ANNUAL
REPORT
2017-18
Clean Seas Seafood Limited
ABN: 61 094 380 435
TABLE OF CONTENTS
Company Overview
Chairman & Managing Director’s Report
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Consolidated Statement of Profit or Loss
& Other Comprehensive Income
Consolidated Statement of Financial Position
7
19
26
43
44
45
46
Consolidated Statement of Changes in Equity
47
Consolidated Statement of Cash Flows
48
Notes to the Consolidated Financial Statements 49
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
Corporate Directory
84
85
89
91
2
Andy Henderson and Nicholas Angelo
on board the Ulysses
3
COMPANY VISION
To be a global leader in aquaculture, inspiring
culinary experiences around the world through
our sustainable, premium seafood
“
“
4
The Ulysses harvest vessel at work
at our Port Lincoln farm
5
The Arno Bay Hatchery on the
Shores of the Spencer Gulf
Hatchery Manager Adam Miller
reviewing a 40g fingerling
Stacey Tucker
feeding the fingerlings
6
COMPANY OVERVIEW
Background
From Ocean to Plate
Clean Seas is the global leader in full cycle breeding,
At our Arno Bay hatchery, the cycle of life commences
production and sale of Yellowtail Kingfish, and is
with eggs, spawned naturally from our selectively bred
renowned world-wide for its exceptionally high quality
brood stock.
fish. Formed in 2000, and publicly listed in 2005, Clean
Seas has become the largest aquaculture producer
of Yellowtail Kingfish outside Japan and one of the
largest Kingfish farms in the world. As well as our
superb quality, we are recognised for our innovations
in Yellowtail Kingfish farming, and our reliability in
For the next 18-21 days, these larvae are hand nurtured
until ready for transfer to the nursery for weaning.
Here our tiny hatchlings are given a specially
formulated feed that replicates the ideal diet they
would naturally eat in the wild.
supplying fresh fish to markets all over the world 52
At 75 days old they are ready to go to sea. The
weeks of the year. In 2018, our Spencer Gulf Hiramasa
fingerlings, now weighing up to 35 grams, can be
Kingfish was voted “Best Fish” at the Australian Food
moved to the pristine, icy waters off Port Lincoln and
awards for the third year in a row and was awarded
are delivered by helicopter into open sea pens.
a gold medal in the ‘From The Sea’ category at the
coveted Delicious produce awards in Sydney.
Provenance
While at sea they continue to be fed scientifically
formulated feeds which are nutritionally balanced for
optimal health and growth.
Safeguarded against predators and encountering
Our Hatchery is located at Arno Bay and our sea farm
minimal stress along the way, our fish remain at sea
operations are located in the Spencer Gulf, in a remote
for around 24 months and are humanely harvested
location off the Eyre Peninsula town of Port Lincoln in
once they reach the highly sought after sashimi grade
South Australia, 8 hours from Adelaide by road.
4kg size.
The waters of the Spencer Gulf are one of the cleanest
and pristine bodies of water in Australia. There is
nothing between the icy waters of Antarctica and our
farm but the expanse of the Great Southern Ocean.
It is believed that these cold waters are what condition
and firm the texture of the flesh to make it one of the
world’s best raw fish.
7
COMPANY OVERVIEW
We won’t say absolutely it’s the best raw fish in the world, but after talking
to chefs around the world, we don’t believe there is a fish that matches
Spencer Gulf Hiramasa Kingfish. Unsurpassed raw, outstanding cooked.
“
Unsurpassed Raw. Outstanding Cooked.
Spencer Gulf Hiramasa Kingfish. Strong, majestic and
powerful in the water, versatile and delicate on the
plate. The taste is unparalleled. Sweet, fresh, exquisite.
A delicate proposition: its flesh retains layers of
subtlety and intrigue. Japanese sushi masters consider
Kingfish the best fish in the world for sashimi.
The natural oil makes it luscious raw; it’s firm yet
distinctively delicate. It can take on flavourings while
retaining its own sublime characteristics. It can be
mildly cured or marinated, slow-cooked, poached, pan
fried or barbecued… The versatility is endless.
“
8
Dan Fisk - General Manager
Aquaculture
9
I was seriously overwhelmed with how good this product is.
The bloodline, the firm flesh and the aroma felt like this fish
just jumped out of the ocean. The flavour was delicious and
has none of the tinny, metallic tastes that can affect frozen fish.
“
- Chef Shaun Presland, Group Executive Chef Saké Restaurants, Australia
“
10
COMPANY OVERVIEW
Introducing Clean Seas SensoryFresh
as fast as possible for optimum texture and Clean
Historically, Clean Seas business has been focused
around sales of whole fresh Yellowtail Kingfish to
high-end restaurants around the world. In 2017/18, the
decision was made to expand our market reach and
product mix which involved a transition from standard
freezing to best-in-class rapid freezing technology
Seas Rapid Freezing does this in around 22 minutes, 10
times faster than conventional freezing. And to capture
the colour, aroma and flavour -35C must be reached
quickly. Conventional freezing won’t do this. Our Rapid
Freezing achieves surface temperatures of -95C and core
temperatures of -50C to -70C.
using liquid nitrogen.
We call it SensoryFresh – the closest thing to ocean fresh.
In April 2018 at The Brussels Seafood Show, Clean
Seas launched SensoryFresh, which combines a range
of rapid freeze technology and logistics protocols to
deliver our Spencer Gulf Hiramasa Kingfish in a new
premium frozen format.
SensoryFresh uses Liquid Nitrogen Rapid Freezing
technology in an effort to capture the texture, colour,
aroma and taste of ‘freshly harvested’ fish. It delivers
sensory attributes that have made Spencer Gulf
Hiramasa Kingfish the choice of Sushi masters and
leading chefs around the world.
Freezing high value, premium quality seafood is all
about speed. The ice formation stage must be achieved
SensoryFresh Liquid Nitrogen Freezing
technology at our facility in Adelaide
11
COMPANY OVERVIEW
Market Opportunity for High Quality Frozen
Yellowtail Kingfish
major global market opportunity with SensoryFresh
that allows us to maintain premium pricing of Spencer
Japan is the largest producer of farmed Yellowtail
Kingfish with annual export sales of about 14,395
tonnes with 85% of all exports being frozen. Whilst
some wholesalers and distributors in Europe process
Gulf Hiramasa Kingfish and extend our reach with
a range of product offerings including whole fish,
fillets, portions and value added products for both
Foodservice and Retail channels.
Yellowtail Kingfish using rapid freeze technology, the
Utilisation of the Frozen product supply chain with
vast majority of frozen Yellowtail Kingfish producers
SensoryFresh will enable Clean Seas to reach new
use traditional freezing technology (-18 Celsius).
markets and exploit channels around the world that
Clean Seas SensoryFresh represents significant product
advantages over the current market frozen offerings.
Recent product testing with a leading European
distributor showed SensoryFresh is vastly superior to
the Japanese Hamachi product. We believe there is a
are not easily accessible with Fresh fish. The cost
advantages of sea freight versus air freight allows for
more competitive pricing to enable profitable volume
growth in global markets.
12
Clean Seas Yellowtail
Kingfish sea pens
13
COMPANY OVERVIEW
Creating Global Brand Awareness
During FY18 Clean Seas undertook a global brand
relaunch which kicked off with a launch to wholesalers
and distributors that began in Melbourne and
progressively rolled out to key customers in Australia
and overseas throughout FY18.
The launch incorporated a global brand awareness
and trial generation program visiting leading chefs
in 1566 restaurants in Australia, USA, Germany, Italy,
Switzerland, Norway, Austria and Spain. Supported by a
new digital marketing campaign (Facebook, Instagram,
LinkedIn and Twitter) including an initial six-week
campaign during which we introduced our brand
story (The Tale of Two Fish) through the Spencer Gulf
Hiramasa Kingfish Video, the Chef Videos and a range
of other brand images and stories. The specially crafted
brand content continues to build a strong and loyal
following around the world.
Building on our sustainability credentials Clean Seas
switched from the traditional white poly boxes used
by the Seafood Industry to a new 100% recyclable
cardboard box with beautiful graphics that showcase
our unique product and the Spencer Gulf Hiramasa
Kingfish brand.
14
Chef Shaun Presland
15
COMPANY OVERVIEW
Farm Expansion to Fitzgerald Bay
Royal Park
Clean Seas has been granted a lease over the full 123
Royal Park Processing Plant is now processing all fish
hectares of additional available area in the Fitzgerald
for the Australian and International markets for fresh
Bay Aquaculture Zone near Whyalla in the upper
and liquid nitrogen rapid freezing. This has brought
Spencer Gulf. This will increase Clean Seas’ leases in
end-to-end quality control from egg- to-customer and
Fitzgerald Bay to 283 hectares. This additional sea lease
will generate significant cost savings from which the
area will allow Clean Seas to increase its maximum
Company expects to benefit in FY19 and beyond.
allowed biomass in Fitzgerald Bay from 2,400 tonnes
to 4,250 tonnes. The increased production volume will
facilitate improved economies of scale and support
broader production efficiencies across the Spencer
Gulf in a manner that is in keeping with Clean Seas’
ongoing commitment to sustainability. The Company
plans to return to farming in Fitzgerald Bay in H1 FY19
with the 2019 Year Class. Clean Seas welcomes and
appreciates this support from the South Australian
Government, PIRSA and the EPA as larger farm sites are
a key element of Clean Seas’ growth strategy
This is expected to materially increase the Company’s
market opportunities while lowering its cost of
processing. While Clean Seas will remain focussed on
its ability to deliver the highest quality fresh Yellowtail
Kingfish product globally, the flexibility provided by
liquid nitrogen rapid freezing will enable Clean Seas to
meet customer demand for premium quality frozen
product and help smooth out any future imbalances
between the rate of biomass growth and the ongoing
expansion of market demand as the Company
continues to increase production.
16
Fingerling lift
Port Lincoln farm
Locklan Maccuspie - Farm Hand
Chester Wilkes - Marine
Production Manager
17
18
CHAIRMAN & MANAGING
DIRECTOR’S REPORT
Terry O’Brien – Chairman
David J Head – Managing Director and CEO
Chairman and Managing Director’s Report
for the year ended June 30 2018
contractor in Port Lincoln to our in-house facility in Royal
Park, Adelaide.
We are pleased to present the 2018 Annual Report for
At Royal Park, we have installed and commissioned liquid
Clean Seas Seafood Limited (ASX: CSS), as we reflect on
nitrogen rapid-freezing technology, allowing Clean Seas
a year that has seen us further improve our position
to introduce its new “Sensory Fresh” product at the
as one of the world’s leading producers of premium
Seafood Expo Global in Brussels in April 2018. Our rapid-
Yellowtail Kingfish.
Clean Seas’ results for the year confirmed continued
strong improvement in performance, as the Company
again achieved double-digit sales and revenue growth,
as well as higher farm gate prices, farm cost efficiencies
and increased net fish biomass growth.
freezing capability can freeze fish in 22 minutes, about
10 times faster than conventional methods, reaching
the critical point of -35°C in less than 50 minutes to
allow Clean Seas to capture the colour, texture, aroma
and flavor of the fish that is often affected in the
freezing process. This technology expands our market
opportunities and following our move to an in-house
Our Spencer Gulf Hiramasa Kingfish remains the market
facility will lower the cost of processing.
leader in Australia and Europe. We saw sales volumes
increase by 15% while sales revenue grew 18%, supported
by continued improvement in selling prices.
