation, amortisation and impairment
• LTI share rights expense
• net interest expense included in investing and financing
Net changes in working capital:
• change in inventories
• change in trade and other receivables
• change in prepayments
• change in biological assets
• change in trade and other payables
• change in other employee obligations
• changes offset in investing
Net cash from operating activities
25
Auditor remuneration
Audit and review of financial statements
Other services
• taxation compliance
• other tax services
Total other service remuneration
Total auditor’s remuneration
Parent
2017
$’000
2016
$’000
-
-
-
-
-
2017
$’000
202
1,997
172
100
567
(134)
(230)
(7,069)
982
124
(35)
-
-
-
-
-
2016
$’000
(8,982)
1,821
-
88
(1,637)
2,541
21
2,713
1,159
130
(208)
(3,324)
(2,354)
2017
$
2016
$
99,420
76,072
8,350
37,450
45,800
12,000
30,380
42,380
145,220
118,452
| 71
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Notes to the Financial Statements
51
Related party transactions and key management personnel disclosures
26
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 Seafood Limited is Australian Tuna Fisheries Pty Ltd (ATF). ATF and
its associated entities controlled 7.7% of issued shares at 30 June 2017 (2016: 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 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
2017
$’000
2016
$’000
17
350
19
70
11
380
13
56
The following balances are outstanding as at the reporting date in relation to transactions with related
parties:
Current Payables
• Australian Tuna Fisheries Pty Ltd
• Stehr Group Pty Ltd
• PSMMR Pty Ltd
2017
$’000
2016
$’000
40
7
9
37
-
15
The totals of remuneration paid or payable to the key management personnel of the Group during the
year are as follows:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Total Remuneration
2017
$
2016
$
1,203,145
1,131,895
66,655
176,083
-
78,432
2,320
-
1,445,883
1,212,647
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 2017.
72 |
Clean Seas Seafood Limited | Notes to the Financial Statements
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
52
Clean Seas Seafood Limited | Notes to the Financial Statements
Contingent assets and liabilities
27
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. Costs of advancing this litigation
claim have been expensed as incurred.
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.
28
Capital commitments
Property, plant and equipment
2017
$’000
971
971
2016
$’000
197
197
Capital commitments relate to items of plant and equipment and site works where funds have been
committed but the assets not yet received.
Interests in subsidiaries
29
29.1
Set out below are details of the subsidy held directly by the Group:
Composition of the Group
Name of the
Subsidiary
Clean Seas Aquaculture
Growout Pty Ltd
Country of incorporation
and principal place of
business
Australia
Principal activity
Growout and sale of
Yellowtail Kingfish
Group proportion of
ownership interests
30 June
2017
30 June
2016
100%
100%
Interests in unconsolidated structured entities
29.2
The Group has no interests in unconsolidated structured entities.
Leases
Finance leases as lessee
30
30.1
The Group holds a number of motor vehicles and plant & equipment under finance lease arrangements.
The net carrying amount of these assets is $1,238k (2016: $173k).
The Group’s finance lease liabilities, which are secured by the related assets held under finance leases,
are classified as follows:
| 73
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Notes to the Financial Statements
Finance lease liabilities
Current:
• finance lease liabilities
Non-current:
• finance lease liabilities
53
2016
$’000
96
68
2017
$’000
263
832
Future minimum finance lease payments at the end of each reporting period under review were as
follows:
30 June 2017
Lease payments
Finance charges
Net present values
30 June 2016
Lease payments
Finance charges
Net present values
Minimum lease payments due
Within 1 year
$’000
1-5 years
$’000
After 5 years
$’000
315
(52)
263
103
(7)
96
923
(91)
832
70
(2)
68
-
-
-
-
-
-
Total
$’000
1,238
(143)
1,095
173
(9)
164
30.2 Operating leases as lessee
The Group leases a number of sites under operating lease arrangements. Future minimum lease
payments are as follows:
Minimum lease payments due
Within 1 year
$’000
1-5 years
$’000
After 5 years
$’000
Total
$’000
Minimum operating lease
payments
333
985
-
1,318
The operating lease expense in 2017 was $167k (2016: $86k).
The main leased site is the Royal Park processing plant in Adelaide, South Australia. This lease has a
minimum term of 4 years to March 2021 with subsequent renewal options of 2 years, 3 years and 3 years
and includes a right of first refusal to purchase.
Financial instrument risk
31
31.1 Risk management objectives and policies
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.
