ANNUAL REPORT
fOR ThE yEAR ENdEd 30 jUNE
2O14
Fertoz Ltd (ACN 145 951 622)
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strategy
Fertoz Limited (ASX:FTZ) is an explorer and developer
of phosphate resources in Canada and the United States
of America, which are both net importers of phosphate
rock and have two of the largest agricultural economies
in the world. The Company aims to supply direct
application phosphate rock with minimal processing to
the lucrative organic fertilizer market in North America.
The USA is the largest organic food market in the world
while Canada is the fourth largest.
Fertoz is targeting small, high-grade resources in
North America that can be commercialised quickly and
inexpensively, with high-grade product sold to organic
farmers or third-party fertilizer plants. The Company
is planning first sales to customers in 2014 from its
flagship Wapiti project.
CONteNts
Chairman's Message
Corporate Review
Project Locations
Project Review
List of Tenements
Directors' Report
Independence Declaration
Corporate Governance Statement
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements
Directors' Declaration
Independent Audit Report
Corporate Directory
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FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
Chairman’s message
Dear Fellow Shareholder,
It is my pleasure to present the 2014 Annual Report for Fertoz Limited (ASX: FTz). We have had an extremely
busy year since listing on the Australian Securities Exchange (“ASX”) in September 2013, and it has been
pleasing to see the progress made towards our goal of becoming a producer of high-grade phosphate to
the world’s largest agricultural markets.
The work that has been achieved on the Company's projects in British Columbia, Canada, since listing has
been tremendous, putting Fertoz in a position to commence sales from bulk samples to the North American
agricultural market before the end of 2014. In that time the Company has:
•
•
•
•
•
Confirmed the high grade nature of its flagship Wapiti project with the announcement on 8 August 2014
of the Company’s maiden JORC Inferred Resource of 1.54 Mt @ 21.6% P2O5 (at a 7% cut-off), calculated
to a depth of 30m along a strike length of 12.5km and an Exploration Target of 2.9Mt-3.3Mt at 20.8% to
22.2% P2O5 estimated to a depth of 30m along a 27km strike. Mineralisation extends to more than 90m
below surface, and further drilling may increase both the resource and the exploration target.¹
Cost effectively expanded our ground at the Fernie Project in British Columbia to include the Marten
tenement and doubling the size of the Barnes Lake tenement;
Completed bulk sample tests which demonstrated 10% phosphate availability, making the Wapiti
product particularly attractive to the organic fertilizer market as a direct application product;
Secured permits to extract bulk samples totalling 27,500 tonnes from the Company’s Wapiti and Fernie
Projects with the Company having commenced bulk sample collection in August 2014 from the Wapiti
Project; and
Reached agreement with two Canadian farmers to trial the Wapiti product to better understand
processing techniques, application methods and to quantify the measurable benefits of our phosphate
product.
The uSA is the largest organic food market in the world while Canada is the fourth largest. The markets are
growing rapidly and with the uS market growing 10% in 2012². Rock phosphate as a natural occurring mineral
can be used in organic agriculture and also is sold at a significant premium to chemically processed phosphate
which is not suitable for organic agriculture. In addition Canada has no significant phosphate rock production
and product for organic agriculture is sourced from Florida, Idaho, Tennessee or Montana in uSA.
Fertoz’s Wapiti and Fernie projects are located close to the main agricultural provinces of Alberta, Saskatchewan
and Manitoba which together with British Columbia comprise over 80% of Canada’s agricultural farm land
(Figure 1). The proximity to Canadian markets provides a logistics cost advantage over alternate uSA products.
The Fernie project is also located close to the uSA border and can target the agricultural areas of north
western uSA.
The increasing demand for organic products, the premiums available over chemically processed phosphate
coupled with minimal processing and capital investment are exciting opportunities for Fertoz to provide a
quick route to production and continued growth of the rock phosphate business.
¹
²
The Exploration Target is conceptual in nature. There has been insufficient exploration (namely drilling) outside the area
used to support the Mineral Resource to define a Mineral Resource and it is uncertain if further exploration will result in the
definition of a Mineral Resource.
FIBL & IFOAM The World of Organic Agriculture 2014.
22
ChAIRMAN’S MESSAGE
The Company also expanded its North American phosphate portfolio during the financial year, by securing
the Dry Ridge Project in Idaho, uSA. The project is ideally located in a known phosphate region and is within
35km of two large scale phosphate processing plants. The Company commenced its drilling approvals on the
Dry Ridge Project during the year and is planning to commence drilling in the second half of 2015.
We welcomed Toronto-based Non-Executive Director Stephen Keith to the Fertoz Board in July 2014, with
fellow Toronto-based Alex Penha appointed as an Alternate Non-Executive Director. In addition to being
located in Canada with project finance, phosphate and organic fertilizer experience Stephen and Alex both
have language skills and connections which will facilitate us in assessing new growth opportunities in the
rapidly expanding fertilizer regions of South America, a natural extension of our strategy.
It has been incredibly pleasing to see the strong performance of the Fertoz share price since our listing and
I thank our shareholders for their support and belief in our strategy. I also thank our directors, management
and staff for their efforts over the past year. We look forward to an exciting year ahead.
James Chisholm
Chairman
3
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
COrPOraTe reVieW
BoaRD Changes
Non-Executive Director Peter Bennetto resigned
from the Fertoz Board on 26 November 2013. Mr
Bennetto had been a Non-Executive Director of
Fertoz since December 2010.
Subsequent to the year-end, on 29 July 2014, Fertoz
appointed North American-based Stephen Keith
as a Non-Executive Director and Alex Penha as an
Alternate Non-Executive Director. Mr Keith, based in
Toronto, was previously President and CEO of Search
Minerals. Prior to his work with Search, Mr Keith was
a founder and the President and CEO of Rio Verde
Minerals Development Corp. (“Rio Verde”) (TSX:
RVD), a phosphate company he took from concept
to listing on the TSX. Rio Verde were progressing
a production plant in Brazil for 150,000 tonnes per
annum direct application phosphate for an estimated
capital cost of C$10 million. Mr Keith led Rio Verde
until its acquisition by B&A Fertilizers Limited on
March 13, 2013.
Mr Penha, also based in Toronto, was a director and
Executive Vice President at Search Minerals, and VP
Corporate Development at Rio Verde.
In addition to being located in Canada with project
finance, phosphate and organic fertilizer experience
Stephen and Alex both have language skills and
connections which will facilitate the assessment of
new growth opportunities in the rapidly expanding
fertilizer regions of South America.
Fertoz was admitted to the official list of the Australian
Securities Exchange (ASX) and commenced trading
under the code FTz on 2 September 2013. This
followed the completion of an Initial Public Offering,
which closed oversubscribed, raising a total of $4
million (before costs) through the issue of 20,000,000
shares at an issue price of 20 cents per share.
Cash
The Company had cash at bank of $2.24 million as at
30 June 2014.
Release of shaRes fRom esCRow
The Company had a total of 2,489,045 shares released
from escrow during the March quarter.
A further 2,339,104 Fertoz shares were released
from escrow on 10 June 2014. Also on 1 September
2014 7,982,951 shares were released from voluntary
escrow with a total of 2,855,367 shares remaining in
mandatory escrow.
DiReCtoRs inCReasing shaReholDing
Non-Executive Chairman Mr James Chisholm
through a related entity, purchased an additional
89,000 Fertoz shares via on-market trades during
December 2013. The shares were valued at between
$0.455 and $0.4348 per share with total consideration
paid for the shares being $39,942.
Managing Director Dr Leslie Szonyi purchased an
additional 11,759 Fertoz shares via on-market trades
during the March 2014 quarter. The shares were
valued at $0.4344 per share with total consideration
paid for the shares being $5,108.