During 2018, we took several important steps in
strengthening our competitive position, completing the
transition of our processing facilities from a third-party
We implemented a new direct marketing campaign
in Australia, Europe and the USA which produced
excellent results. This campaign has been aided by
the sustainability credentials Clean Seas has earned,
including certification by Friends of the Sea, leading
food science organisation HACCP, and the Aquaculture
19
The Ulysses working at the
Port Lincoln farm
20
CHAIRMAN & MANAGING
DIRECTOR’S REPORT
Group Board Photo from left to right: Mr Nick Burrows, Ms Raelene Murphy,
Mr David J Head, Mr Terry O’Brien, Ms Helen Sawczak, Mr Marcus Stehr
Stewardship Council for which final approval is pending
Overall the Company increased sales volumes by 15%
following completion of the audit in Q4 FY18.
over FY17 to 2,640 tonnes of fish. Excluding the impact
Looking ahead to 2019, we are targeting increases in
sales volume and revenue, while we will also increase
our farming capacity by returning to farm at our
Fitzgerald Bay leases at the top of the Spencer Gulf. This
will build Clean Seas’ capacity over time towards 11,000
tonnes of annual fish production, compared to 3,300
of clearance sales of frozen product in both years,
Clean Seas achieved a 7% increase in sales volume.
This growth, together with improved pricing, drove
the Company’s improvement in sales revenue, which
increased by 18% compared to FY17 to reach $41.7 million.
tonnes in the latest year.
Sales
Financial Results
Higher domestic and international selling prices drove
an improvement in farm gate prices in FY18.
Clean Seas achieved a full year net profit after tax of $3.4
The Large Fresh category represented 64% of Clean
million, a significant improvement from the previous
Seas’ volume and 73% of revenue in FY18 with volumes
year’s result of $0.2 million. The Company achieved
maintaining about 1,700 tonnes (whole weight
this through above-average fish growth and double
equivalent – WWE). During the year, farm gate prices
digit sales growth in Europe and Asia, with Australian
increased 8% ($1.06/kg), with an 18% improvement
volumes stable at higher farm gate prices than the
achieved over the past two years (FY17-FY18 - $2.08/kg).
previous year.
Clean Seas’ Spencer Gulf Hiramasa Kingfish continues to
sell at a $2-$4 per kilo premium to its competitors in its
key markets of Australia and Europe.
21
Dale Rice - Engineer
Ethan Tiller - Farm Hand
Locklan Maccuspie - Farm Hand
22
CHAIRMAN & MANAGING
DIRECTOR’S REPORT
Sales of frozen product (excluding clearance stock)
New liquid nitrogen rapid-freezing technology was
increased 53% in FY18 to 378 tonnes (WWE) at 25%
commissioned early in the 2018 calendar year, allowing
higher farm gate prices. By the end of FY18, Clean Seas
Clean Seas to launch new “Sensory Fresh” products in
had ended production of traditional frozen products
its international markets, while lowering processing and
(-18˚C) and transitioned to the new “Sensory Fresh”
freight costs.
range of frozen products. This provides a clear quality
advantage and is expected to drive significant sales
growth and market expansion over coming years.
Fish Health and Fish Growth
Clean Seas maintained excellent fish health through the
year, with net growth of 3,330 tonnes in FY18. This is 35%
or 871 tonnes higher than FY17.
Total biomass at 30 June 2018 was 3,606 tonnes. This
was 907 tonnes, or 34% higher than 12 months earlier.
This biomass level positions the Company well for
further sales growth in FY19 and beyond as Clean Seas
continues expansion of Spencer Gulf Hiramasa Kingfish
in global markets.
Processing and Supply Economics
While Clean Seas will remain focused on its ability to
deliver the highest quality fresh Yellowtail Kingfish
globally, the flexibility provided by rapid freezing
will enable Clean Seas to meet customer demand
for premium quality frozen product. The ability to
hold rapid frozen stock will also help smooth out any
imbalances between the rate of biomass growth and
market demand as the Company continues to increase
production.
Farm expansion
During the year, the Company progressed plans to
return to farming at its Fitzgerald Bay leases, at the top
of the Spencer Gulf near Whyalla in South Australia,
commencing with the 2019-year class fish in 2019. This
will provide an additional 4,250 tonnes of farm capacity.
It will also improve sustainability practices including
During FY18, Clean Seas progressively transitioned its
fallowing of farm sites, and help to reduce biosecurity
processing operations from a third-party contractor in
risk through further geographic diversification.
Port Lincoln to its new in-house processing facility at
Royal Park, Adelaide.
Across its sites at Port Lincoln & Louth Bay, Arno
Bay, Fitzgerald Bay and Wallaroo, the Company now
In Q1 FY18 Clean Seas’ new in-house processing facility
has lease capacity for 11,000 tonnes of annual fish
had ramped up to process nearly all fish for the domestic
production.
market and commenced export processing. This brought
improved quality control, enabling Clean Seas to
generate cost savings from that point onwards. By year-
end, the Royal Park facility was processing all fish for the
Australian and international markets and the transition
to in-house processing operations was complete.
In FY19, the YC19 fish will be initially transferred from
our Arno Bay Hatchery to an Arno Bay “Nursery” site,
which is Clean Seas’ normal practice, and the fish will be
relocated to Fitzgerald Bay later in 2019.
23
CHAIRMAN & MANAGING
DIRECTOR’S REPORT
Marketing and brand awareness
CORPORATE
In the September 2017 quarter, Clean Seas gained
US Food and Drug Administration (FDA) and EU
Capital Raise
accreditation for its new processing plant. This was a
significant step in its move to export both fresh and
frozen fish from its Royal Park facility.
Clean Seas completed a successful $17.6 million capital
raising in the first half of the year, comprising an
oversubscribed $7.0 million institutional placement, a
The Company’s Chef Activation Program progressed
Renounceable Rights Issue, which raised $8.9 million in
well, with 1,565 restaurants visited between March
total, and a top-up placement which raised $1.7 million.
and June 2018. This comprised 800 in Australia, 575 in
Europe and 190 in the USA. Initial results have been
very encouraging, with 42% of chefs visited who are
not currently using our Spencer Gulf Hiramasa Kingfish
indicating they intend to start buying Clean Seas’ Large
Fresh premium product.
Clean Seas introduced its Sensory Fresh products to
international markets at the Australian Embassy in
Brussels in April in association with the Seafood Expo
Global.
Clean Seas was pleased with investors’ strong response
to the capital raising activities, which demonstrated
support for the Company’s strategic plan and decision to
invest to accelerate business growth.
Government funding
Clean Seas was awarded a $2.5 million grant from
the Federal Government under the Regional Jobs and
Investment Packages scheme, demonstrating support
for the Company’s expansion of its farming operations
During the year, Clean Seas switched from traditional
white poly boxes used in the seafood industry to a new
100% recyclable box with graphics on it to showcase the
Spencer Gulf Hiramasa Kingfish brand.
in the Spencer Gulf.
Board changes
Clean Seas also launched a new website (www.
cleanseas.com.au) and digital marketing campaign on
social media to introduce the brand story, The Tale of
Two Fish, with video interviews with leading chefs using
In early July 2018, the Company announced the
following new Board appointments and retirements
following a planned succession process as initially
advised at the 2016 Annual General Meeting:
our product to boost engagement and credibility.
• Appointment of Ms Raelene Murphy and Ms Helen
Sawczak as Independent Non-Executive Directors,
effective 1 July 2018
• Retirement of Dr Hagen Stehr and Mr Paul Steere as
Non-Executive Directors, effective 30 June 2018
• Retirement of Mr Paul Robinson as Alternate Director
for Dr Hagen Stehr, effective 30 June 2018
24
CHAIRMAN & MANAGING
DIRECTOR’S REPORT
On behalf of the Board and staff of Clean Seas, we would
exchange of initial and responding experts’ reports on
like to express our sincere appreciation to Hagen and
liability and quantum. Clean Seas expects mediation by
the two Pauls’ for their invaluable contribution to the
December 2018, with a trial to be scheduled in H2 FY19 if
Company over many years. Hagen, who is the founder
not settled at mediation.
of the business and who has been intimately involved
with the ups and downs of the business over the years
has been designated the title of Founder Emeritus of
Clean Seas Seafood as a token of our gratitude for his
vision and his resilience. All three men will be missed for
their deep experience in aquaculture and their general
commercial acumen.
As part of a restructure of its head office finance and
support functions, in September 2018, Clean Seas
decided to split the combined role of Chief Financial
Officer and Company Secretary into two separate roles.
CFO and Company Secretary Wayne Materne will leave
the Company in December 2018, and Clean Seas is
actively recruiting candidates to fill the two roles.
During his four years with the Company, Wayne has
been instrumental in providing effective support for
the expanding business, and the Board thanks Wayne
for his focus, dedication and strong contribution to the
Company.
Feed litigation progressing
The Company continued to progress its litigation
against Gibson’s Limited, trading as Skretting Australia,
in relation to what it alleges was taurine-deficient feed
supplied to Clean Seas from December 2008 to July 2012.
Gibson’s Limited is defending the proceedings and
has denied all liability to the Group. As at year-end, the
interlocutory steps in the litigation are almost complete,
with both parties having completed discovery and
Outlook
In FY19, Clean Seas will target sales volumes of 2,750
to 3,000 tonnes of fish, which would represent a 17%+
increase from the 2,353 tonnes in FY18 (which excludes
frozen clearance products). This is targeted to generate
sales revenue of $47 to $50 million, an 18%+ increase
from the $39.7 million in FY18 on the same basis. Further
double-digit sales growth is expected to continue in
FY20 and beyond.
Clean Seas will continue to invest to develop its sales
and marketing capabilities to support long-term sales
growth in Europe and to expand its presence in the US
and Asian markets. The Board notes that the inherent
operational risks in aquaculture may impact future
results.
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 effort put in by
everyone has been clear in what we have been able to
achieve operationally and financially.
We look forward to updating you as Clean Seas’ growth
initiatives continue to build shareholder value in FY19
and beyond.
Terry O’Brien
Chairman
David J Head
Managing Director and CEO
25
Clean Seas Seafood Limited | DIRECTORS’ REPORT
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
4
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
5
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 2018.
Directors
The following persons held office as Directors of Clean Seas during and since the end of the
financial year:
• Mr Terry O’Brien - Chairman;
• Mr Nick Burrows;
• Mr Marcus Stehr;
• Dr Hagen Stehr AO (retired 30 June 2018);
• Mr Paul Steere (retired 30 June 2018);
• Ms Raelene Murphy (appointed 1 July 2018);
• Ms Helen Sawczak (appointed 1 July 2018);
• Mr David Head (Managing Director & CEO); and
• Mr Paul Robinson – Alternate Director for Dr Hagen Stehr (retired 30 June 2018).
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 statutory profit after tax for the year of $3.380
million which compares to a $0.202 million statutory profit after tax in FY17.
•
•
•
•
•
•
and
Achieved a H2 FY18 profit after tax of $7.2 million, up from $5.2 million in H2 FY17;
Continued excellent Yellowtail Kingfish survival rates, health and growth;
Yellowtail Kingfish biomass at year end increased 34% to 3,606 tonnes;
Commencement of operation of an in-house processing plant at Royal Park in Adelaide, South
Australia, where phased in production commenced in July 2017;
Further development of the Spencer Gulf Hiramasa Kingfish branding which reflects 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 chef
activation program have been key contributors to planned sales growth in FY18 and beyond;
Launch of Sensory Fresh products which are produced with Liquid Nitrogen Rapid Freezing
technology which is world’s best practice for freezing high value, premium seafood. Sales of
these products will commence in FY19.
Sales expansion was achieved in the key Australian, European and Asian markets with strong sales
of fresh Spencer Gulf Hiramasa Kingfish and growth in sales of frozen products to premium
markets reflecting continued recognition of the quality of our product. The Company is exploring
options for increased distribution in the Asian and North American regions. Increased competition
was experienced in the Australian market, with two producers of Yellowtail Kingfish with warmer
seawater farm locations selling their product at lower prices than Spencer Gulf Hiramasa Kingfish.
Increased competition also emerged in Europe from land based farms producing Yellowtail
Kingfish.
Fish husbandry costs increased 24% to $24.2 million whilst biomass increased 34% to 3,606 tonnes
and live fish net growth increased 35% to 3,330 tonnes. The Company is progressing plans to return
to farming at its Fitzgerald Bay leases, at the top of the Spencer Gulf near Whyalla in South
Australia. It is expected that the 2019 Year Class fish will, as usual, be initially transferred from our
Arno Bay Hatchery to our Arno Bay “Nursery Site” prior to later being relocated to Fitzgerald Bay.