74 |
Clean Seas Seafood Limited | Notes to the Financial Statements
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
54
Clean Seas Seafood Limited | Notes to the Financial Statements
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 Market risk analysis
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 2017
• financial assets
• financial liabilities
Total exposure
30 June 2016
• financial assets
• financial liabilities
Total exposure
Short term exposure
Long term exposure
EUR
USD
Other
EUR
USD
Other
A$’000
A$’000
A$’000
A$’000
A$’000
A$’000
503
(25)
478
1,205
-
1,205
41
-
41
407
-
407
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The following table illustrates the sensitivity of profit and equity in regards to the Group’s financial assets
and financial liabilities and the AUD / EUR exchange rate ‘all other things being equal’. It assumes a +/-
5% change in this exchange rate for the year ended at 30 June 2017 (2016: 5%). The sensitivity analysis
is based on the impact on the Group’s valuation of live fish held for sale.
Profit and Equity
Increase 5% Decrease 5%
Increase / (Decrease)
A$’000
A$’000
30 June 2017
30 June 2016
(920)
(550)
1,000
630
| 75
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Notes to the Financial Statements
55
Clean Seas Seafood Limited | Notes to the Financial Statements
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.
Interest rate sensitivity
The Group’s policy is to minimise interest rate cash flow risk exposures on long-term financing.
Credit risk analysis
31.3
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
Carrying amounts:
• cash and cash equivalents
• trade and other receivables
2017
$’000
2016
$’000
524
3,832
4,356
598
3,699
4,297
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
More than three (3) months but not more than six (6) months
More than six (6) months but not more than one (1) year
More than one (1) year
Total
2017
$’000
822
50
84
66
1,022
2016
$’000
883
89
-
-
972
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.
76 |
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
56
Clean Seas Seafood Limited | Notes to the Financial Statements
The credit risk for cash and cash equivalents is considered negligible, since the counterparties are
reputable banks with high quality external credit ratings.
Liquidity risk analysis
31.4
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 2017, the Group’s non-derivative financial liabilities have contractual maturities (including
interest payments where applicable) as summarised below:
Current
Non-current
Within 6
months
$’000
4,083
135
67
4,285
6 - 12 months
$’000
1 - 5 years
$’000
5+ years
$’000
-
128
-
128
-
832
-
832
-
-
-
-
30 June 2017
Trade and other payables
Finance lease obligations
Other borrowings
Total
This compares to the maturity of the Group’s non-derivative financial liabilities in the previous reporting
periods as follows:
Current
Non-current
Within 6
months
$’000
6 - 12 months
$’000
1 - 5 years
$’000
5+ years
$’000
2,950
52
67
3,069
-
51
2,900
2,951
-
70
-
70
-
-
-
-
30 June 2016
Trade and other payables
Finance lease obligations
Other borrowings
Total
The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying
values of the liabilities at the reporting date.
| 77
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
Clean Seas Seafood Limited | Notes to the Financial Statements
57
Fair value measurement
Fair value measurement of non-financial instruments
32
32.1
Financial assets and financial liabilities measured at fair value in the statement of financial position are
grouped into three levels of a fair value hierarchy. The three levels are defined based on the
observability of significant inputs to the measurement, as follows:
•
•
•
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly
Level 3: unobservable inputs for the asset or liability
The following table shows the Levels within the hierarchy of non-financial assets measured at fair value
on a recurring basis at 30 June 2017:
30 June 2017
Biological assets - current
Biological assets – non-current
Southern bluefin tuna quota
Total
30 June 2016
Biological assets - current
Biological assets – non-current
Southern bluefin tuna quota
Total
Level 1
$’000
-
-
-
-
Level 1
$’000
-
-
-
-
Level 2
$’000
31,905
244
200
32,349
Level 2
$’000
24,885
244
200
25,329
Level 3
$’000
-
-
-
-
Level 3
$’000
-
-
-
-
Total
$’000
31,905
244
200
32,349
Total
$’000
24,885
244
200
25,329
The fair values of the biological assets are determined in accordance with Note 4.22.
Capital management policies and procedures
33
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 2017.
78 |
Clean Seas Seafood Limited | Notes to the Financial Statements
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
58
Clean Seas Seafood Limited | Notes to the Financial Statements
Parent entity information
34
Information relating to Clean Seas Seafood Limited (‘the Parent Entity’):
Statement of financial position
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Share rights reserve
Accumulated losses
Total equity
Statement of profit or loss and other comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
2017
$’000
2016
$’000
795
41,137
1,373
2,259
38,878
165,998
172
747
38,679
3,931
4,053
34,626
157,736
-
(127,292)
(123,110)
38,878
34,626
(4,182)
(1,961)
-
-
(4,182)
(1,961)
The Parent Entity has capital commitments of $20k to purchase plant and equipment
(2016: Nil). 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.