4
PROJECT LOCATIONS
PrOJeCT LOCaTiOns
Figure 1 — Feroz's North American project locations and proximity to Canada Agricultural areas
Competent Persons statement
The technical information in this report that relates to Exploration Targets, Exploration Results, Mineral
Resources or Ore Reserves is based on information compiled by Mr Jo Shearer, a Competent Person, who is
a member of the Association of Professional Engineers and Geoscientists of British Columbia, a ‘Recognised
Professional Organisation’ (RPO) included in a list that is posted on the ASX website from time to time. Mr
Shearer is the Chief Operating Officer Canada for Fertoz Limited. Mr Shearer has sufficient experience that
is relevant to the style of mineralisation and type of deposit under consideration and to the activity being
undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Shearer consents to the inclusion
in the report of the matters based on his information in the form and context in which it appears.
5
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
PrOJeCT reVieW
wapiti pRojeCt (100% owneD)
BRitish ColumBia, CanaDa (wapiti east anD wapiti west tenements)
The Wapiti Project
includes the Wapiti
(which
East and Wapiti West tenements) totals an area of
18,070ha and is located near Tumbler Ridge, in British
Columbia, Canada. The project is easily accessible
by sealed roads and Forest Service roads and has
rail within 80km. The Company is focused on the
Wapiti East tenements and previous work indicates
a consistent and continuous at-surface phosphate-
bearing horizon which has a potential strike length
of up to 39km. Laboratory results of the phosphate
indicate up to 10% availability which makes the
product at Wapiti East particular attractive to the
North American organic sector which is the largest
organic market in the World.
exploration
The Company completed a drill program of 62 holes
for 2,098m at Wapiti East in September 2013. holes
varied from 12.8m to 74.7m in depth and mainly at a
-45° and -60° inclination. Two holes were completed
on each set-up to give added confidence on the
accuracy of the three dimensional orientation and
thickness of the phosphorite horizon. The phosphorite
horizon was intersected between approximately 9m
and 35m below surface.
Other exploration work completed during the year
included establishing a base of operations, geological
mapping, prospecting, trenching and construction of
access trails to the site.
Results of the 62-hole program were released in the
December quarter, confirming a mineralised zone
that was relatively uniform and regular in orientation.
Drill spacing varied and was reduced in places to
20m intervals and the results demonstrated good
continuity that was open at depth with the mineralised
phosphorite zone typically between approximately
1.2m and 2.25m true width, outcropping at width at
a moderate (~50 degrees) and consistent dip. The
average grade varied between 13% and 27% P2O5
within the phosphate horizon.
A two-tonne bulk sample from a small trial pit mining
operation was collected in October 2013, and
assays completed by AGAT Laboratories in Ontario.
Sampling averaged 24.3% P2O5 with low levels of
heavy metal impurities, which is a pre-requisite for use
in the organic fertilizer market, whilst also providing
sufficient levels of macro and micro nutrients. The
results are summarized in Tables 1 and 2.
Exploration drilling conducted at Wapiti in September 2013
6
PROJECT REVIEW
taBle 1 - assay Results foR two-tonne Bulk sample
al2O3
(%)
BaO
(%)
CaO
(%)
Cr2O3
(%)
Fe2O3
(%)
K2O
(%)
MgO
(%)
mnO
(%)
Na2O
(%)
P2O5
(%)
siO2
(%)
TiO2
(%)
srO
(%)
V2O5
(%)
0.7
0.02
49.9
<0.01
0.47
0.24
0.5
0.01
0.43
24.3
5.56
0.05
0.07
0.06
taBle 2 - heav y metal assa y Results foR two-tonne Bulk sample
as
ppm
Cd
ppm
Co
ppm
Cr
ppm
Cu
ppm
Hg
ppm
mo
ppm
ni
ppm
Pb
ppm
51
15
1
46
10
7
8
12
15
se
ppm
<10
Zn
ppm
307
Zr
ppm
U
ppm
27
97
Both laboratories were provided with samples that
had been ground and screened at -100 mesh
(- 0.15mm) with the total phosphate content of the
samples being 23.0% P2O5. The laboratories used
a Neutral Ammonium Citrate
(NAC) extraction
method, which is the industry standard in North
America, for assessing the availability of phosphorus
in phosphate fertilizer sources. The NAC extraction
test was performed twice as the second extraction
has historically been shown to provide a higher
correlation in predicting agronomic effectiveness
in high calcium carbonate material like Wapiti
East (Chien and hammond Soil Science Society of
America Journal 1978, Mackay New zealand Journal
of Agricultural Research 1984). The NAC second
extraction test showed good consistent results which
ranged between 9.7% and 9.9% P2O5 availability.
Test work
Consultant laboratories completed metallurgical test
work on the two-tonne bulk sample to determine
solubility and reactivity of phosphorus in March 2014.
This was undertaken to assess the commerciality of
Wapiti phosphate. Results from this sample achieved
a 10% phosphate availability, which makes the Wapiti
product particularly attractive to the organic fertilizer
market as a direct application product. The result
can be compared to other known phosphate areas
such as North Carolina, uSA and Sechura, Peru which
typically demonstrate 6% to 7% available phosphate
and exhibit good agronomic effectiveness on suitable
soils and crops (Sinclair, New zealand Journal of
Agricultural Research, 1998). Wapiti phosphate also
contains important secondary and tertiary minerals
required for good plant growth making it suitable for
North American organic markets.
The metallurgical
tests were coordinated by
Agrologist Ruth McDougall and two laboratories
were engaged to undertake the analysis for quality
control purposes. Both commercial laboratories,
SGS Agrifood
in Guelph, Ontario
and A&L Analytical Laboratories Inc. in Memphis,
Tennessee, are accredited to perform this analysis
and both participate in a North America-wide
program of accreditation for available phosphorus
determination.
laboratories
7
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
projECt rEviEW
— continued —
JOrC inferred resource and exploration Target
Subsequent to the year-end, Fertoz announced a
maiden Inferred Resource estimate for Wapiti of 1.54
Mt @ 21.6% P2O5 (at a 7% cut-off), calculated to a
depth of 30m along a strike length of 12.5km.
Inferred Resource
The
is contained within an
Exploration Target of between 2.9 Mt and 3.3 Mt at
20.8% to 22.2% P2O5 which has been estimated to a
depth of depth of 30m along a 27km strike length.
Mineralisation extends to depths in excess of 90m
below surface and there is potential to increase both
the resource and exploration target with additional
drilling. The Exploration Target is conceptual in
nature. There has been
insufficient exploration
(namely drilling) outside the area used to support the
Mineral Resource to define a Mineral Resource and
it is uncertain if further exploration will result in the
definition of a Mineral Resource.
Exploration at Wapiti has included 81 diamond
drill holes and multiple trenches and surface
samples between 1978 and 2013. This information
has been used by J.T. Shearer, M. Sc, P. Geo., and
G.Shevchenko, B. Sc. (Eng.) of Coastal Resource
Mapping Ltd to estimate a mineral resource
in accordance with
and an exploration target
JORC 2012. Resources
(including potentially
deleterious elements) are calculated using the
Polygonal-Weighted Average method and are
summarised in Tables 3 and 4.
The Inferred Resource was calculated within four
distinct areas in the project (Figure 2 - see page 10)
and these are summarised in the Table 4. Resources
were based on a 12.5km strike length of phosphate-
bearing sediments. The phosphate-rich horizon has
an average width of 1m and was extrapolated to
a depth of 30m. The density of the phosphate has
been calculated at 2.845 t/m³ by Metsolve Laboratory
using empirical test work and supported using
stoichiometric calculations.
Table 5 shows the Exploration Target for Wapiti. It
was based on a phosphate-bearing horizon having
a mapped strike length of 27km and extrapolation
to a depth of 30m below surface. The phosphate
bearing layer is uniform in thickness with a density of
2.845 t/m³.