The Royal Park processing plant is a major strategic initiative for the Company. This has, for the
first time, given Clean Seas full control of processing, delivering opportunities to improve the
freshness and quality of product delivered to customers, explore new product development and
reduce processing costs. Following receipt of international accreditations and other transition
arrangements, all global processing has been undertaken at Royal Park since June 2018. Production
of the new Sensory Fresh range was temporarily suspended in late May 2018 following a flood
incident which had no impact on fresh fish processing or the launch of Sensory Fresh. All repair
costs are expected to be covered by insurance.
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 respect of what the
Company maintains were defective feeds supplied to the Company and fed to the Company’s
Yellowtail Kingfish between December 2008 and July 2012, has progressed during FY18. The
interlocutory steps in the litigation are almost complete with both parties having completed
discovery and the exchange of initial and responding expert’s reports on liability and quantum. It is
anticipated that the matter will be listed for trial in H2 FY19. The pre-trial mediation discussed by
Sales volumes increased 15% to 2,640 tonnes, which was a 7% increase excluding the impact of
clearance sales in both years;
Revenue increased 18% to $41.7 million;
Further improvement in farm gate revenue with price increases in the Company’s major
markets;
Significant positive outcomes of the FY18 year included:
•
•
•
26
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | DIRECTORS’ REPORT
5
•
•
•
•
•
•
Achieved a H2 FY18 profit after tax of $7.2 million, up from $5.2 million in H2 FY17;
Continued excellent Yellowtail Kingfish survival rates, health and growth;
Yellowtail Kingfish biomass at year end increased 34% to 3,606 tonnes;
Commencement of operation of an in-house processing plant at Royal Park in Adelaide, South
Australia, where phased in production commenced in July 2017;
Further development of the Spencer Gulf Hiramasa Kingfish branding which reflects 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 chef
activation program have been key contributors to planned sales growth in FY18 and beyond;
and
Launch of Sensory Fresh products which are produced with Liquid Nitrogen Rapid Freezing
technology which is world’s best practice for freezing high value, premium seafood. Sales of
these products will commence in FY19.
Sales expansion was achieved in the key Australian, European and Asian markets with strong sales
of fresh Spencer Gulf Hiramasa Kingfish and growth in sales of frozen products to premium
markets reflecting continued recognition of the quality of our product. The Company is exploring
options for increased distribution in the Asian and North American regions. Increased competition
was experienced in the Australian market, with two producers of Yellowtail Kingfish with warmer
seawater farm locations selling their product at lower prices than Spencer Gulf Hiramasa Kingfish.
Increased competition also emerged in Europe from land based farms producing Yellowtail
Kingfish.
Fish husbandry costs increased 24% to $24.2 million whilst biomass increased 34% to 3,606 tonnes
and live fish net growth increased 35% to 3,330 tonnes. The Company is progressing plans to return
to farming at its Fitzgerald Bay leases, at the top of the Spencer Gulf near Whyalla in South
Australia. It is expected that the 2019 Year Class fish will, as usual, be initially transferred from our
Arno Bay Hatchery to our Arno Bay “Nursery Site” prior to later being relocated to Fitzgerald Bay.
The Royal Park processing plant is a major strategic initiative for the Company. This has, for the
first time, given Clean Seas full control of processing, delivering opportunities to improve the
freshness and quality of product delivered to customers, explore new product development and
reduce processing costs. Following receipt of international accreditations and other transition
arrangements, all global processing has been undertaken at Royal Park since June 2018. Production
of the new Sensory Fresh range was temporarily suspended in late May 2018 following a flood
incident which had no impact on fresh fish processing or the launch of Sensory Fresh. All repair
costs are expected to be covered by insurance.
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 respect of what the
Company maintains were defective feeds supplied to the Company and fed to the Company’s
Yellowtail Kingfish between December 2008 and July 2012, has progressed during FY18. The
interlocutory steps in the litigation are almost complete with both parties having completed
discovery and the exchange of initial and responding expert’s reports on liability and quantum. It is
anticipated that the matter will be listed for trial in H2 FY19. The pre-trial mediation discussed by
27
Clean Seas Seafood Limited | DIRECTORS’ REPORT
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
6
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
7
the parties some time ago is yet to be confirmed but is likely to be held during H1 FY19. As noted
in the financial statements, 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
In line with the announcements at the Company’s 2016 AGM, Dr Hagen Stehr and Mr Paul Steere
retired as Non-Executive Directors on 30 June 2018. The Company records its appreciation of the
strong contribution that has been made over many years by Dr Hagen Stehr as Founder, former
Chairman and Director since the Company was founded in 2000. The Company also records its
appreciation of the strong contribution made by Mr Paul Steere since becoming a Director in 2010,
including being Chairman from May 2012 to May 2017. With Dr Hagen Stehr’s retirement, Mr Paul
Robinson has also retired as Alternate Director on 30 June 2018.
The Board has decided to honour Dr Hagen Stehr and recognise his role and contribution by
bestowing the title Founder Emeritus.
Ms Raelene Murphy and Ms Helen Sawczak have been appointed as Independent Non-Executive
Directors with effect from 1 July 2018. Further details are provided later in this report.
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:
•
Continued international roll out of the Spencer Gulf Hiramasa Kingfish branding and
associated marketing campaign;
Continuing an international activation program targeting leading dining establishments and
their chefs;
Sales expansion in North America, China and Asia
Commencement in FY19 of sales of Sensory Fresh products;
Further increases in farm gate revenue, with price increases supported by the new marketing
campaign and cost reductions across the supply chain;
Progressing new product development initiatives;
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; and
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.
•
•
•
•
•
•
•
•
28
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 Chairman of the Remuneration and Nominations Committee
and a member of the Audit and Risk 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.
An accountant by training, Mr O’Brien was 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 he was responsible for a
number of divestments and acquisitions, which alongside organic growth saw 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 also holds the following positions;
•
•
Chairman of Bundaberg Brewed Drinks Pty Ltd
Chairman of Kookaburra Sport Pty Ltd
• Non-Executive Director of Bega Cheese Ltd (ASX: BGA)
• Non-Executive Director of Foodbank Australia
• Member of East Asia Review Commission (Advisory Board) of Societe d’Oxygene et
d’Acetylene d’Extreme-Orient, a member of the Air Liquide Group
Mr O’Brien is a Fellow of CPA Australia and a Fellow of the Australian Institute of Company
Directors.
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
Audit and Risk 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.
Mr Burrows’ Directorship background encompasses a multi-sector portfolio of Chair, Non-
Executive Directorship, Board Committee and Advisory Board positions spanning local and state
government, not-for-profit and major private companies. He currently is:
• 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;
• Non-Executive Director of PFG Group Pty Ltd & and MIC Pty Ltd; and
•
a 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.
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | DIRECTORS’ REPORT
7
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 Chairman of the Remuneration and Nominations Committee
and a member of the Audit and Risk 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.
An accountant by training, Mr O’Brien was 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 he was responsible for a
number of divestments and acquisitions, which alongside organic growth saw Simplot sales increase
nearly threefold during his tenure as Managing Director to become approximately 25% of the global
JR Simplot agribusiness company.
Chairman of Bundaberg Brewed Drinks Pty Ltd
Chairman of Kookaburra Sport Pty Ltd
Mr O’Brien also holds the following positions;
•
•
• Non-Executive Director of Bega Cheese Ltd (ASX: BGA)
• Non-Executive Director of Foodbank Australia
• Member of East Asia Review Commission (Advisory Board) of Societe d’Oxygene et
d’Acetylene d’Extreme-Orient, a member of the Air Liquide Group
Mr O’Brien is a Fellow of CPA Australia and a Fellow of the Australian Institute of Company
Directors.
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
Audit and Risk 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.
Mr Burrows’ Directorship background encompasses a multi-sector portfolio of Chair, Non-
Executive Directorship, Board Committee and Advisory Board positions spanning local and state
government, not-for-profit and major private companies. He currently is:
• 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;
• Non-Executive Director of PFG Group Pty Ltd & and MIC Pty Ltd; and
•
a 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.
29
Clean Seas Seafood Limited | DIRECTORS’ REPORT
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
8
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
9
Mr Burrows has had a long involvement with Governance Institute of Australia including serving
as National President and serving on the Tasmanian Branch Council
Mr Marcus Stehr - Non-Executive Director
Mr Stehr was appointed to the Company Board on incorporation in September 2000. He is also a
member of the Remuneration and Nominations Committee.
Mr Stehr’s technical qualifications include Master Class 4 Fishing/Trading Skippers certificates, MED
1 and Dive Master certificates. Commercial qualifications include business management courses
spanning post graduate studies in Business and completion of the Company Director’s Course. He is
a 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 Managing 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:
•
• 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
Board member of the Australian Southern Bluefin Tuna Industry Association Ltd;
Ms Raelene Murphy – Independent Non-Executive Director (appointed 1 July 2018)
Ms Murphy was appointed to the Company Board on 1 July 2018. She is also a member of the Audit
and Risk Committee from 1 July 2018.
Ms Murphy has over 35 years’ experience in strategic, financial and operational leadership in both
industry and professional advisory. Raelene specialised in operational and financial restructuring
including merger and acquisition integration and was formerly a Managing Director at KordaMentha
and a Partner in a national accounting firm. Her industry experience includes CEO of the Delta
Group and senior executive roles in the Mars Group.
Ms Murphy is currently a Non-Executive Director of:
•
•
•
•
•
Altium Limited (ASX: ALU)
Bega Cheese Limited (ASX: BGA)
Integral Diagnostics Limited (ASX: IDX)
Service Stream Limited (ASX: SSM) and
Ross House Investments Pty Ltd (Stillwell Motor Group).
She was previously a Non-Executive Director of Tassal Group Limited (ASX: TGR) and EVZ
Limited (ASX: EVZ).
Ms Murphy is a Fellow of Chartered Accountants Australia and New Zealand.
Ms Helen Sawczak – Independent Non-Executive Director (appointed 1 July 2018)
Ms Sawczak was appointed to the Company Board on 1 July 2018.
Ms Sawczak is the National CEO of the Australia China Business Council.
Ms Sawczak has over 25 years’ experience in international commercial law. Ms Sawczak started her
career as a corporate lawyer at international law firms both in Australia and overseas. In Australia,
Ms Sawczak worked in the China practice of MinterEllison and then moved to Moscow and
30
Kazakhstan to work for Clifford Chance acting for US and European clients investing in the
privatisation of former Soviet industries. After returning to Australia, Ms Sawczak worked as in-
house counsel with Alcoa and Telstra and then moved into senior management roles at Australia
Post and ANZ Bank.
Ms Sawczak is a graduate of the Australian Institute of Company Directors and holds a BA/LLB
from Monash University and a Grad.DipArts (Chinese Language) First Class Honours from the
University of Melbourne.
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.
Retired Directors
Dr Hagen Stehr AO – Non-Executive Director (retired 30 June 2018)
Dr Stehr was a founding Director at incorporation in September 2000 and retired on 30 June 2018.
Dr Stehr was Chairman from September 2000 to December 2009. Following his retirement from the
Board, Dr Stehr has been formally designated the title Founder Emeritus.
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;
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | DIRECTORS’ REPORT
9
Kazakhstan to work for Clifford Chance acting for US and European clients investing in the
privatisation of former Soviet industries. After returning to Australia, Ms Sawczak worked as in-
house counsel with Alcoa and Telstra and then moved into senior management roles at Australia
Post and ANZ Bank.
Ms Sawczak is a graduate of the Australian Institute of Company Directors and holds a BA/LLB
from Monash University and a Grad.DipArts (Chinese Language) First Class Honours from the
University of Melbourne.
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.
Retired Directors
Dr Hagen Stehr AO – Non-Executive Director (retired 30 June 2018)
Dr Stehr was a founding Director at incorporation in September 2000 and retired on 30 June 2018.
Dr Stehr was Chairman from September 2000 to December 2009. Following his retirement from the
Board, Dr Stehr has been formally designated the title Founder Emeritus.