Post-reporting date events
35
No adjusting or significant non-adjusting events have occurred between the reporting date and the date
of authorisation.
| 79
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
59
Clean Seas Seafood Limited | Director’s Declaration
Directors’ Declaration
In the opinion of the Directors of Clean Seas Seafood Limited:
•
•
The consolidated financial statements and notes of Clean Seas Seafood Limited are in
accordance with the Corporations Act 2001, including:
o Giving a true and fair view of its financial position as at 30 June 2017 and of its
performance for the financial year ended on that date; and
Complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
o
There are reasonable grounds to believe that Clean Seas Seafood Limited will be able to pay its
debts as and when they become due and payable.
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 2017.
Note 2 confirms that the consolidated financial statements also comply with International Financial
Reporting Standards.
Signed in accordance with a resolution of the Directors:
Terry O’Brien
Chairman
Dated the 31st day of August 2017
80 |
Clean Seas Seafood Limited | Director’s Declaration
Clean Seas Seafood Limited | Independent Auditor’s Report
Grant Thornton House
Level 3
170 Frome Street
Adelaide, SA 5000
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
Independent Auditorʼs Report
to the Members of Clean Seas Seafood Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Clean Seas Seafood Limited (the Company) and its
subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30
June 2017, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year
then ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies, and the directorsʼ declaration.
In our opinion, the accompanying financial report of the Group, is in accordance with the
Corporations Act 2001, including:
a Giving a true and fair view of the Groupʼs financial position as at 30 June 2017 and of its
performance for the year ended on that date; and
b Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditorʼs Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Boardʼs APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
| 81
Clean Seas Seafood Limited | Independent Auditor’s Report
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key audit matter
Revenue recognition
Notes 4, 6
Revenue is the key driver of the Group.
The Group focuses on revenue as a key performance
measure and revenue is also a key driver by which
the performance of the Group is measured.
This area is a key audit matter due to the volume of
transactions and the total balance of revenue.
How our audit addressed the key audit matter
Our procedures included, amongst others:
• Documenting the processes and assessing the
internal controls relating to revenue processing
and recognition;
• Reviewing the revenue recognition policy to
ensure it is in line with AASB 118 Revenue;
• Performing analytical procedures to understand
the movements and trends in revenue for
comparison against expectations;
• Tracing a sample revenue transactions to
supporting documentation to ensure revenue is
being recognised in line with the revenue
recognition policy and accounting standards;
• Performing cut off testing to ensure that revenue
transactions at or around year end have been
recorded in the correct period; and
• Assessing the adequacy of the related disclosures
within the financial statements.
Biological asset existence and valuation
Notes 4, 14 & 16
The Groupʼs biological assets include Kingfish, which
is measured at fair value less costs to sell.
Our procedures included, amongst others:
• Documenting the processes and assessing the
internal controls relating to the valuation
methodology applied to biological assets;
• Reviewing the inputs used in the valuation model
by comparing to actual performance subsequent to
reporting date and comparing with historical
performance of the Group;
• Attending a physical fin fish count and grading to
gain comfort that the biomass inputs into the
valuation are appropriate;
• Reviewing the historical accuracy of the Group's
assessment of the fair value of Kingfish by
comparing to actual outcomes; and
• Assessing the adequacy of the related disclosures
within the financial statements.
Estimating the fair value is a complex process
involving a number of judgements and estimates
regarding various inputs. Due to the nature of the
asset, the valuation technique includes a model that
uses a number of inputs from internal sources.
This area is a key audit matter due to the complex
nature involving a number of judgements and
estimates.
82 |
Clean Seas Seafood Limited | Independent Auditor’s Report
Clean Seas Seafood Limited | Independent Auditor’s Report
Share rights payments
Note 22
During the year, the Group issued performance rights
to key management personnel.
Management obtained an independent valuation to
assist with significant judgements and estimations.
The total fair value of the performance rights issued
was $515,518 which is to be expensed over the
vesting period in accordance with AASB 2 Share-
based payments.
The performance rights contain vesting conditions
related to achievement of certain performance
hurdles. Estimating the probability of achieving these
hurdles requires significant management judgement.
This area is a key audit matter due to the degree of
judgement involved in estimating the fair value of the
performance rights
Our procedures included, amongst others:
• Assessing the qualification and expertise of
managementʼs valuation expert;
• Obtaining copies of the data provided to
managements expert to evaluate for consistency
with other information gathered during the audit;
• Agreeing key assumptions applied by
managementʼs experts to publicly available market
data;
• Agreeing key inputs to the relevant terms within
the share rights agreements;
• Assessing the vesting period against the
performance hurdles;
• Verifying the mathematical accuracy of the share
option valuation provided by managementʼs
experts using the Monte Carlo pricing model; and
• Assessing the adequacy of the related disclosures
within the Remuneration Report and financial
statements.