Intersections on a sectional basis for the calculation
of this Exploration Target are summarised in Table
6 below. The Exploration Target distance for each
section is shown in Figure 2. The data for each section
was extrapolated varying distances between data
points (drilling, trenching, surface sampling). The
uncertainty in determination of the target was in the
width and grade of the phosphate.
taBle 3 - wapiti east infeRReD ResouRCe
Depth below
surface (m)
Category
Tonnes
(million)
P2O5
(%)
al2O3
(%)
CaO
(%)
MgO
(%)
30
Inferred
1.54
21.6
1.9
43.6
1.3
siO2
(%)
13.7
Fe2O3
(%)
1.2
taBle 4 - infeRReD mineRal ResouRCe By phosphate zone
area Description
Category
Length
(km)
Depth
(m)
Width
(m)
P2O5
(%)
resource
(t)
Red Deer East Limb
Red Deer West Limb
Inferred
Inferred
Red Deer West-West Limb
Inferred
Wapiti Syncline
Inferred
5.64
4.34
1.5
1.0
Total
inferred
12.48
30
30
30
30
30
1.0
0.95
1.13
1.0
1.0
23.0
19.7
22.5
18.6
773,490
499,920
138,020
126,530
21.6
1,537,960
8
PROJECT REVIEW
taBle 5 - wapiti exploRation taRget
Depth below surface (m)
Category
Tonnes
(million)
Width
(m)
P2O5 (%)
range
30
Exploration Target
2.9 to 3.3
0.85 to 0.97
20.8 to 22.2
taBle 6 - wapiti exploRation taRget By phosphate zone
area Description
Category
Length
(km)
Depth
(m)
Width
(m)
P2O5
(%)
resource (t)
Red Deer East Limb
Red Deer West Limb
Inferred
Expln Target
Inferred
Expln Target
Red Deer West-West Limb
Inferred
Wapiti Syncline
Inferred
Expln Target
5.64
2.5
4.34
9.3
1.5
1.0
2.7
30
30
30
30
1.0
0.78 – 1.0
23.0
23.0 - 25.5
773,490
268,640 – 342,860
0.95
0.67 - 0.95
19.7
19.7 - 22.5
499,920
848,610 – 1,071,250
1.13
22.5
138,020
1.0
0.73 - 0.97
18.6
18.6 - 20.7
126,530
270,080 – 341,640
Total
expln Target
27.0
30
0.85 – 0.97 20.8 – 22.2 2,925,290 – 3,293,710
rehabilitated drill site drilled in September 2013
9
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
projECt rEviEW
— continued —
Figure 2 — Wapiti inferred resource and Exploration target strike lengths and exploration locations
10
PROJECT REVIEW
second bulk sample
Fertoz began the process to apply for a permit to
the British Columbia Mines Department to extract
a second bulk sample of up to 7,500 tonnes in the
December quarter of 2013. The process required the
Company to complete tasks including:
•
•
•
A metal leaching and acid rock drainage
assessment
An environmental plan, and
An avalanche hazard assessment/safety plan.
In addition, various indigenous meetings with First
Nations groups were required to be undertaken, in
order to advise them of progress to date and the
planned extraction of the bulk sample.
In February, Fertoz received approval to extract
a winter bulk sample of 7,500 tonnes from the
Wapiti project in British Columbia, Canada. Road
access improvements were carried out in March but
sample collection was delayed due to the fact that
unseasonably warm weather prevented an ice bridge
being constructed across Red Deer Creek.
On 30 April, Fertoz received approval to extract a
further 2,000 tonnes, taking the bulk sample to 9,500
tonnes. In May, Fertoz received approval to extract
a bulk sample of 17,500 tonnes of product for sale
to the North American agricultural market. The
Company is now planning to increase the total bulk
sample to 30,000 tonnes.
As of 26 June, Fertoz had set up camp at Wapiti
East in preparation for bulk sample collection.
Chilko Construction completed the installation of
eight culverts across creeks from the camp. The
construction of an access road of approximately 2km
to the “North” bulk sample location area has been
completed and bulk sample collection commenced
in August 2014.
Environmental baseline data collection and analysis
has been completed by Nova Pacific Environmental
and an environmental report prepared to support
the small mine application of up to 75,000 tonnes
per annum of phosphate rock. No residual adverse
effects are expected from mining after implementing
the mitigation measures outlined in the report. The
Company is aiming to submit its mine application
to the British Columbia Mines Department by
November 2014.
Second bulk sample being mined in August 2014
11
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
projECt rEviEW
— continued —
Farms to trial phosphate
homegold royalty
Fertoz began discussions with local farmers interested
in trialling Wapiti East phosphate on their farms in
the December quarter.
Fertoz renegotiated an agreement with homegold
Resources Ltd (“homegold”) regarding the royalty
for Wapiti in June 2014.
In March, Fertoz signed an agreement with two
organic broad acre farms in Western Canada to trial
the agronomic effectiveness of phosphate from its
Wapiti Project. The farms are organically certified
and the operators, who are professional agronomists,
have agreed to assist Fertoz in increasing sales of
Wapiti phosphate in the growing organic sector in
North America.
under the terms of the Agreement, Fertoz will supply
up to 1,000 tonnes of phosphate rock from Wapiti at
the mine gate. The farmers will be responsible for
freight, rock phosphate processing and the costs of
the farm trials.
All
information, testing procedures, processing
techniques and application methods will be provided
to Fertoz as part of the Agreement.
homegold was to receive a royalty of C$2.50 per tonne
of phosphate rock produced from Wapiti, provided
the royalty did not exceed 5% of earnings before
interest and tax from the operation. The royalty has
been replaced with two milestone payments totalling
C$100,000 which will be paid on achievement of the
following milestones:
•
•
First Milestone - the sale of 7,500 tonnes of
phosphate rock from the Wapiti Project.
Second Milestone - the sale of 100,000 tonnes of
phosphate rock from the Wapiti Project.
C$50,000 will be payable on achievement of the
First Milestone with C$5,000 to be paid in cash and
C$45,000 to be paid in ordinary shares in Fertoz at
the 10-day weighted average share price prior to the
First Milestone.
In August the farmers received product and have
commenced processing the phosphate ready for
farm trial application which is expected to start in
October 2014.
C$50,000 will be payable on achievement of the
Second Milestone to be paid in Fertoz ordinary
shares at the 10-day weighted average share price
prior to the Second Milestone.
new tenements extend Wapiti east phosphate
zone
Fertoz increased its phosphate tenement holding
at Wapiti East in April 2013, receiving eight new
tenements (2,168 hectares) from the British Columbian
Ministry of Energy and Mines, to extend the potential
phosphate horizon by approximately 12km, or 44%,
from 27km to 39km. In addition, the areas secured
during the year provide bulk phosphate storage,
and camp site areas readily accessible from Tumbler
Ridge.
The phosphate potential of the new tenements in
the Mount Muinok area was investigated by Pacific
Ridge Exploration in 2008. Shallow trenching samples
produced results of 15% to 21% P2O5 over 1m to 2m
wide intervals (Ref. 30718 Pacific Ridge Exploration
Tumbler Ridge Report 2008).
under the terms of the original agreement, Fertoz
would pay homegold a CAD$50,000 cash payment
payable once the Company decided to proceed with
commercial operations at Wapiti. under the new
terms, payment will be paid in Fertoz ordinary shares
at the 10-day weighted average share price prior to
achieving the First Milestone.
Jo Shearer, Fertoz’s senior geologist and Chief
Operating Officer in Canada, provides his services
through homegold. In addition to changing the bulk
of the royalty payment to Fertoz scrip, from 1 June
2014, Mr Shearer has also agreed to receive $12,000
of his salary in Fertoz scrip every six months in lieu of
cash.