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;
31
Clean Seas Seafood Limited | DIRECTORS’ REPORT
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
10
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
11
•
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 Paul Steere – Independent Non-Executive Director (retired 30 June 2018)
Mr Steere was appointed to the Company Board on 20 May 2010, was Chairman from 22 May 2012
to 10 May 2017 and then Non-Executive Director until his retirement on 30 June 2018. He was also
a member of the Audit and Risk Committee until 30 June 2018.
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;
• Deputy Chair of the Nelson Marlborough Institute of Technology; and
•
Chair 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 and a resident of Nelson, New
Zealand.
Mr Paul Robinson – Non-Executive Alternate Director (retired 30 June 2018)
Mr Robinson was appointed Alternate Director for Dr Hagen Stehr in December 2005 and retired on
30 June 2018. He was also a consultant to the Audit and Risk Committee until 30 June 2018.
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.
32
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
(2)
Nominations Committee
Audit and Risk Committee
Remuneration and
Director’s name
A
B
A
B
A
B
9
9
9
9
9
9
9
9
9
7
9
9
4
4
4
-
-
-
4
4
4
1
3
4
8
-
8
-
8
-
8
1
8
1
7
4
(1) Paul Robinson attended 8 Board meetings, 3 ARC meetings and 1 Remuneration and Nominations Committee
meeting by invitation as Alternate Director for Hagen Stehr.
(2) Audit and Risk Committee (ARC) was previously named the Finance, Audit and Risk Management (FARM)
Terry O’Brien
Paul Steere
Nick Burrows
Hagen Stehr (1)
Marcus Stehr
David Head
Committee.
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 23,451,185 share rights during the financial year as part of the FY18 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.
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
c
b Details of remuneration
Service agreements
d Bonuses included in remuneration; and
e Other information.
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | DIRECTORS’ REPORT
11
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
Audit and Risk Committee
(2)
Remuneration and
Nominations Committee
Director’s name
A
B
A
B
A
B
Terry O’Brien
Paul Steere
Nick Burrows
Hagen Stehr (1)
Marcus Stehr
David Head
9
9
9
9
9
9
9
9
9
7
9
9
4
4
4
-
-
-
4
4
4
1
3
4
8
-
8
-
8
-
8
1
8
1
7
4
(1) Paul Robinson attended 8 Board meetings, 3 ARC meetings and 1 Remuneration and Nominations Committee
meeting by invitation as Alternate Director for Hagen Stehr.
(2) Audit and Risk Committee (ARC) was previously named the Finance, Audit and Risk Management (FARM)
Committee.
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 23,451,185 share rights during the financial year as part of the FY18 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.
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.
33
Clean Seas Seafood Limited | DIRECTORS’ REPORT
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
12
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
13
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 FY18 Guerdon Associates Pty
Ltd provided advice.
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. No such advice was taken during the year.
Non-Executive Directors do not receive any shares, options or other securities in addition to their
remuneration and are not eligible to participate in any Company share plans or any other incentive
plans that may be in operation. They do not receive any retirement benefits other than compulsory
superannuation where applicable.
The aggregate remuneration paid to all the Non-Executive Directors (inclusive of statutory
superannuation) may not exceed the current “fee pool” limit of $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 is taken into account in determining the remuneration paid to Executive Directors as
part of their normal employment conditions.
Annual Directors’ fees for FY18 were set at $120,000 for the Chairman of the Board and $60,000 for
all other Non-Executive Directors. In addition, annual Committee fees are paid at $7,500 for a
Committee Chairman and $5,000 for other Committee members.
Senior Executive Remuneration
The remuneration structure adopted by the Group for FY18 consists of the following components:
•
•
fixed remuneration being annual salary and benefits;
short term incentives, being cash bonuses; and
34
•
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 profit after tax (NPAT). 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 FY18 are summarised as
follows:
• Managing Director and CEO: NPAT in FY18, capital raise outcome, farm gate price, cash flow,
key appointments and EU accreditation; and
•
CFO and Company Secretary: NPAT in FY18, capital raise outcome 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 2017 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.
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 2017
was passed on a show of hands at the Company’s 2017 Annual General Meeting, with 89.5% of
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | DIRECTORS’ REPORT
13
•
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 profit after tax (NPAT). 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 FY18 are summarised as
follows:
• Managing Director and CEO: NPAT in FY18, capital raise outcome, farm gate price, cash flow,
•
key appointments and EU accreditation; and
CFO and Company Secretary: NPAT in FY18, capital raise outcome 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 2017 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.
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 2017
was passed on a show of hands at the Company’s 2017 Annual General Meeting, with 89.5% of
35
Clean Seas Seafood Limited | DIRECTORS’ REPORT
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
14
directed proxy votes being for this resolution. 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 five financial
years:
2018
2017
2016
2015
2014(*)
2013(*)
(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
Item
Basic EPS (cents)
Profit / (loss) before tax ($’000)
Profit / (loss) after tax ($’000)
0.22
3,380
3,380
0.02
202
202
Net Assets ($’000)
71,769
51,553
Share price at 30 June (cents)
5.0
4.6
(*) Restated to reflect change in R&D tax incentive refund accounting
36
Clean Seas Seafood Limited | DIRECTORS’ REPORT
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37
Clean Seas Seafood Limited | DIRECTORS’ REPORT
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
17
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38
d Bonuses included in remuneration
Details of the short-term incentive cash bonuses awarded as remuneration to each Key Management
Personnel for FY18, 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 FY18 and will be paid in FY19.
Included in
Percentage vested
Percentage forfeited
remuneration ($)
during the year
during the year
155,905
61,210
93.2%
65.0%
6.8%
35.0%
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 2018 reporting period held by each of
the Group’s Key Management Personnel, including their related parties, is set out below:
Year ended 30 June 2018 – Ordinary Shares’000
Balance at start
of year
Granted as
remuneration
Received on
exercise
Other
changes
Held at the end
of
reporting period
Personnel
T O’Brien (1)(2)
P Steere (2)
H Stehr (1)(2)
N Burrows (2)
M Stehr (2)
P Robinson (1)(2)
D Head (1)(2)
W Materne
Totals
2,000
905
106,040
879
1,178
2,198
8,806
-
122,006
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000
90
11,008
88
118
602
1,321
-
14,227
3,000
995
117,048
967
1,296
2,800
10,127
-
136,233
(1) Changes are on market purchases
(2) Changes arise from participation in Renounceable 1:10 Entitlement Issue
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:
Year ended 30 June 2018 – Share Rights’000
Personnel
D Head
W Materne
Totals
Balance at start
of year
Granted as
remuneration
Exercised
Lapsed
Held at the end of
reporting period
16,232
2,615
18,847
13,034
2,149
15,183
-
-
-
-
-
-
29,266
4,764
34,030
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
6
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
C
l
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | DIRECTORS’ REPORT
17
d Bonuses included in remuneration
Details of the short-term incentive cash bonuses awarded as remuneration to each Key Management
Personnel for FY18, 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 FY18 and will be paid in FY19.
Other Key Management Personnel
David Head
Wayne Materne
e Other information
Included in
remuneration ($)
Percentage vested
during the year
Percentage forfeited
during the year
155,905
61,210
93.2%
65.0%
6.8%
35.0%
Shares held by Key Management Personnel
The number of ordinary shares in the Company during the 2018 reporting period held by each of
the Group’s Key Management Personnel, including their related parties, is set out below:
Year ended 30 June 2018 – Ordinary Shares’000
Personnel
T O’Brien (1)(2)
P Steere (2)
H Stehr (1)(2)
N Burrows (2)
M Stehr (2)
P Robinson (1)(2)
D Head (1)(2)
W Materne
Totals
Balance at start
of year
Granted as
remuneration
Received on
exercise
Other
changes
Held at the end
of
reporting period
2,000
905
106,040
879
1,178
2,198
8,806
-
122,006
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000
90
11,008
88
118
602
1,321
-
14,227
3,000
995
117,048
967
1,296
2,800
10,127
-
136,233
(1) Changes are on market purchases
(2) Changes arise from participation in Renounceable 1:10 Entitlement Issue
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:
Year ended 30 June 2018 – Share Rights’000
Personnel
D Head
W Materne
Totals
Balance at start
of year
Granted as
remuneration
Exercised
Lapsed
Held at the end of
reporting period
16,232
2,615
18,847
13,034
2,149
15,183
-
-
-
-
-
-
29,266
4,764
34,030
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
39
Clean Seas Seafood Limited | DIRECTORS’ REPORT
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
18
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
19
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 7.1% of issued shares at 30 June 2018 (2017: 7.7%) and it
is associated with Stehr Group Pty Ltd, H & A Stehr Superannuation Fund 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 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
2018
$’000
2017
$’000
9
486
32
137
17
350
19
70
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
Current receivables
• Australian Tuna Fisheries Pty Ltd
End of audited Remuneration Report.
2018
$’000
2017
$’000
21
-
18
17
40
7
9
17
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.
40
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.
During the year, Grant Thornton, the Company’s auditors, performed certain other services in
Non-audit services
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 Audit and Risk Committee, is satisfied
that the provision of those non-audit services during the year is compatible with, and did not
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | DIRECTORS’ REPORT
19
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.
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 Audit and Risk Committee, is satisfied
that the provision of those non-audit services during the year is compatible with, and did not
41
Clean Seas Seafood Limited | DIRECTORS’ REPORT
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
20
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 Audit and Risk 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 24 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 21 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 2018
42
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
Auditor’s Independence Declaration
To the Directors of Clean Seas Seafood Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor
for the audit of Clean Seas Seafood Limited for the year ended 30 June 2018, I declare that, to the
best of my knowledge and belief, there have been:
a
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b
no contraventions of any applicable code of professional conduct in relation to the audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
J L Humphrey
Partner – Audit & Assurance
Adelaide, 31 August 2018
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.
Clean Seas Seafood Limited | AUDITORS INDEPENDENCE DECLARATION
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
Auditor’s Independence Declaration
To the Directors of Clean Seas Seafood Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor
for the audit of Clean Seas Seafood Limited for the year ended 30 June 2018, I declare that, to the
best of my knowledge and belief, there have been:
a
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b
no contraventions of any applicable code of professional conduct in relation to the audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
J L Humphrey
Partner – Audit & Assurance
Adelaide, 31 August 2018
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.
43
Clean Seas Seafood Limited | CORPORATE GOVERNANCE STATEMENT
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
22
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
23
Corporate Governance Statement
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
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 2018 is dated
as at 30 June 2018 and was approved by the Board on 31 August 2018. The Corporate
Governance Statement is available on Clean Seas’ website at www.cleanseas.com.au/investors/
corporate-governance.
For the year ended 30 June 2018
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
Profit before finance items and tax
Other expenses
Finance costs
Finance income
Profit before tax
Income tax benefit / (expense)
Profit for the year from continuing operations
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Earnings per share from continuing operations:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Notes
6
13
20.1
14
7
7
8
2018
$’000
41,650
86
18,183
(24,210)
(10,218)
(10,959)
(5,977)
-
-
-
(2,539)
(2,625)
3,391
(75)
64
3,380
3,380
3,380
2017
$’000
35,397
-
9,941
(19,529)
(7,181)
(8,999)
(3,031)
(1,343)
(1,997)
(2,956)
302
(112)
12
202
-
-
202
202
22.1
22.1
0.22
0.21
0.02
0.02
Note: This statement should be read in conjunction with the notes to the financial statements.
44
Clean Seas Seafood Limited | CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
23
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 30 June 2018
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 before finance items and tax
Finance costs
Finance income
Profit before tax
Income tax benefit / (expense)
Profit for the year from continuing operations
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Earnings per share from continuing operations:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Notes
6
13
20.1
14
7
7
8
2018
$’000
41,650
86
18,183
(24,210)
(10,218)
(10,959)
(5,977)
-
(2,539)
(2,625)
3,391
(75)
64
3,380
-
3,380
-
3,380
2017
$’000
35,397
-
9,941
(19,529)
(7,181)
(8,999)
(3,031)
(1,343)
(1,997)
(2,956)
302
(112)
12
202
-
202
-
202
22.1
22.1
0.22
0.21
0.02
0.02
Note: This statement should be read in conjunction with the notes to the financial statements.