Information Other than the Financial Report and Auditorʼs Report Thereon
The Directors are responsible for the other information. The other information comprises the
information included in the Groupʼs annual report for the year ended 30 June 2017, but does not
include the financial report and our auditorʼs report thereon. The annual report is expected to be
made available to us after the date of this auditorʼs report.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directorsʼ for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the Directors determine is necessary to enable the
preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Groupʼs ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to liquidate the Group or
to cease operations, or have no realistic alternative but to do so.
Auditorʼs Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditorʼs report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists.
| 83
Clean Seas Seafood Limited | Independent Auditor’s Report
Clean Seas Seafood Limited | ASX Additional Information
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditorʼs report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directorsʼ report for the year ended 30
June 2017.
In our opinion, the Remuneration Report of Clean Seas Seafood Limited, for the year ended 30
June 2017, complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
J L Humphrey
Partner - Audit & Assurance
Adelaide, 31 August 2017
84 |
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
64
Clean Seas Seafood Limited | 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 17 August 2017.
Ordinary share capital (quoted)
1,373,043,448 fully paid ordinary shares are held by 7,454 shareholders.
Substantial shareholders
The number of shares held by substantial shareholders and their associates are set out below:
Shareholder
Australian Tuna Fisheries Pty Ltd
Number of Shares
106,040,344
Voting Rights
Ordinary Shares:
On a show of hands, every member present at a meeting in person or by
proxy shall have one vote and upon a poll each fully paid share shall
have one vote.
Distribution of equity security holders – Ordinary shares
Holding
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001+
Total
Number of holders
552
1,036
836
3,265
1,765
7,454
There were 2,458 holders of less than a marketable parcel of 10,417 ordinary shares, holding a
total of 10,325,015 ordinary shares.
| 85
Clean Seas Seafood Limited | ASX Additional Information
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2017
65
Twenty (20) largest shareholders
Australian Tuna Fisheries Pty Ltd
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
Mr Jason Conrad Squire
Mr Michael John O'Neill & Mrs Rebecca Joan O'Neill
BNP Paribas Noms Pty Ltd
Mr Xianghui Chen
Mr Jamie Lewis
Rowe Heaney Super Fund Pty Ltd
Mr Hagen Heinz Stehr & Mrs Anna Stehr
11,628,587
Ordinary shares
Number of
shares held
Percentage
of issued
shares
94,411,757
91,774,535
27,219,151
14,500,000
14,100,000
13,846,473
13,561,027
13,065,000
12,432,835
11,281,094
7,911,259
6,800,000
6,600,000
6,447,761
6,147,999
5,996,771
5,349,465
5,300,000
5,231,250
6.9%
6.7%
2.0%
1.1%
1.0%
1.0%
1.0%
1.0%
0.9%
0.8%
0.8%
0.6%
0.5%
0.5%
0.5%
0.4%
0.4%
0.4%
0.4%
0.4%
373,604,964
27.2%
Mr Ermanno Feliciani
DHC International Pty Limited
Fernbow Pty Ltd
Lidova Pty Ltd
RDLK Pty Ltd
HSBC Custody Nominees (Australia) Limited
BNP Paribas Nominees Pty Ltd
Hans And Delwyn Pty Limited
Mrs Hui-Chen Tsai
Simplot Australia Pty Limited
Total
Securities Exchange
The Company is listed on the Australian Securities Exchange.
On Market Buy Back
There is no current on market buy back.
86 |
Clean Seas Seafood Limited | ASX Additional Information
Clean Seas Seafood Limited | Corporate Directory
Corporate Directory
Directors
Terry O’Brien
Independent Non-Executive Chairman
Paul Steere
Independent Non-Executive Director
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
Principal registered office
in Australia
Share register
David Head
Managing Director and Chief Executive Officer
Wayne Materne
Chief Financial Officer & Company Secretary
7 North Quay Boulevard,
Port Lincoln SA 5606
Ph: (08) 8621 2900
Fax: (08) 8621 2990
Email: reception@cleanseas.com.au
Boardroom Pty Ltd
Level 12, 225 George Street / GPO Box 3993
Sydney NSW 2000
Ph: 1300 737 760 / +612 9290 9600
Fax: +612 9290 9655
Email: enquiries@boardroomlimited.com.au
Auditor
Grant Thornton Audit Pty Ltd
Level 3, 170 Frome Street,
Adelaide SA 5000
Stock exchange listing
Clean Seas Seafood Limited shares are listed
on the Australian Securities Exchange (ASX: CSS)
Website address
www.cleanseas.com.au
| 87
88 |