12
PROJECT REVIEW
phosphate rock being milled, ready for farm trials
13
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
projECt rEviEW
— continued —
feRnie pRojeCt (100% owneD)
BRitish ColumBia, CanaDa (maRten, BaRnes lake anD CRows nest tenements)
The Fernie Project (which includes the Marten,
Barnes Lake and Crows tenements) includes a total
of 3,904ha and is located near Sparwood in British
Columbia Canada. The tenements are within 25km of
each other and are in close proximity to the operating
East Kootenay Coalfield which is serviced by the
established mining communities in the region. At
the door step of the project is the existing road and
rail transport links to the west coast ports of Canada
as well as the North American arterial rail and road
networks. Previous exploration work has highlighted
the presence of widespread, shallow phosphate-
bearing sediments associated with the base of the
Jurassic-aged Fernie Formation.
exploration
Fertoz completed reconnaissance exploration at the
Fernie Project in the first half of the financial year which
resulted in the Company expanding its prospective
phosphate tenements in the Fernie Project area.
During a site visit, the Company located historical
drill holes from previous work carried out in 1968
and 1978 that were outside the existing tenement
boundary. Subsequent research showed that these
holes displayed phosphate occurrences within 10m
of the surface. As such, the existing claim holdings
were extended to include these drill holes areas.
On 5 February 2014, the Company secured the
Marten tenements to add to its portfolio for the
Fernie Project. The Marten tenements consist of
1,215ha and are located 20km south east of Sparwood
between Fertoz’s existing tenements at Crows Nest
and Barnes Lake (Figure 3). The Consolidated
Mining and Smelting Company of Canada Limited
(Cominco) carried out exploration in an extensive
area of phosphate-bearing rocks in 1926, covered by
the Marten tenement. In 1929, Cominco established
an underground phosphate exploration mine there
employing 13 people. Two shallow incline shafts were
sunk and two small prospect tunnels were driven on
the outcrop of the phosphate bed and a 7ft by 8ft
drift (2.1m by 2.4m) was advanced 200ft (61m). The
underground workings exposed a 2.25ft (0.7m) wide
phosphate horizon with an average grade of 55%
calcium triphosphate which equates to 25% P2O5
(Ref. BC Minfile Report 082G10). During the June
Coal train passing through Marten tenement
14
PROJECT REVIEW
quarter Fertoz located historical phosphate mine
shafts, associated stockpiles and a road base pit
containing phosphate on the Marten tenements.
In July 2014, Fertoz announced the British Columbia
Ministry of Energy and Mines had approved a permit
to allow the Company to extract a surface bulk sample
of 10,000 tonnes of phosphate rock from the Marten
tenements of its Fernie Phosphate Project in British
Columbia, Canada. Fertoz is planning a small targeted
drill programme and the extraction of a 10,000 tonne
bulk sample with the Company intending to progress
these activities in October 2014.
Figure 3 — Fernie project (Marten, Crows Nest, Barnes Lake)
15
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
projECt rEviEW
— continued —
DRy RiDge pRojeCt (option to aCquiRe 100% owneRship)
iDaho, usa
On 10 December 2013, Fertoz announced it had
acquired an option from Sulfate Resources LLC
(“Sulfate”) to explore and acquire up to 100% of
the Dry Ridge Phosphate Project in Idaho, uSA from
Solvay uSA Inc. (“Solvay”).
The Dry Ridge Phosphate Project is located in the
established phosphate mining region of south-
eastern Idaho, uSA (Figure 4).
The Dry Ridge acquisition complements
the
Company’s projects, and is close to existing and
proposed phosphate mines in the Idaho area. The
exploration licence covers 210 hectares and extends
along the known north-south trending outcrop of
phosphate bearing horizons demonstrated on the
adjacent tenements. Previous trenching, mapping
and analysis identified relatively narrow and high-
grade phosphate zones grading up to 33% P2O5,
Figure 4 — Dry ridge project
16
PROJECT REVIEW
at a width of 3m within larger, lower-grade zones.
This phosphate is hosted in sedimentary horizons
that extend north into the tenure owned by Agrium,
which is developing the new husky #1 phosphate
mine (Federal Register Notice, 2 August 2012)
and south to husky #3 where Agrium is planning
extensive exploration.
under the Option Agreement, Fertoz has the right
to explore the property until 30 August 2016 and can
exercise its option to acquire the Project by paying
Solvay up to a total of uS$600,000 to earn an 80%
interest in the project. The purchase price was agreed
with Solvay on the basis that there is 12 million tons at
a minimum grade of 24% P2O5 in the Project. upon
Fertoz exercising its right to acquire the Project,
Fertoz will own 80% of the Project and Sulfate will
own 20%. Fertoz can acquire the remaining 20% of
the Project by paying uS$200,000 to Sulfate by 9
December 2016.
On 19 February 2014, the uS Federal Bureau of
Land Management (“BLM”) approved the transfer
of the operating rights for the Company’s Dry Ridge
Phosphate Project to Fertoz.
In addition, the Company appointed Cascade
Earth Sciences, World Industrial Minerals and other
consultants to commence the expected 12-month
approval process for its exploration programme which
is planned to commence in the second half of 2015.
The process for approving exploration programmes
in Idaho requires significant third party input and
reports prior to drilling commencing.
The Company started the approvals process by
submitting to the BLM a comprehensive three-year
exploration programme in April 2014. By submitting
the exploration programme prior to 30 May 2014 the
Company has met one of the conditions of the Dry
Ridge Option Agreement.
Field work conducted in July has provided the
geological data required to identify the locations
for 48 drill sites and 24 trenches along the full
4.8km length of the Fertoz Dry Ridge lease area.
Environmental studies
(wildlife, vegetation and
cultural) are underway.
The purpose of the Dry Ridge exploration programme
is to provide an understanding of the phosphate
types, orientation, geometry,
formation
quality, determine a Mineral Resource and collect
environmental data in advance of mining.
rock
austRalian pRojeCts
During the December quarter, Fertoz completed
the sale of six phosphate exploration tenements in
the Northern Territory, known as the Katherine and
Barkly tenements, to Mandarin Mining Pty Ltd for the
consideration of $50,000. The Company had been
searching for a joint venture partner for these projects
but the sale of the tenements allowed management
to focus on the development of North American,
near-term projects, rather than expend funds on
drilling lower grade targets in Australia.
The Company currently has two Australian projects.
It has an Option Agreement in place at the Barrow
Creek Project, NT with Rum Jungle Resources Ltd
(“Rum Jungle’). Rum Jungle is responsible for all
costs to explore and maintain the tenement in good
standing. It has a three-year option to purchase the
project for $1 million.
The Company also holds a tenement in Queensland
called the Sherrin North Project, close to other
phosphate projects and phosphate-bearing rocks.
however, with the focus on the Americas, the
Company is searching for a suitable company to
either joint venture the tenement or achieve an
outright sale.
17
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
LisT OF TenemenTs
Project name
Tenement
number
Ownership
approx.