45
Clean Seas Seafood Limited | CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
24
Consolidated Statement of Financial Position
As at 30 June 2018
Assets
Current
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Biological assets
Current assets
Non-current
Property, plant and equipment
Biological assets
Intangible assets
Non-current assets
TOTAL ASSETS
Liabilities
Current
Trade and other payables
Borrowings
Provisions
Current liabilities
Non-current
Borrowings
Provisions
Non-current liabilities
TOTAL LIABILITIES
NET ASSETS
Notes
2018
$’000
2017
$’000
9
10
12
13
14
15
16
17
18
19
18
19
5,534
5,133
5,484
581
45,229
61,961
16,500
244
2,957
19,701
81,662
6,504
622
862
7,988
1,727
178
1,905
9,893
71,769
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
Equity
Equity attributable to owners of the Parent:
•
•
•
share capital
share rights reserve
accumulated losses
TOTAL EQUITY
21
21
182,345
661
165,998
172
(111,237)
(114,617)
71,769
51,553
Note: This statement should be read in conjunction with the notes to the financial statements.
46
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
25
Consolidated Statement of Changes in Equity
For the year ended 30 June 2018
Balance at 1 July 2016
Profit for the year
Share purchase plan and placement
Share rights reserve movement
Balance at 30 June 2017
Profit for the year
Share placement and renounceable entitlement
Share rights reserve movement
Balance at 30 June 2018
Notes
21.1
21.2
21.1
21.2
Share
capital
$’000
157,736
-
8,262
-
165,998
-
16,347
-
182,345
Share rights
reserve
$’000
-
-
-
172
172
-
-
489
661
Accumulated
Losses
$’000
(114,819)
202
-
-
(114,617)
3,380
-
-
(111,237)
Total
equity
$’000
42,917
202
8,262
172
51,553
3,380
16,347
489
71,769
Note: This statement should be read in conjunction with the notes to the financial statements.
47
Clean Seas Seafood Limited | CONSOLIDATED STATEMENT OF CASH FLOWS
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
26
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
27
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial
Statements
For the year ended 30 June 2018
Operating activities
Receipts from customers
Payments to suppliers excluding feed
Payments for feed
Payments to employees
Government grants received
Net cash used in operating activities
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
Note: This statement should be read in conjunction with the notes to the financial statements.
Notes
2018
$’000
2017
$’000
40,787
(22,172)
(17,141)
(8,318)
29
(6,815)
(4,917)
63
(4,854)
17,656
(1,309)
1,220
(818)
(70)
16,679
5,010
524
5,534
36,130
(19,657)
(13,333)
(6,464)
-
(3,324)
(2,453)
14
(2,439)
8,970
(708)
1,648
(4,138)
(83)
5,689
(74)
598
524
23
9
48
•
•
2
statements.
Australia.
1
Nature of operations
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
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
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
The consolidated financial statements for the year ended 30 June 2018 were approved and
authorised for issue by the Board of Directors on 31 August 2018.
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 2017. Information on the more significant standard(s) is presented
below.
AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred
Tax Assets for Unrealised Losses
AASB 2016-1 amends AASB 112 Income Taxes to clarify how to account for deferred tax assets
related to debt instruments measured at fair value, particularly where changes in the market interest
rate decrease the fair value of a debt instrument below cost.
AASB 2016-1 is applicable to annual reporting periods beginning on or after 1 January 2017.
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
27
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 2018 were approved and
authorised for issue by the Board of Directors on 31 August 2018.
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 2017. Information on the more significant standard(s) is presented
below.
AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred
Tax Assets for Unrealised Losses
AASB 2016-1 amends AASB 112 Income Taxes to clarify how to account for deferred tax assets
related to debt instruments measured at fair value, particularly where changes in the market interest
rate decrease the fair value of a debt instrument below cost.
AASB 2016-1 is applicable to annual reporting periods beginning on or after 1 January 2017.
49
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
28
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
29
AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative:
Amendments to AASB 107
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.
AASB 2016-2 is applicable to annual reporting periods beginning on or after 1 January 2017.
The adoption of this standard 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 2018, but will
be applicable to the Group in future reporting periods, are detailed below. Apart from these
standards, other accounting standards that will be applicable in future periods have been reviewed,
however they have been considered to be insignificant to the Group.
At the date of authorisation of these financial statements, certain new standards, amendments and
interpretations to existing standards have been published but are not yet effective, and have not
been adopted early by the Group. Management anticipates that all of the relevant pronouncements
will be adopted in the Group's accounting policies for the first period beginning after the effective
date of the pronouncement. Information on new standards, amendments and interpretations that
are expected to be relevant to the group’s financial statements is provided below.
AASB 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
50
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 adoption of AASB 9 is not expected to have a material impact on the Group.
AASB 15 Revenue from Contracts with Customers (1 January 2018)
AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15 (1
AASB 2015-8 Amendments to Australian Accounting Standards – Effective Date of AASB 15
January 2018)
(1 January 2017)
AASB 15:
Interpretations:
time
• replaces AASB 118 Revenue, AASB 111 Construction Contracts and some revenue-related
− establishes a new revenue recognition model
− changes the basis for deciding whether revenue is to be recognised over time or at a point in
− provides new and more detailed guidance on specific topics (e.g. multiple element
arrangements, variable pricing, rights of return, warranties and licensing)
− expands and improves disclosures about revenue
The Group has undertaken a detailed assessment of the impact of AASB 15 and based on the
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
• provides new guidance on the application of the definition of lease and on sale and lease back
value asset leases
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:
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
29
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 adoption of AASB 9 is not expected to have a material impact on the Group.
AASB 15 Revenue from Contracts with Customers (1 January 2018)
AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15 (1
January 2018)
AASB 2015-8 Amendments to Australian Accounting Standards – Effective Date of AASB 15
(1 January 2017)
AASB 15:
• replaces AASB 118 Revenue, AASB 111 Construction Contracts and some revenue-related
Interpretations:
− establishes a new revenue recognition model
− changes the basis for deciding whether revenue is to be recognised over time or at a point in
time
− provides new and more detailed guidance on specific topics (e.g. multiple element
arrangements, variable pricing, rights of return, warranties and licensing)
− expands and improves disclosures about revenue
The Group has undertaken a detailed assessment of the impact of AASB 15 and based on the
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:
51
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
30
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
31
• there will be a significant increase in lease assets and financial liabilities recognised on the balance
4.4 Segment reporting
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; and
• 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.
Summary of accounting policies
4
4.1 Overall considerations
The consolidated financial statements have been prepared using the significant accounting policies
and measurement bases summarised below.
4.2 Basis of consolidation
The Group financial statements consolidate those of the Parent Company and its subsidiary as of 30
June 2018. 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.
4.3 Foreign currency translation
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.
52
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
(“SBT”). 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 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 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
4.5 Revenue
discounts.
Sale of goods
rewards of ownership.
Rendering of services
customers.
Interest income
Sale of goods is recognised when the Group has transferred to the buyer the significant risks and
Revenue from the rendering of a service is recognised upon the delivery of the service to the
Interest income and expenses are reported on an accrual basis using the effective interest method.
Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of
4.6 Operating expenses
their origin.
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31
4.4 Segment reporting
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
(“SBT”). 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 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.
4.5 Revenue
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.
4.6 Operating expenses
Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of
their origin.
53
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
32
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
33
4.7 Borrowing costs
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 7).
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.
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 4.11.
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.
4.9 Property, plant and equipment
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%
54
• 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.
4.10 Leased assets
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.
4.11 Impairment testing of other intangible assets and property, plant and
equipment
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
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.
4.10 Leased assets
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.
4.11 Impairment testing of other intangible assets and property, plant and
equipment
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
55
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
34
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
35
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.
4.12 Financial instruments
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.
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.
56
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.
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.
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
35
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.
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.
57
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
36
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
37
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.
4.13 Inventories
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.
4.14 Income taxes
Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not
recognised in other comprehensive income or directly in equity.
Current income tax assets and/or liabilities comprise those obligations to, or claims from, the
Australian Taxation Office (‘ATO’) and other fiscal authorities relating to the current or prior
reporting periods that are unpaid at the reporting date. Current tax is payable on taxable profit,
which differs from profit or loss in the financial statements. Calculation of current tax is based on
tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting
period.
Deferred income taxes are calculated using the liability method on temporary differences between
the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not
provided on the initial recognition of goodwill or on the initial recognition of an asset or liability
unless the related transaction is a business combination or affects tax or accounting profit. Deferred
tax on temporary differences associated with investments in subsidiaries and joint ventures is not
provided if reversal of these temporary differences can be controlled by the Group and it is
probable that reversal will not occur in the foreseeable future.
Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to
apply to their respective period of realisation, provided they are enacted or substantively enacted by
the end of the reporting period.
Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised
against future taxable income, based on the Group’s forecast of future operating results which is
adjusted for significant non-taxable income and expenses and specific limits to the use of any
unused tax loss or credit. Deferred tax liabilities are always provided for in full. The Group does
not currently recognise deferred tax assets and liabilities due to uncertainty regarding the utilisation
of prior year losses in future years.
Deferred tax assets and liabilities are offset only when the Group has a right and intention to set off
current tax assets and liabilities from the same taxation authority.
58
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.
4.15 Cash and cash equivalents
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.
4.16 Equity and reserves
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 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
Retained earnings / accumulated losses include all current and prior period retained profits and
All transactions with owners of the Parent are recorded separately within equity.
on the issue of shares.
losses.
4.17 Employee benefits
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
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
37
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.
4.15 Cash and cash equivalents
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.
4.16 Equity and reserves
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 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.
4.17 Employee benefits
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
59
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
38
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
39
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.
4.18 Share-based employee remuneration
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).
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.
60
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.
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.
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
39
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.
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.
61
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
40
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
41
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.
5
Operating Segments
Management currently identifies the Group’s two segments as finfish sales and tuna operations as
detailed in Note 1. 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:
Revenue
From external customers
Segment revenues
Other income
Net gain from changes in value of fish
Fish husbandry expense
Employee benefits expense
Fish processing and selling expense
Frozen Inventory COGS
Depreciation and amortisation
Other expenses
Finance costs and income
Segment operating profit / (loss)
before tax
Operations Unallocated
Finfish
Sales
2018
$’000
41,650
41,650
86
18,183
(24,210)
(10,218)
(10,959)
(5,977)
(2,509)
(2,195)
-
3,851
Tuna
2018
$’000
-
-
-
-
-
-
-
-
(30)
(430)
(460)
2018
$’000
-
-
-
-
-
-
-
-
-
-
(11)
(11)
Total
2018
$’000
41,650
41,650
86
18,183
(24,210)
(10,218)
(10,959)
(5,977)
(2,539)
(2,625)
(11)
3,380
Segment assets 2018
75,673
455
5,534
81,662
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.
4.24 Significant management judgement in applying accounting policies
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.
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 in relation to the value of accessible
carried forward losses into future years (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.