area (ha)
expiry Date
registered holder
CaNaDa
Wapiti east
WK-1
WK-2
WK-3
WK-4
WK-5
WK-6
WK-7
WK-8
WK-9
WK-10
WK-11
WK-12
WK-One
Wapiti NE
Wapiti Two
Wapiti South
WAP S2
WAP S3
WAP S4
WAP S5
WAP S6
Red Deer 1
Red Deer 2
Red Deer 3
Munok 1
Belcourt 1
Munok 2
Belcourt 2
Belcourt 3
Belcourt 4
Belcourt Link
WAP 11
subTotal
851942
851948
851952
851958
941760
941761
941762
941763
941764
941769
955278
956829
982744
1015556
1015557
1015558
1018104
1018106
1018107
1018108
1018109
1023921
1023922
1023923
1015626
1015627
1024783
1024803
1024806
1024805
1027037
1027038
21/04/2020
Fertoz International
21/04/2020
Fertoz International
21/04/2020
Fertoz International
21/04/2020
Fertoz International
21/04/2020
Fertoz International
21/04/2020
Fertoz International
21/04/2020
Fertoz International
21/04/2020
Fertoz International
21/04/2020
Fertoz International
21/04/2020
Fertoz International
21/04/2020
Fertoz International
21/04/2020
Fertoz International
21/04/2020
Fertoz International
21/04/2020
Fertoz International
21/04/2020
Fertoz International
21/04/2020
Fertoz International
21/04/2020
Fertoz International
21/04/2020
Fertoz International
21/04/2020
Fertoz International
21/04/2020
Fertoz International
21/04/2020
Fertoz International
20/11/2014
Fertoz International
20/11/2014
Fertoz International
20/11/2014
Fertoz International
1/06/2017
1/01/2019
2/01/2015
3/06/2015
3/06/2015
3/06/2015
Fertoz International
Fertoz International
Fertoz International
Fertoz International
Fertoz International
Fertoz International
30/03/2015
Fertoz International
30/03/2015
Fertoz International
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
450.8
451
450.8
451
450.8
469.9
450.9
451.1
451.3
451.4
470.3
225.4
18.8
375.5
168.9
376.4
451.8
451.8
451.9
452.1
452.3
150.2
206.3
150.1
169.6
113.3
603.1
301.8
188.7
339.8
282.6
168.9
11098.6
18
LIST OF TENEMENTS
Project name
Tenement
number
Ownership
approx.
area (ha)
expiry Date
registered holder
CanaDa (continued)
Wapiti West
942096
942097
851714
980302
1025451
1018084
1018085
1018086
1018087
1018095
1018096
1018097
1018098
1018099
1018101
1018102
1018103
1018128
1011319
1020873
1023062
1024365
1025533
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Tunnel 1
Tunnel 2
Sukunka1
Sukunka2
PAL 1
PAL 2
PAL 3
PAL 4
SuK 3
SuK 4
SuK 5
SuK 6
SuK 7
SuK 8
SuK 9
SuK 10
SuK 11
T11
subTotal
Ferny
Barnes Lake1
Barnes Lake 2
Crows Nest
Marten 1
Marten 2
subTotal
Canada Total
446.1
446.0
18.5
444.2
18.5
443.9
388.5
444.1
444.3
444.5
444.7
444.9
445.1
445.3
445.4
445.6
445.8
316.2
6,971.6
27/03/2016
Fertoz International
27/03/2016
Fertoz International
15/09/2016
Fertoz International
15/09/2016
Fertoz International
24/01/2015
Fertoz International
27/03/2016
Fertoz International
27/03/2016
Fertoz International
27/03/2016
Fertoz International
27/03/2016
Fertoz International
27/03/2016
Fertoz International
27/03/2016
Fertoz International
27/03/2016
Fertoz International
27/03/2016
Fertoz International
27/03/2016
Fertoz International
27/03/2016
Fertoz International
27/03/2016
Fertoz International
27/03/2016
Fertoz International
28/03/2016
Fertoz International
609.0
629.0
19/07/2017
Fertoz International
18/07/2015
Fertoz International
1,450.9
15/10/2014
Fertoz International
12/12/2014
Fertoz International
28/01/2015
Fertoz International
754.3
460.9
3,904.0
21,974.2
19
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
LiSt oF tENEMENtS
— continued —
Project name
Tenement
number
Ownership
approx.
area (ha)
expiry Date
registered holder
UniTeD sTaTes
Dry Ridge
I-07238
0%¹
United states Total
aUsTraLia
Sherrin North
EPM19448
Barrow Creek
EL26915
100%
100%²
australia Total
210.0
210.0
22,100.0
74,387.0
96,487.0
31/05/2016
Solvay uSA Inc.
5/05/2018
7/4/2015
Fertoz Limited
Fertoz Limited
¹
²
Fertoz has an option to acquire 100% of the tenement prior to 9 December 2016.
Joint venture agreement allows Central Australian Phosphate Ltd to earn an interest in the tenement.
20
DIRECTORS' REPORT
DireCTOrs' rePOrT
The directors present their report, together with the financial statements, on the consolidated entity (referred
to hereafter as the 'consolidated entity') consisting of Fertoz Limited (referred to hereafter as the 'company'
or 'parent entity') and the entities it controlled for the year ended 30 June 2014.
DiReCtoRs
The following persons were directors of Fertoz Limited during the whole of the financial year and up to the
date of this report, unless otherwise stated:
Mr James Chisholm
Mr Leslie Szonyi
Mr Adrian Byass
Mr Stephen Keith (appointed 29 July 2014)
Mr Alex Penha alternate director to Mr Stephen Keith (appointed 29 July 2014)
Mr Peter Bennetto (resigned 26 November 2013)
pRinCipal aCtivities
The principal continuing activities during the period, of entities within the consolidated entity was phosphate
exploration and development in British Columbia, Canada and Idaho, united States of America.
DiviDenDs
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of opeRations
The loss for the consolidated entity after providing for income tax and non-controlling interest amounted to
$2,133,636 (2013: $1,867,270).
A review of operations for the period, and the results of those operations is contained within the Project
Review and Corporate review.
signifiCant Changes in the state of affaiRs
Significant changes in the state of affairs of the consolidated entity during the financial year were
as follows:
The Company raised $4,000,000 (before costs) and listed on the Australian Securities Exchange on 2
September 2013 resulting in the issue of 20,0000,000 ordinary shares taking issued capital of the Company
to 45,009,595 Ordinary Shares.
There were no other significant changes in the state of affairs of the consolidated entity during the
financial year.
21
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
DirECtorS' rEport
— continued —
matteRs suBsequent to the enD of the finanCial yeaR
No other matter or circumstance has arisen since 30 June 2014 that has significantly affected, or may
significantly affect the consolidated entity's operations, the results of those operations, or the consolidated
entity's state of affairs in future financial years.
likely Developments anD expeCteD Results of opeRations
The consolidated entity intends to continue its exploration, development and production activities on its
existing projects and to acquire further suitable projects as opportunities arise.
enviRonmental Regulation
The consolidated entity is subject to environmental regulations under laws of Queensland, Australia, Northern
Territory, Australia, British Columbia, Canada and Idaho, u.S.A where it either holds mineral exploration
tenements or has a right to explore on such tenements. During the financial year the consolidated entity’s
activities recorded no non-compliance issues.
22
DIRECTORS' REPORT
infoRmation on DiReCtoRs
mr James Chisholm
Title Non-Executive Chairman
Qualifications B.Eng, MBA
experience and expertise Mr Chisholm is a qualified engineer, having worked in the engineering,
mining, oil and gas sectors for the past 28 years. James has worked
on numerous resource construction and maintenance projects around
Australia, primarily covering coal, iron ore, and agricultural mining and
processing. James co-founded The Chairmen1 Pty Ltd which sold its assets
to Guildford Coal Ltd (ASX: GuF), becoming its largest shareholder. James
is experienced in start-up exploration and development companies.
Other current directorships Non-executive Chairman of Atrum Coal NL (ASX: ATu)
Former directorships
(in the last 3 years)
None
special responsibilities The board carries out the responsibilities of the Nomination and
Remuneration and Audit and Risk Committees
interests in shares 5,303,380 ordinary shares
interests in options 1,230,769
Dr Leslie szonyi
Title Managing Director
Qualifications B. Eng, Ph.D. Chemical Engineering, Member of AICD
experience and expertise Dr Les Szonyi has over 30 years’ experience in the chemicals processing
industry, including 18 years at Orica (formerly ICI Australia). he spent the
five and a half years prior to joining Fertoz based in Central Queensland,
leading Queensland Nitrates (QNP), an integrated manufacturer of
ammonia, nitric acid and ammonium nitrate. Les has a track record of
increasing shareholder value through enhanced commercial performance,
contract negotiation, technical excellence, project management and
superior operations and safety performance.
Other current directorships None
Former directorships
(in the last 3 years)
None
special responsibilities The board carries out the responsibilities of the Nomination and
Remuneration and Audit and Risk Committees.
interests in shares 690,438 Ordinary Shares
interests in options 2,461,540
23
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
DirECtorS' rEport
— continued —
mr adrian Byass
Title Independent Non-executive Director
Qualifications BSc (hon), B.Econ, Member of Institute of Geoscientists, Fellow of Society
of Economic Geology
experience and expertise Mr Byass has over 18 years’ experience in the mining and minerals
industry. This experience has principally been gained through mining,
resource estimation, mine development and exploration roles for several
gold, base metals and speciality metal mining and exploration companies
worldwide. Mr Byass is a Competent Person for reporting to the ASX
for certain minerals. My Byass has also gained experience in corporate
finance and financial modelling during his employment with publicly
listed mining companies. he is currently managing director of Plymouth
Minerals Limited.
Other current directorships
Ironbark zinc Limited (ASX: IBG), Corazon Mining Limited (ASX: CzN) and
Plymouth Minerals Limited (ASX: PLh)
Former directorships
(in the last 3 years)
Wolf Minerals Ltd (resigned 27th June 2013)
special responsibilities The board carries out the responsibilities of the Nomination and
Remuneration and Audit and Risk Committees
interests in shares 130,000 Ordinary Shares
interests in options 923,076
mr stephen Keith (appointed 29 July 2014)
Title Independent Non-executive Director
Qualifications P.Eng, B.Sc. Applied Science, MBA
experience and expertise Stephen is based in Toronto and was President and Chief Executive Officer
(CEO) of Search Minerals Inc. (TSX-V:SMY), a company focused on the
exploration and development of strategic metals. Prior to his work with
Search Minerals, Mr Keith was a founder and the President of Rio Verde
Minerals Development Corp, a phosphate company he took from concept
to listing on the TSX-V. Mr Keith led Rio Verde Minerals until its acquisition
by B&A Fertilizers Limited on March 13, 2013. In addition Stephen sits
on the Board of Directors of Aura Minerals (TSX:ORA) and is a strategic
advisor to Dominican Renewables Inc.
Other current directorships Aura Minerals (TSX:ORA).
Former directorships
(in the last 3 years)
Search Minerals Inc. (resigned 28 July 2014), Rio Verde Minerals
Development Corp (resigned 13 March 2013)
special responsibilities The board carries out the responsibilities of the Nomination and
Remuneration and Audit and Risk Committees
interests in shares None
interests in options None
24
DIRECTORS' REPORT
infoRmation on DiReCtoRs
(continued)
mr alexandre Penha (appointed 29 July 2014)
Title Alternate Non-executive Director to Stephen Keith
Qualifications BA, B.Sc. Economics, post-degree in Corporate Finance
experience and expertise Alex is based in Toronto and has worked closely with Stephen Keith for a
number of years at both Search Minerals (Director and EVP) and Rio Verde
Minerals (VP of Corporate Development). Alex has over eight years of
experience in mining capital markets, including corporate development,
research and investment banking. Alex is a board member of the Brazil-
Canada Chamber of Commerce and Chairman of its mining Committee.
Other current directorships None
Former directorships
(in the last 3 years)
Search Minerals Inc. (resigned 28 July 2014)
special responsibilities The board carries out the responsibilities of the Nomination and
Remuneration and Audit and Risk Committees
interests in shares None
interests in options None
mr Peter Bennetto (resigned 26 November 2013)
Title Non-executive Director
Qualifications Member of FSIA. Member of AICD
experience and expertise Mr Bennetto has over 30 years’ experience in banking and investment. he
has had deep involvement in capital, currency and commodity markets
with Societe Generale and Banque Indosuez. he has held company
director positions in exploration, mining and manufacturing companies
listed on the ASX since 1990 and is currently the non-executive chairman
of Ironbark zinc Ltd.
Other current directorships
Ironbark zinc Ltd
Former directorships
(in the last 3 years)
Waratah Resources Limited resigned 23 January 2013.
special responsibilities The board carries out the responsibilities of the Nomination and
Remuneration and Audit and Risk Committees
interests in shares Not applicable as no longer a director
interests in options Not applicable as no longer a director
25
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
DirECtorS' rEport
— continued —
Company seCRetaRy
Mr McInally was appointed as Chief Financial Officer and Company Secretary on 4 October 2012. Mr Julien
McInally (B.Bus ,CPA, MBA) is a CFO/Company Secretary with over 15 years of resource industry experience with
public listed companies on the TSXV, AIM and ASX stock exchanges. he has expertise in capital raisings, mergers
and acquisitions, project evaluation of complex mining projects, strategy, commercial agreements, statutory
and management reporting and compliance and governance obligations of publicly listed companies.
DiReCtoRs meetings
The number of meetings of the company's Board of Directors ('the Board') and of each Board committee
held during the year ended 30 June 2014, and the number of meetings attended by each director were:
Name
James Chisholm
Peter Bennetto
Adrian Byass
Leslie Szonyi
FULL BOarD
attended
held
7
4
7
7
7
4
7
7
held: represents the number of meetings held during the time the director held office.
The Board of the Company undertake the responsibilities of both the Nomination and Remuneration
Committee and the Audit and Risk Committee.
Mr Stephen Keith and Mr Alex Penha were appointed after the financial year ended 30 June 2014.
26
DIRECTORS' REPORT
RemuneRation RepoRt (auDiteD)
The remuneration report, which has been audited, outlines the key management personnel remuneration
arrangements for the consolidated entity, in accordance with the requirements of the Corporations Act 2001
and its Regulations.
The remuneration report is set out under the following main headings:
A Principles used to determine the nature and amount of remuneration
B Details of remuneration
C Service agreements
D Share-based compensation
E Additional disclosures relating to key management personnel
a Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's executive reward framework is to ensure reward for performance
is competitive and appropriate for the results delivered. The framework aligns executive reward with the
achievement of strategic objectives and the creation of value for shareholders, and conforms to the market
best practice for delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies
the following key criteria for good reward governance practices:
•
•
•
•
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency
The Board undertakes the responsibilities of the Nomination and Remuneration Committee and is responsible
for determining and reviewing remuneration arrangements for its directors and executives. The performance
of the consolidated entity depends on the quality of its directors and executives. The remuneration philosophy
is to attract, motivate and retain high performance and high quality personnel. The Board has structured an
executive remuneration framework that is market competitive and complementary to the reward strategy of
the consolidated entity.
Alignment to shareholders' interests:
•
•
a focus on sustained growth in share price and key non-financial drivers of value
attracts and retains high calibre executives
Alignment to program participants' interests:
•
•
•
rewards capability and experience
reflects competitive reward for contribution to growth in shareholder wealth
provides a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive directors and executive
remunerations are separate.
27
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
DirECtorS' rEport
— continued —
Non-executive directors remuneration
Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities
of the directors. Non-executive directors' fees and payments are reviewed annually by the Board. The Board
may, from time to time, receive advice from independent remuneration consultants to ensure non-executive
directors' fees and payments are appropriate and in line with the market. The chairman's fees are determined
independently to the fees of other non-executive directors based on comparative roles in the external
market. The chairman is not present at any discussions relating to determination of his own remuneration.
Non-executive directors receive share options to ensure alignment with the Boards responsibility of creating
shareholder wealth. The remuneration for the non-executive directors including the Chairman has been set
at $36,000 per annum. Remuneration for non-executive directors commenced in September following the
listing of the Company on the Australian Securities Exchange.
ASX listing rules require the aggregate non-executive director’s remuneration be determined periodically by
a general meeting. The most recent determination was at the General Meeting held on 29 May 2012, where
the shareholders approved an aggregate remuneration of $250,000 per annum.
Executive remuneration
The consolidated entity aims to reward executives with a level and mix of remuneration based on their
position and responsibility, which is both fixed and variable.