62
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
41
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 1. 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:
Revenue
From external customers
Segment revenues
Other income
Net gain from changes in value of fish
Fish husbandry expense
Employee benefits expense
Fish processing and selling expense
Frozen Inventory COGS
Depreciation and amortisation
Other expenses
Finance costs and income
Segment operating profit / (loss)
before tax
Finfish
Sales
2018
$’000
Tuna
Operations Unallocated
2018
$’000
2018
$’000
41,650
41,650
86
18,183
(24,210)
(10,218)
(10,959)
(5,977)
(2,509)
(2,195)
-
3,851
-
-
-
-
-
-
-
(30)
(430)
-
(460)
-
-
-
-
-
-
-
-
-
-
(11)
(11)
Total
2018
$’000
41,650
41,650
86
18,183
(24,210)
(10,218)
(10,959)
(5,977)
(2,539)
(2,625)
(11)
3,380
Segment assets 2018
75,673
455
5,534
81,662
63
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
42
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
43
Revenue
From external customers
Segment revenues
Other income
Net gain from changes in value of fish
Fish husbandry expense
Employee benefits expense
Fish processing and selling expense
Frozen Inventory COGS
Frozen Inventory Adjustment to NRV
Depreciation and amortisation
Other expenses
Finance costs and income
Segment operating profit / (loss)
before tax
Finfish Sales
2017
$’000
Tuna
Operations
2017
$’000
Unallocated
2017
$’000
35,397
35,397
-
9,941
(19,529)
(7,181)
(8,999)
(3,031)
(1,343)
(1,980)
(2,609)
-
666
-
-
-
-
-
-
-
-
-
(17)
(347)
-
(364)
-
-
-
-
-
-
-
-
-
-
-
(100)
(100)
Total
2017
$’000
35,397
35,397
-
9,941
(19,529)
(7,181)
(8,999)
(3,031)
(1,343)
(1,997)
(2,956)
(100)
202
Segment assets 2017
56,690
442
524
57,656
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
2018
$’000
Non-current assets
2018
$’000
Revenue
2017
$’000
Non-current assets
2017
$’000
20,970
20,680
41,650
19,701
-
19,701
19,916
15,481
35,397
17,256
-
17,256
During 2018 $5.7 million or 14% (2017: $4.85 million or 14%) 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
Total
64
2018
$’000
33,619
8,031
-
41,650
2017
$’000
31,269
4,126
2
35,397
2018
$’000
64
64
2018
$’000
64
11
75
2018
$’000
3,380
30%
1,014
(1,014)
-
-
-
-
-
-
2017
$’000
12
12
2017
$’000
32
80
112
2017
$’000
202
30%
61
(61)
-
-
-
-
-
-
7
Finance income and finance costs
Finance income for the reporting periods consist of the following:
Interest income from cash and cash equivalents
Total
Finance costs for the reporting periods consist of the following:
Interest expenses for borrowings at amortised cost:
•
finance leases
• other borrowings
Total
8
Income tax expense
The major components of tax expense and the reconciliation of the expected tax expense based on
the domestic effective tax rate of 30% (2017: 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:
• Deferred tax expense
Tax expense / (income)
• R&D tax incentive refund – 30% corporate tax rate component
Due to uncertainty regarding the utilisation of prior year tax losses in future years, the tax losses are
not recognised as an asset. At 30 June 2018 carried forward tax losses are estimated to be $68.3
million (2017: $71.7 million) and non-refundable R&D tax offsets are estimated to be $7.4 million
(2017: $7.4 million).
9
Cash and cash equivalents
Cash and cash equivalents include the following components:
Cash at bank and in hand
Total
2018
$’000
5,534
5,534
2017
$’000
524
524
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
43
Finance income and finance costs
7
Finance income for the reporting periods consist of the following:
Interest income from cash and cash equivalents
Total
Finance costs for the reporting periods consist of the following:
Interest expenses for borrowings at amortised cost:
•
finance leases
• other borrowings
Total
2018
$’000
64
64
2018
$’000
64
11
75
2017
$’000
12
12
2017
$’000
32
80
112
Income tax expense
8
The major components of tax expense and the reconciliation of the expected tax expense based on
the domestic effective tax rate of 30% (2017: 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)
2018
$’000
3,380
30%
1,014
-
(1,014)
-
-
-
-
-
2017
$’000
202
30%
61
-
(61)
-
-
-
-
-
Due to uncertainty regarding the utilisation of prior year tax losses in future years, the tax losses are
not recognised as an asset. At 30 June 2018 carried forward tax losses are estimated to be $68.3
million (2017: $71.7 million) and non-refundable R&D tax offsets are estimated to be $7.4 million
(2017: $7.4 million).
Cash and cash equivalents
9
Cash and cash equivalents include the following components:
Cash at bank and in hand
Total
2018
$’000
5,534
5,534
2017
$’000
524
524
65
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
44
Trade and other receivables
10
Trade and other receivables consist of the following:
Trade receivables, gross
Allowance for credit losses
Trade receivables
Other receivables
Total
2018
$’000
4,939
(50)
4,889
244
5,133
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 for credit losses
Balance at 1 July
Amounts written off / (uncollectable)
Additional provision recognised
Impairment loss reversed
Balance 30 June
2018
$’000
50
(24)
24
-
50
2017
$’000
20
(36)
66
-
50
An analysis of unimpaired trade receivables that are past due is given in Note 30.3.
Financial assets and liabilities
11
11.1 Categories of financial assets and liabilities
Note 4.12 provides a description of each category of financial assets and financial liabilities and the
related accounting policies.
66
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
47
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3
11.2 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 2018 (2017: nil).
During FY18 no gains or losses were recognised in other comprehensive income or reclassified
from equity into profit or loss within revenue (2017: nil).
11.3 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.
12
Inventories
Inventories consist of the following:
Frozen fish products
Fish feed
Other
Total
13
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
2018
$’000
2,518
2,839
127
5,484
2018
$’000
32,105
43,915
(25,732)
18,183
(5,059)
45,229
2017
$’000
2,175
1,248
98
3,521
2017
$’000
25,036
33,953
(24,012)
9,941
(2,872)
32,105
The closing biomass comprised 3,606 tonnes at an average weight of 2.1kg. This comprised 2,133
tonnes of 2017 year class (YC17) at an average weight of 3.9kg and 1,473 tonnes of YC18 at an
average weight of 1.5 kg (2017: 2,699 tonnes at 2.2kg comprising 98 tonnes of YC15 at 6.3kg, 1,504
tonne of YC16 at 4.3 kg and 1,097 tonnes of YC17 at 1.2kg). During FY18 harvests totalled 2,454
tonnes (FY17: 2,294 tonnes).
There is inherent uncertainty in the biomass estimate and resultant live fish valuation. This is
common to all such valuations and best practice methodology is used to facilitate reliable estimates.
Biomass is estimated using a model that simulates fish growth. Actual growth will invariably differ
to some extent, which is monitored and stock records adjusted via harvest counts and weights,
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
47
11.2 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 2018 (2017: nil).
During FY18 no gains or losses were recognised in other comprehensive income or reclassified
from equity into profit or loss within revenue (2017: nil).
11.3 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
12
Inventories consist of the following:
Frozen fish products
Fish feed
Other
Total
13
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
2018
$’000
2,518
2,839
127
5,484
2018
$’000
32,105
43,915
(25,732)
18,183
(5,059)
45,229
2017
$’000
2,175
1,248
98
3,521
2017
$’000
25,036
33,953
(24,012)
9,941
(2,872)
32,105
The closing biomass comprised 3,606 tonnes at an average weight of 2.1kg. This comprised 2,133
tonnes of 2017 year class (YC17) at an average weight of 3.9kg and 1,473 tonnes of YC18 at an
average weight of 1.5 kg (2017: 2,699 tonnes at 2.2kg comprising 98 tonnes of YC15 at 6.3kg, 1,504
tonne of YC16 at 4.3 kg and 1,097 tonnes of YC17 at 1.2kg). During FY18 harvests totalled 2,454
tonnes (FY17: 2,294 tonnes).
There is inherent uncertainty in the biomass estimate and resultant live fish valuation. This is
common to all such valuations and best practice methodology is used to facilitate reliable estimates.
Biomass is estimated using a model that simulates fish growth. Actual growth will invariably differ
to some extent, which is monitored and stock records adjusted via harvest counts and weights,
69
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
48
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
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.
Property, plant and equipment
14
Details of the Group’s property, plant and equipment and their carrying amount are as follows:
15
Biological assets – non-current
Finfish Broodstock
Carrying amount at beginning of period
Purchases
Sales
Carrying amount at end of period
49
2017
$’000
244
-
-
244
2018
$’000
244
-
-
244
Gross carrying amount
Balance 1 July 2017
Additions
Transfers & other movements
Disposals
Balance 30 June 2018
Depreciation and impairment
Balance 1 July 2017
Disposals
Transfers & other movements
Depreciation
Balance 30 June 2018
Carrying amount 30 June 2018
Gross carrying amount
Balance 1 July 2016
Additions
Transfers & other movements
Disposals
Balance 30 June 2017
Depreciation and impairment
Balance 1 July 2016
Disposals
Transfers & other movements
Depreciation
Balance 30 June 2017
Carrying amount 30 June 2017
Land &
Buildings
$’000
Plant &
Equipment
$’000
3,913
115
-
-
28,607
4,939
-
-
Total
$’000
32,520
5,054
-
-
4,028
33,546
37,574
(1,313)
(17,222)
(18,535)
-
-
(90)
(1,403)
2,625
-
-
(2,449)
(19,671)
13,875
Land &
Buildings
$’000
Plant &
Equipment
$’000
3,913
-
-
-
25,649
2,979
-
(21)
-
-
(2,539)
(21,074)
16,500
Total
$’000
29,562
2,979
-
(21)
3,913
28,607
32,520
(1,227)
(15,332)
(16,559)
-
-
(86)
(1,313)
2,600
21
-
(1,911)
(17,222)
11,385
21
-
(1,997)
(18,535)
13,985
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 18).
70
16
Intangible assets
Details of the Group’s intangible assets and their carrying amounts are as follows:
Net carrying amount
Balance at 1 July 2017
Amortisation and impairment
Net carrying amount 30 June 2018
Balance at 1 July 2016
Amortisation and impairment
Net carrying amount 30 June 2017
PIRSA
Leases
and
Licences
$’000
Southern
Bluefin
Tuna
Quota
$’000
2,827
2,827
2,827
2,827
-
-
200
(70)
130
200
-
200
Total
$’000
3,027
(70)
2,957
3,027
-
3,027
At each reporting date the Directors review intangible assets for impairment. Following an
assessment of the market value for SBT Quota an impairment of $70,000 was recognised in the
profit and loss in FY18 (2017: nil).
17
Trade and other payables
Trade and other payables consist of the following:
Current:
•
•
trade payables
related party payables
• other payables
Total trade and other payables
2018
$’000
4,243
40
2,221
6,504
2017
$’000
2,039
100
1,944
4,083
All amounts are short-term. The carrying values of trade payables and other payables are considered
to be a reasonable approximation of fair value.
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
49
15
Biological assets – non-current
Finfish Broodstock
Carrying amount at beginning of period
Purchases
Sales
Carrying amount at end of period
2018
$’000
244
-
-
244
2017
$’000
244
-
-
244
Intangible assets
16
Details of the Group’s intangible assets and their carrying amounts are as follows:
Net carrying amount
Balance at 1 July 2017
Amortisation and impairment
Net carrying amount 30 June 2018
Balance at 1 July 2016
Amortisation and impairment
Net carrying amount 30 June 2017
PIRSA
Leases
and
Licences
$’000
Southern
Bluefin
Tuna
Quota
$’000
2,827
-
2,827
2,827
-
2,827
200
(70)
130
200
-
200
Total
$’000
3,027
(70)
2,957
3,027
-
3,027
At each reporting date the Directors review intangible assets for impairment. Following an
assessment of the market value for SBT Quota an impairment of $70,000 was recognised in the
profit and loss in FY18 (2017: nil).
Trade and other payables
17
Trade and other payables consist of the following:
Current:
•
•
trade payables
related party payables
• other payables
Total trade and other payables
2018
$’000
4,243
40
2,221
6,504
2017
$’000
2,039
100
1,944
4,083
All amounts are short-term. The carrying values of trade payables and other payables are considered
to be a reasonable approximation of fair value.
71
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
50
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
51
Borrowings
18
Borrowings consist of the following:
Current:
• Finance lease (note 29)
• Other – insurance premium funding
Total borrowings – current
Non-current:
• Finance lease (note 29)
Total borrowings – non-current
2018
$’000
475
147
622
1,727
1,727
2017
$’000
263
67
330
832
832
The Group has a secured $10.0m 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 2018 and 30 June 2017. This facility was undrawn at 30
June 2018.
The Group also has a $6.0m secured Lease Finance Facility with Commonwealth Bank of Australia,
of which $2.1m was utilised at 30 June 2018.
Provisions
19
The carrying amounts and movements in the provisions account are as follows:
Annual Leave
$’000
Long Service
Leave
$’000
Carrying amount 1 July 2017
Additional provisions
Amount utilised
Carrying amount 30 June 2018
Current employee benefit provision
Non-current employee benefit provision
509
364
(239)
634
634
-
20
Employee remuneration
20.1 Employee benefits expense
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
72
Total
$’000
858
424
(242)
1,040
862
178
2017
$’000
5,301
457
544
286
172
421
349
60
(3)
406
228
178
2018
$’000
7,354
632
639
315
489
789
10,218
7,181
Renounceable 1:10 entitlement issue: 148,971,013 shares issued on 17 November 2017, to raise
Top up placement: 28,633,063 shares issued on 21 November 2017, to raise $1.72 million before
20.2 Share-based employee remuneration
The Company granted a total of 23,451,185 FY18 LTI Share Rights to senior executives during the
year (2017: 18,847,188). 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 FY18 LTI Share Rights were valued by the Directors on a basis consistent with the FY17 LTI
Share Rights, which were independently valued by Value Adviser Associates Pty Ltd on 16 August
2017. One-third of the valuation at the end of the first year is expensed in the first year. Two-thirds
of the valuation in the second year, less the amount expensed in the first year, is expensed in the
second year. The final valuation at the end of the third year, less amounts expensed in the previous
two years, is expensed or written back in the third year. Each year is 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.
For the FY18 LTI Share Rights this includes the Clean Seas share price on 1 July 2017 being 4.6
cents and on 27 November 2017 (AGM date) being 6.7 cents with no adjustment being required for
future dividends, achievement of one of the three performance targets in FY18 and assessment of
the probability of achievement of the second and third (NPAT) performance targets in FY19 and
FY20.
21
Equity
21.1 Share capital
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.
Shares issued and fully paid:
• at beginning of the year
• share issue
Total contributed equity at 30 June
1,667,314,190
1,373,043,448
2018
Shares
2017
Shares
1,373,043,448
1,105,282,736
294,270,742
267,760,712
2018
$’000
165,998
16,347
182,345
2017
$’000
157,736
8,262
165,998
All shares issued during the year were issued at 6.0 cents per share. The issues were;
Institutional placement: 116,666,666 shares issued on 26 October 2017, to raise $7.0 million
•
•
•
before expenses
$8.94 million before expenses
expenses
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
51
20.2 Share-based employee remuneration
The Company granted a total of 23,451,185 FY18 LTI Share Rights to senior executives during the
year (2017: 18,847,188). 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 FY18 LTI Share Rights were valued by the Directors on a basis consistent with the FY17 LTI
Share Rights, which were independently valued by Value Adviser Associates Pty Ltd on 16 August
2017. One-third of the valuation at the end of the first year is expensed in the first year. Two-thirds
of the valuation in the second year, less the amount expensed in the first year, is expensed in the
second year. The final valuation at the end of the third year, less amounts expensed in the previous
two years, is expensed or written back in the third year. Each year is 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.
For the FY18 LTI Share Rights this includes the Clean Seas share price on 1 July 2017 being 4.6
cents and on 27 November 2017 (AGM date) being 6.7 cents with no adjustment being required for
future dividends, achievement of one of the three performance targets in FY18 and assessment of
the probability of achievement of the second and third (NPAT) performance targets in FY19 and
FY20.
21
Equity
21.1 Share capital
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.
Shares issued and fully paid:
• at beginning of the year
• share issue
2018
Shares
2017
Shares
1,373,043,448
1,105,282,736
294,270,742
267,760,712
Total contributed equity at 30 June
1,667,314,190
1,373,043,448
2018
$’000
165,998
16,347
182,345
2017
$’000
157,736
8,262
165,998
All shares issued during the year were issued at 6.0 cents per share. The issues were;
•
Institutional placement: 116,666,666 shares issued on 26 October 2017, to raise $7.0 million
before expenses
Renounceable 1:10 entitlement issue: 148,971,013 shares issued on 17 November 2017, to raise
$8.94 million before expenses
Top up placement: 28,633,063 shares issued on 21 November 2017, to raise $1.72 million before
expenses
•
•
73
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
52
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
21.2 Share rights reserve
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:
Share rights outstanding:
• at beginning of the year
• granted during the year
• exercised during the year
•
lapsed during the year
2018
2017
Share rights
Share rights
18,847,188
23,451,185
-
18,847,188
-
-
-
-
Total share rights at 30 June
42,298,373
18,847,188
Details of these Share Rights are provided at note 20.2.
2018
$’000
172
489
-
-
661
2017
$’000
-
172
-
-
172
Earnings per share and dividends
22
22.1 Earnings per share
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 2018 or 2017).
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
2018
‘000
2017
‘000
1,561,678
1,264,396
36,963
11,102
Weighted average number of shares used in diluted earnings per share
1,598,641
1,275,498
22.2 Dividends
Dividends Paid and Proposed
Dividends declared during the year
2018
$’000
-
2017
$’000
-
74
22.3 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
23
Reconciliation of cash flows from operating activities
Parent
2018
$’000
2017
$’000
Profit for the year
Adjustments for:
• depreciation, amortisation and impairment
• LTI share rights expense
• net interest expense included in investing and financing
•
impairment of non-current assets
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 used in operating activities
24
Auditor remuneration
Audit and review of financial statements
Other services
•
taxation compliance
• other tax services
Total other service remuneration
Total auditor’s remuneration
53
-
-
-
-
-
2017
$’000
202
1,997
172
100
-
567
(134)
(230)
(7,069)
982
124
(35)
2017
$
99,420
8,350
37,450
45,800
145,220
-
-
-
-
-
2018
$’000
3,380
2,539
489
11
70
(1,963)
(1,301)
(162)
(13,124)
2,421
182
643
2018
$
97,131
9,500
20,750
30,250
127,381
(6,815)
(3,324)
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
53
22.3 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
23
Reconciliation of cash flows from operating activities
Profit for the year
Adjustments for:
• depreciation, amortisation and impairment
• LTI share rights expense
• net interest expense included in investing and financing
•
impairment of non-current assets
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 used in operating activities
24
Auditor remuneration
Audit and review of financial statements
Other services
•
taxation compliance
• other tax services
Total other service remuneration
Total auditor’s remuneration
Parent
2018
$’000
2017
$’000
-
-
-
-
-
2018
$’000
3,380
2,539
489
11
70
(1,963)
(1,301)
(162)
(13,124)
2,421
182
643
-
-
-
-
-
2017
$’000
202
1,997
172
100
-
567
(134)
(230)
(7,069)
982
124
(35)
(6,815)
(3,324)
2018
$
97,131
9,500
20,750
30,250
127,381
2017
$
99,420
8,350
37,450
45,800
145,220
75
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
54
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
55
Related party transactions and key management personnel disclosures
25
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 7.1% of issued shares at 30 June 2018 (2017: 7.7%) and it
is associated with Stehr Group Pty Ltd, H & A Stehr Superannuation Fund 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 the sale of king fish, ice, expenses, SBT quota lease and contract
labour
• Payments for towing, contract labour, fish feed, marina and net shed rent and
electricity
Stehr Group Pty Ltd
• Payments for office rent and associated expenses
PSMMR Pty Ltd (associated with Paul Robinson – Alternate Director)
• Payments for consulting services
2018
$’000
2017
$’000
9
486
32
137
17
350
19
70
The following balances are outstanding as at the reporting date in relation to transactions with
related parties:
Capital commitments relate to items of plant and equipment and site works where funds have been
Current payables
• Australian Tuna Fisheries Pty Ltd
• Stehr Group Pty Ltd
• PSMMR Pty Ltd
Current receivables
• Australian Tuna Fisheries Pty Ltd
2018
$’000
2017
$’000
21
-
18
17
40
7
9
17
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
2018
$
2017
$
1,254,684
1,121,924
56,763
406,265
-
59,622
176,083
-
1,717,712
1,357,629
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 2018.
76
26
Contingent assets and liabilities
The litigation against Gibson’s Limited, trading as Skretting Australia, in respect of what the
Company maintains were defective feeds supplied to the Company and fed to the Company’s
Yellowtail Kingfish between December 2008 and July 2012, has progressed during FY18. The
interlocutory steps in the litigation are almost complete with both parties having completed
discovery and the exchange of initial and responding expert’s reports on liability and quantum. It is
anticipated that the matter will be listed for trial in H2 FY19. The pre-trial mediation discussed by
the parties some time ago is yet to be confirmed but is likely to be held during H1 FY19. 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.
The Group also has unrecognised carry forward tax losses. This contingent asset is discussed in
Note 8.
There are no other material contingent assets or liabilities.
27
Capital commitments
Property, plant and equipment
2018
$’000
56
2017
$’000
971
committed but the assets not yet received.
28
Interests in subsidiaries
28.1 Composition of the Group
Set out below are details of the subsidy held directly by the Group:
Name of the Subsidiary
Clean Seas Aquaculture
Growout Pty Ltd
Country of incorporation
and principal place of
business
Australia
Group proportion of
ownership interests
Principal activity
30 June 2018
30 June 2017
Growout and sale of
Yellowtail Kingfish
100%
100%
28.2 Interests in unconsolidated structured entities
The Group has no interests in unconsolidated structured entities.
29
Leases
29.1 Finance leases as lessee
The Group holds a number of motor vehicles and plant & equipment under finance lease
arrangements. The net carrying amount of these assets is $2,296k (2017: $1,238k).
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
55
26
Contingent assets and liabilities
The litigation against Gibson’s Limited, trading as Skretting Australia, in respect of what the
Company maintains were defective feeds supplied to the Company and fed to the Company’s
Yellowtail Kingfish between December 2008 and July 2012, has progressed during FY18. The
interlocutory steps in the litigation are almost complete with both parties having completed
discovery and the exchange of initial and responding expert’s reports on liability and quantum. It is
anticipated that the matter will be listed for trial in H2 FY19. The pre-trial mediation discussed by
the parties some time ago is yet to be confirmed but is likely to be held during H1 FY19. 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.
The Group also has unrecognised carry forward tax losses. This contingent asset is discussed in
Note 8.
There are no other material contingent assets or liabilities.
27
Capital commitments
Property, plant and equipment
2018
$’000
56
2017
$’000
971
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
28
28.1 Composition of the Group
Set out below are details of the subsidy held directly by the Group:
Name of the Subsidiary
Clean Seas Aquaculture
Growout Pty Ltd
Country of incorporation
and principal place of
business
Australia
Group proportion of
ownership interests
Principal activity
30 June 2018
30 June 2017
Growout and sale of
Yellowtail Kingfish
100%
100%
28.2 Interests in unconsolidated structured entities
The Group has no interests in unconsolidated structured entities.
Leases
29
29.1 Finance leases as lessee
The Group holds a number of motor vehicles and plant & equipment under finance lease
arrangements. The net carrying amount of these assets is $2,296k (2017: $1,238k).
77
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
56
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
57
The Group’s finance lease liabilities, which are secured by the related assets held under finance
leases, are classified as follows:
30
Financial instrument risk
30.1 Risk management objectives and policies
Finance lease liabilities
Current:
•
finance lease liabilities
Non-current:
•
finance lease liabilities
2018
$’000
475
1,727
2017
$’000
263
832
Future minimum finance lease payments at the end of each reporting period under review were as
follows:
30 June 2018
Lease payments
Finance charges
Net present values
30 June 2017
Lease payments
Finance charges
Net present values
Minimum lease payments due
Within 1 year
$’000
1-5 years
$’000
After 5 years
$’000
581
(106)
475
315
(52)
263
1,896
(169)
1,727
923
(91)
832
-
-
-
-
-
-
Total
$’000
2,477
(275)
2,202
1,238
(143)
1,095
29.2 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
Minimum lease payments – 30 June 2018
Minimum lease payments – 30 June 2017
255
333
482
985
-
-
Total
$’000
737
1,318
The operating lease expense in 2018 was $315k (2017: $167k).
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.
78
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 11.1. 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.
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.
30.2 Market risk analysis
investing activities.
Foreign currency sensitivity
denominated in Euro (EUR).