The executive remuneration and reward framework has four components:
•
•
•
•
base pay and non-monetary benefits
short-term performance incentives
share-based payments
other remuneration such as superannuation and long service leave
The combination of these comprises the executive's total remuneration.Fixed remuneration, consisting
of base salary, superannuation and non-monetary benefits, are reviewed annually by the Board, based on
individual and business unit performance, the overall performance of the consolidated entity and comparable
market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example
motor vehicle benefits) where it does not create any additional costs to the consolidated entity and provides
additional value to the executive.
The Company does not have short-term incentives ('STI') at this time.
Consolidated entity performance and link to remuneration
Because the consolidated entity is in exploration and not production, there is no direct relationship between
the consolidated entity’s financial performance and the level of remuneration paid to key management
personnel.
The link between remuneration, company performance and shareholder wealth generation is tenuous,
particularly in the exploration and development stage of a minerals company. Share prices are subject to
the influence of international phosphate prices and market sentiment towards the sector and increases or
decreases may occur independently of executive performance or remuneration.
28
DIRECTORS' REPORT
Executive remuneration (continued)
The company may issue options to provide an incentive for key management personnel which, it is believed,
is in line with industry standards and practice and is also believed to align the interests of key management
personnel with those of the company’s shareholders.
Use of remuneration consultants
The company did not engage remuneration consultants during the financial year ended 30 June 2014.
Voting and comments made at the company's 2013 Annual General Meeting ('AGM')
The remuneration report presented to shareholders at the 2013 AGM was accepted with no
comments made.
B Details of remuneration
Details of the remuneration of the key management personnel of consolidated entity are set out in the
following tables. There were no other key management personnel of the consolidated entity other than the
directors.
2014
Name
non-executive
Directors
James Chisholm
(Chairman)
Peter Bennetto *
Adrian Byass
shOrT-Term BeneFiTs
POsT-emPLOymenT
beNeFits
share-BaseD
PayMeNts
Cash salary
and fees
$
30,000
8,600
30,000
annual
leave
accrued
$
-
-
-
non-
monetary
superannuation
Options
shares
Total
$
-
-
-
$
-
-
-
$
18,529
18,529
21,923
$
-
-
-
$
48,529
27,129
51,923
executive Directors
Leslie Szonyi
304,388
2,266
Total
372,988
2,266
-
-
25,612
34,258
25,612
93,239
-
-
366,524
494,105
* Mr Bennetto resigned as a director on 26 November 2013
29
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
DirECtorS' rEport
— continued —
shOrT-Term BeneFiTs
POsT-emPLOymenT
beNeFits
share-BaseD
PayMeNts
2013
Name
non-executive
Directors
James Chisholm
(Chairman)
Peter Bennetto
Adrian Byass
Cash salary
and fees
$
-
-
-
annual
leave
accrued
$
-
-
-
executive Directors
Leslie Szonyi
302,752
29,423
Total
302,752
29,423
non-
monetary
superannuation
Options
shares
Total
$
-
-
-
-
-
$
-
-
-
$
109,084
109,084
106,077
$
-
-
-
$
109,084
109,084
106,077
27,248
201,677
27,248
525,922
-
-
561,100
885,345
The proportion of remuneration linked to performance and the fixed proportion are as follows.
Name
2014
2013
2014
2013
2014
2013
FixeD remUneraTiOn
aT risK - sTi
aT risK - LTi
non-executive Directors
James Chisholm (Chairman)
Peter Bennetto
Adrian Byass
62%
32%
58%
-%
-%
-%
executive Directors
Leslie Szonyi
91%
64%
-%
-%
-%
-%
-%
-%
-%
-%
38%
68%
42%
100%
100%
100%
9%
36%
There was no proportion of the cash bonuses paid/payable or forfeited in either 2014 or 2013.
30
DIRECTORS' REPORT
C service agreements
Remuneration and other terms of employment for key executive management personnel are formalised in
service agreements. Details of these agreements are as follows:
Leslie szonyi
Title Managing Director and Chief Executive Officer
agreement commenced 4 April 2011
Term of agreement On-going
Details
a.
Base salary including superannuation guarantee levy is $330,000.
The base salary is reviewed annually in accordance with increases the
Consumer Price Index.
b.
If, with the approval of the Board, Dr Szonyi performs extra services
or makes any special exertion for the benefit of the Company, then
the Directors may (in accordance with the Constitution) approve the
payment of special and additional remuneration in relation to such
services;
c.
Dr Szonyi may terminate the Executive Agreement at any time by giving
Fertoz not less than 6 months written notice;
d.
Fertoz Ltd may terminate the Executive Agreement:
i.
at any time by giving Dr Szonyi 12 months written notice, or
payment in lieu of that notice; and
ii.
without prior notice in certain prescribed circumstances, including
where Dr Szonyi commits a serious or persistent breach of the
Executive Agreement.
31
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
DirECtorS' rEport
— continued —
D share-based compensation
Issue of shares
No shares were issued to directors and other key management personnel as part of compensation during the
year ended 30 June 2014.
Options
There where no options over ordinary shares granted in this financial year as part of compensation during the
year ended 30 June 2014. All Long Term Incentive options appearing as remuneration in this financial year
are due to options granted in previous years and that vested during this financial year.
All Options granted carry no dividend or voting rights.
The number of options over ordinary shares granted to and vested by directors and other key management
personnel as part of compensation during the year ended 30 June 2014 are set out below:
Name
2014
2013
2014
2013
nUmBer OF OPTiOns granTeD
DUring The year
nUmBer OF OPTiOns VesTeD
DUring The year
James Chisholm (Chairman)
Peter Bennetto
Adrian Byass
Leslie Szonyi
-
-
-
-
-
-
923,076
-
1,230,769
1,230,769
923,076
2,461,540
-
-
-
-
No options over ordinary shares were granted, exercised and lapsed for directors and other key management
personnel as part of compensation during the year ended 30 June 2014.
32
DIRECTORS' REPORT
e additional disclosures relating to key management personnel
Shareholding
The number of shares in the company held during the financial year by each director and other members of
key management personnel of the consolidated entity, including their personally related parties, is set out
below:
Ordinary shares
Balance at the
start of year
James Chisholm
Peter Bennetto *
Adrian Byass
Leslie Szonyi
5,214,380
819,042
-
678,679
received
as part of
remuneration
-
-
-
-
additions
Other
Balance at end
of year
89,000
-
130,000
11,759
-
(819,042)
-
-
5,303,380
-
130,000
690,438
Total
6,712,101
-
230,759
(819,042)
6,123,818
Option holding
The number options over ordinary shares in the company held during the financial year by each director and
other members of key management personnel of the consolidated entity, including their personally related
parties, is set out below:
Ordinary shares
Balance at the
start of year
James Chisholm
Peter Bennetto *
Adrian Byass
Leslie Szonyi
1,230,769
1,230,769
923,076
2,461,540
received
as part of
remuneration
-
-
-
-
Total
5,846,154
-
additions
Other
Balance at end
of year
-
-
-
-
-
-
(1,230,769)
-
-
1,230,769
-
923,076
2,461,540
(1,230,769)
4,615,385
All options as at year end had vested and are exercisable, however, the shares underlying the options are
escrowed until 2 September 2015.
This concludes the remuneration report, which has been audited.