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
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
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 2018
•
•
•
•
financial assets
financial liabilities
Total exposure
30 June 2017
financial assets
financial liabilities
Total exposure
Short term exposure
Long term exposure
EUR
A$’000
USD
A$’000
Other
A$’000
EUR
A$’000
USD
A$’000
Other
A$’000
1,803
(614)
1,189
503
(25)
478
172
(49)
123
41
-
41
2
(105)
(103)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
57
Financial instrument risk
30
30.1 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 11.1. 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.
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.
30.2 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 2018
•
financial assets
•
financial liabilities
Total exposure
30 June 2017
•
financial assets
•
financial liabilities
Total exposure
Short term exposure
Long term exposure
EUR
A$’000
USD
A$’000
Other
A$’000
EUR
A$’000
USD
A$’000
Other
A$’000
1,803
(614)
1,189
503
(25)
478
172
(49)
123
41
-
41
2
(105)
(103)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
79
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
58
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
The following table illustrates the sensitivity of profit and equity in regards to the Group’s financial
assets and financial liabilities and the AUD / EUR exchange rate ‘all other things being equal’. It
assumes a +/- 5% change in this exchange rate for the year ended at 30 June 2018 (2017: +/- 5%).
The sensitivity analysis is based on the impact on the Group’s valuation of live fish held for sale.
Profit and Equity
Increase / (Decrease)
30 June 2018
30 June 2017
Increase 5% Decrease 5%
A$’000
(1,250)
(920)
A$’000
1,380
1,000
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.
30.3 Credit risk analysis
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
Total
2018
$’000
5,534
5,133
10,667
2017
$’000
524
3,832
4,356
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:
80
59
2017
$’000
822
50
84
66
2018
$’000
1,082
92
51
80
1,305
1,022
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
In respect of trade and other receivables, the Group is not exposed to any significant credit risk
exposure to any single counterparty or any group of counterparties having similar characteristics.
Trade receivables consist of a large number of customers in various industries and geographical
areas. Based on historical information about customer default rates management consider the credit
quality of trade receivables that are not past due or impaired to be good.
The credit risk for cash and cash equivalents is considered negligible, since the counterparties are
reputable banks with high quality external credit ratings.
30.4 Liquidity risk analysis
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 2018, the Group’s non-derivative financial liabilities have contractual maturities
(including interest payments where applicable) as summarised below:
Current
Non-current
Within 6 months
6 - 12 months
1 - 5 years
$’000
$’000
$’000
5+ years
$’000
30 June 2018
Trade and other payables
Finance lease obligations
Other borrowings
Total
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
6 - 12 months
$’000
$’000
1 - 5 years
$’000
5+ years
$’000
6,504
242
147
6,893
4,083
135
67
4,285
-
-
233
233
-
-
128
128
-
-
1,727
1,727
-
-
832
832
-
-
-
-
-
-
-
-
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
59
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
2018
$’000
1,082
92
51
80
2017
$’000
822
50
84
66
1,305
1,022
In respect of trade and other receivables, the Group is not exposed to any significant credit risk
exposure to any single counterparty or any group of counterparties having similar characteristics.
Trade receivables consist of a large number of customers in various industries and geographical
areas. Based on historical information about customer default rates management consider the credit
quality of trade receivables that are not past due or impaired to be good.
The credit risk for cash and cash equivalents is considered negligible, since the counterparties are
reputable banks with high quality external credit ratings.
30.4 Liquidity risk analysis
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 2018, 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
6 - 12 months
$’000
1 - 5 years
$’000
5+ years
$’000
30 June 2018
Trade and other payables
Finance lease obligations
Other borrowings
Total
6,504
242
147
6,893
-
233
-
233
-
1,727
-
1,727
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
30 June 2017
Trade and other payables
Finance lease obligations
Other borrowings
Total
4,083
135
67
4,285
-
128
-
128
-
832
-
832
-
-
-
-
-
-
-
-
81
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
60
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
61
33
Parent entity information
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
2018
$’000
5,591
53,824
1,749
3,531
50,293
182,345
661
(132,713)
50,293
(5,421)
-
(5,421)
2017
$’000
795
41,137
1,373
2,259
38,878
165,998
172
(127,292)
38,878
(4,182)
-
(4,182)
The Parent Entity has no capital commitments to purchase plant and equipment
(2017: $20k). Refer Note 27 for further details of the commitment.
The Parent Entity has not entered into a Deed of Cross Guarantee. Refer Note 26 in relation to
contingent assets and liabilities.
34
Post-reporting date events
date of authorisation.
No adjusting or significant non-adjusting events have occurred between the reporting date and the
The above amounts reflect the contractual undiscounted cash flows, which may differ to the
carrying values of the liabilities at the reporting date.
Fair value measurement
31
31.1 Fair value measurement of non-financial instruments
Financial assets and financial liabilities measured at fair value in the statement of financial position
are grouped into three levels of a fair value hierarchy. The three levels are defined based on the
observability of significant inputs to the measurement, as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly or indirectly
• Level 3: unobservable inputs for the asset or liability
The following table shows the Levels within the hierarchy of non-financial assets measured at fair
value on a recurring basis at 30 June 2018:
30 June 2018
Biological assets - current
Biological assets – non-current
Southern bluefin tuna quota
Total
30 June 2017
Biological assets - current
Biological assets – non-current
Southern bluefin tuna quota
Total
Level 1
$’000
-
-
-
-
Level 1
$’000
-
-
-
-
Level 2
$’000
45,229
244
130
45,603
Level 2
$’000
32,105
244
200
32,549
Level 3
$’000
-
-
-
-
Level 3
$’000
-
-
-
-
Total
$’000
45,229
244
130
45,603
Total
$’000
32,105
244
200
32,549
The fair values of the biological assets are determined in accordance with Note 4.20.
Capital management policies and procedures
32
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 $10m
Trade Finance Facility at 30 June 2018.
82
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
61
Parent entity information
33
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
2018
$’000
5,591
53,824
1,749
3,531
50,293
182,345
661
(132,713)
50,293
(5,421)
-
(5,421)
2017
$’000
795
41,137
1,373
2,259
38,878
165,998
172
(127,292)
38,878
(4,182)
-
(4,182)
The Parent Entity has no capital commitments to purchase plant and equipment
(2017: $20k). Refer Note 27 for further details of the commitment.
The Parent Entity has not entered into a Deed of Cross Guarantee. Refer Note 26 in relation to
contingent assets and liabilities.
Post-reporting date events
34
No adjusting or significant non-adjusting events have occurred between the reporting date and the
date of authorisation.
83
Clean Seas Seafood Limited | DIRECTORS DECLARATION
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
62
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 2018 and of its
performance for the financial year ended on that date; and
o Complying with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Regulations 2001; and
• 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 2018.
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 2018
84
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 Auditor’s 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 2018, 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 Directors’ 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 Group’s financial position as at 30 June 2018 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 Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have 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
www.grantthornton.com.au
‘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.
85
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.
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;
Testing the key internal controls for operating
effectiveness;
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.
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.
Key audit matter
Revenue Recognition
Notes 4 and 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.
Biological asset existence and valuation
Note 4, 13 and 15
The Group’s biological assets include Kingfish, which is
measured at fair value less costs to sell.
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.
86
Clean Seas Seafood Limited | INDEPENDENT AUDITOR’S REPORT
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 30 June 2018, but does not include the financial report and our auditor’s report
thereon.
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 Directors’ 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 Group’s 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.
Auditor’s 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 auditor’s 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. 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
auditor’s report.
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in the Directors’ report for the year ended 30 June 2018.
In our opinion, the Remuneration Report of Clean Seas Seafood Limited, for the year ended 30 June 2018 complies with
section 300A of the Corporations Act 2001.
87
Clean Seas Seafood Limited | INDEPENDENT AUDITOR’S REPORT
Clean Seas Seafood Limited – Consolidated Financial Statements
67
For the year ended 30 June 2018
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 20 August 2018.
Ordinary share capital (quoted)
1,667,314,190 fully paid ordinary shares are held by 8,290 shareholders.
Substantial shareholders
The number of shares held by substantial shareholders and their associates, as stated on
their most recent Substantial Shareholder notice, are set out below:
Shareholder
Number of Shares
Australian Tuna Fisheries Pty Ltd (1)
Bonafide Wealth Management AG (2)
101,562,733
100,943,046
(1) Notice released to ASX on 28 November 2016.
(2) Notice released to ASX on 6 July 2018.
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
Number of holders
Holding
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001+
Total
546
972
903
3,943
1,926
8,290
There were 2,077 holders of less than a marketable parcel of 9,260 ordinary shares, holding
a total of 6,986,089 ordinary shares.
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 2018
88
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
Clean Seas Seafood Limited | ASX ADDITIONAL INFORMATION
67
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 20 August 2018.
Ordinary share capital (quoted)
1,667,314,190 fully paid ordinary shares are held by 8,290 shareholders.
Substantial shareholders
The number of shares held by substantial shareholders and their associates, as stated on
their most recent Substantial Shareholder notice, are set out below:
Shareholder
Australian Tuna Fisheries Pty Ltd (1)
Bonafide Wealth Management AG (2)
Number of Shares
101,562,733
100,943,046
(1) Notice released to ASX on 28 November 2016.
(2) Notice released to ASX on 6 July 2018.
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
546
972
903
3,943
1,926
8,290
There were 2,077 holders of less than a marketable parcel of 9,260 ordinary shares, holding
a total of 6,986,089 ordinary shares.
89
Clean Seas Seafood Limited | ASX ADDITIONAL INFORMATION
Clean Seas Seafood Limited – Consolidated Financial Statements
For the year ended 30 June 2018
68
Ordinary shares
Number of
shares held
164,219,072
103,256,733
31,376,844
30,253,008
20,338,569
16,236,000
15,500,100
13,791,446
12,432,835
12,409,194
12,100,000
10,300,000
10,000,000
10,000,000
9,800,000
9,142,138
8,500,000
7,214,739
6,447,761
Percentage
of issued
shares
9.8%
6.2%
1.9%
1.8%
1.2%
1.0%
0.9%
0.8%
0.7%
0.7%
0.7%
0.6%
0.6%
0.6%
0.6%
0.5%
0.5%
0.4%
0.4%
6,349,465
509,667,904
0.4%
30.6%
Twenty (20) largest shareholders
J P Morgan Nominees Australia Limited
Australian Tuna Fisheries Pty Ltd
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
BNP Paribas Nominees Pty Ltd
Mr Michael John O'Neill & Mrs Rebecca Joan O'Neill
3rd Wave Investors Ltd
Mr Hagen Heinz Stehr & Mrs Anna Stehr
Rowe Heaney Super Fund Pty Ltd
Mr Ermanno Feliciani
Demeta Pty Ltd
Mr Jamie Lewis
Mrs Rika Westwood
Lidova Pty Ltd
Fernbow Pty Ltd
DHC International Pty Limited
Mr Jason Conrad Squire
Morgan Stanley Australia Securities (Nominee) Pty Ltd
RDLK Pty Ltd
Hans And Delwyn 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.
90
Clean Seas Seafood Limited | CORPORATE DIRECTORY
CORPORATE DIRECTORY
DIRECTORS
Terry O’Brien
Independent Non-Executive Chairman
Nick Burrows
Independent Non-Executive Director
Marcus Stehr
Non-Executive Director
Raelene Murphy
Independent Non-Executive Director
Helen Sawczak
Independent Non-Executive Director
David Head
Managing Director and Chief Executive Officer
COMPANY SECRETARY
Wayne Materne
EXECUTIVES
David Head
Managing Director and Chief Executive Officer
Wayne Materne
Chief Financial Officer & Company Secretary
PRINCIPAL REGISTERED OFFICE
IN AUSTRALIA
7 North Quay Boulevard,
Port Lincoln SA 5606
Ph: (08) 8621 2900
Fax: (08) 8621 2990
Email: reception@cleanseas.com.au
SHARE REGISTER
Boardroom Pty Ltd
Level 12, 225 George Street / GPO Box 3993
Sydney NSW 2000
Ph: 1300 737 760 / +612 9290 9600
Fax: +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
www.cleanseas.com.au
91