* Other represents shares held by Mr Bennetto at resignation date
33
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
DirECtorS' rEport
— continued —
shaRes unDeR option
unissued ordinary shares of Fertoz Limited under option at the date of this report are as follows:
grant date
29 May 2012
29 May 2012
29 May 2012
29 May 2012
6 July 2012
3 September 2012
3 September 2012
3 September 2012
24 April 2013
1 May 2013
Total
expiry date
1 September 2017
1 September 2017
1 September 2017
1 September 2017
1 September 2017
1 September 2017
1 September 2017
1 September 2017
1 September 2017
1 September 2017
exercise price
$0.25
$0.35
number under option
1,846,155
1,230,769
$0.45
$0.55
$0.25
$0.25
$0.35
$0.45
$0.25
$0.25
1,230,769
615,385
307,692
307,692
307,692
307,692
4,000,000
461,538
10,615,384
No person entitled to exercise the options had or has any right by virtue of the option to participate in any
share issue of the company or of any other body corporate.
shaRes issueD on the exeRCise of options
There were no ordinary shares of Fertoz Limited issued during the year ended 30 June 2014 and up to the
date of this report on the exercise of options granted.
inDemnity anD insuRanCe of offiCeRs
The company has indemnified the directors and executives of the company for costs incurred, in their capacity
as a director or executive, for which they may be held personally liable, except where there is a lack of good
faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors and
executives of the company against a liability to the extent permitted by the Corporations Act 2001. The
contract of insurance prohibits disclosure of the nature of liability and the amount of the premium.
inDemnity anD insuRanCe of auDitoR
The company has not, during or since the financial year, indemnified or agreed to indemnify the auditor of
the company or any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor
of the company or any related entity.
34
DIRECTORS' REPORT
non-auDit seRviCes
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial
year by the auditor are outlined in note 3 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or
by another person or firm on the auditor's behalf), is compatible with the general standard of independence
for auditors imposed by the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 3 to the financial statements do not
compromise the external auditor’s independence requirements of the Corporations Act 2001 for the following
reasons:
•
•
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity
and objectivity of the auditor, and
none of the services undermine the general principles relating to auditor independence as set out
in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional
and Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a
management or decision-making capacity for the company, acting as advocate for the company or
jointly sharing economic risks and rewards.
offiCeRs of the Company who aRe foRmeR auDit paR tneRs of BDo auDit pty ltD
There are no officers of the company who are former audit partners of BDO Audit Pty Ltd.
auDitoR's inDepenDenCe DeClaRation
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act
2001 is set out on the following page.
auDitoR
BDO Audit Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.
On behalf of the directors
James Chisholm
Chairman
26 September 2014
35
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
inDePenDenCe DeCLaraTiOn
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
DECLARATION OF INDEPENDENCE BY ANTHONY WHYTE TO THE DIRECTORS OF FERTOZ LIMITED
As lead auditor of Fertoz Limited for the year ended 30 June 2014, I declare that, to the best of my
knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Fertoz Limited and the entities it controlled during the period.
A J Whyte
Partner
BDO Audit Pty Ltd
Location, 26 September 2014
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
36
CORPORATE GOVERNANCE STATEMENT
COrPOraTe gOVernanCe sTaTemenT
The Board of Directors (‘the Board’) of Fertoz Limited (the ‘company’) is responsible for the corporate
governance of the consolidated entity. The Board guides and monitors the business and affairs of the
company on behalf of the shareholders by whom they are elected and to whom they are accountable.
The table below summarises the company's compliance with the ASX Corporate Governance Council's
Principles and Recommendations with 2010 Amendments (2nd Edition) in accordance with ASX Listing Rule
4.10.3.
Principles and recommendations
response
Compliance
Principle 1 – Lay solid foundations for management and oversight
1.1
1.2
1.3
Establish the functions
reserved to the Board and
those delegated to senior
executives and disclose those
functions.
The Board is responsible for the overall
corporate governance of the company.
Complies.
The Board has adopted a Board Charter that
formalises its roles and responsibilities and
defines the matters that are reserved for the
Board and specific matters that are delegated to
senior executives.
On appointment of a director, the company
issues a letter of appointment setting out the
terms and conditions of appointment to the
Board.
Disclose the process for
evaluating the performance
of senior executives.
The process for the performance of senior
executives is included in the Performance and
Evaluation Policy.
Provide the information
indicated in the Guide to
reporting on Principle 1.
A Board Charter has been disclosed on the
company’s website and is summarised in this
Corporate Governance Statement.
Complies.
Complies.
A performance evaluation process is included
in the Performance and Evaluation Policy which
has been disclosed on the company’s website
and is summarised in this Corporate Governance
Statement.
The company’s website is www.fertoz.com.au.
The Board had not conducted a performance
evaluation for senior executives in the financial
year due to the Company having only been
listed since September 2013. Performance
evaluations will be conducted in accordance
with the policy in October 2013 after a full year
of operations since listing has been concluded.
37
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
CorporAtE GovErNANCE StAtEMENt
— continued —
Principles and recommendations
response
Compliance
Principle 2 – structure the Board to add value
2.1
2.2
2.3
2.4
2.5
2.6
A majority of the Board
should be independent
directors.
The chair should be an
independent director.
As at the date of this report, the Company
does not have a majority of independent
directors. The Board considers the Company
is not currently of a size, or its affairs of such
complexity, to justify the establishment of this
requirement.
As at the date of this report, the Company
does not have an Independent director as
Chairman. The Board considers the Company
is not currently of a size, or its affairs of such
complexity, to justify the appointment of such.
Does not comply.
Does not comply.
The roles of chair and chief
executive officer should not
be exercised by the same
individual.
James Chisholm is the Chairman and Leslie
Szonyi is the Managing Director and Chief
Executive Officer.
Complies.
The Board should establish a
nomination committee.
The company does not have a Nomination and
Remuneration Committee.
Does not comply.
The Board as a whole undertakes the process
of reviewing the skill base and experience of
existing Directors to enable identification or
attributes required in new Directors and senior
executives. Where appropriate, independent
consultants will be engaged to identify possible
new candidates for the Board.
The Board considers the current mix of skills
and experience of members of the Board and
its senior executives is sufficient to meet the
requirements of the company.
The Board supports the nomination and re-
election of the directors at the company’s
forthcoming Annual General Meeting.
The company conducts the process for
evaluating the performance of the Board, its
committees and individual directors as outlined
in the Performance and Evaluation Policy which
is available on the company’s website at www.
fertoz.com.au.
Complies.
Disclose the process for
evaluating the performance
of the Board, its committees
and individual directors.
Provide the information
indicated in the Guide to
reporting on Principle 2.
The information has been disclosed, where
applicable, in the directors’ report attached to
the Corporate Governance Statement.
Complies.
38
CORPORATE GOVERNANCE STATEMENT
Principles and recommendations
response
Compliance
Principle 3 – Promote ethical and responsible decision-making
3.1
Establish a code of conduct
and disclose the code or a
summary of the code as to:
•
•
•
the practices necessary
to maintain confidence
in the company’s
integrity;
the practices necessary
to take into account
their legal obligations
and the reasonable
expectations of their
stakeholders; and
the responsibility
and accountability
of individuals for
reporting and
investigating reports of
unethical practices.
Establish a policy concerning
diversity and disclose the
policy or a summary of that
policy. The policy should
include requirements for
the Board to establish
measurable objectives for
achieving gender diversity for
the Board to assess annually
both the objectives and
progress in achieving them.
3.2
Complies.
Complies.
The Board has adopted a Code of Conduct.
The Code outlines the framework for ensuring
that the Company’s decision making and actions
are undertaken in an ethical and accountable
manner and in accordance with the relevant
laws and regulations of the countries in which it
operates..
The Code confirms the company’s commitment
to operating with integrity and with a duty
of care to its stakeholders (shareholders,
employees, customers, suppliers etc) and the
broader community in which it operates.
All employees are encouraged to report any
concerns or departure from the Code.
The Code of Conduct is available on the
company’s website, www.fertoz.com.au
The Board has adopted a Diversity Policy.
that outlines recognises the benefits of
employee and board diversity, the importance
of benefiting from all available talent and
promoting an environment conducive to the
appointment of well qualified employees, senior
management and Board candidates so that
there is appropriate diversity to maximise the
achievement of corporate and business goals.
The Board is responsible for implementing
this policy, setting measurable objectives and
strategies to achieve the purpose of this policy
and monitoring the Group’s progress through
the monitoring, evaluation and reporting
mechanisms.
The Company’s strategy does include the
requirement to recruit from a diverse pool of
candidates, use a transparent process and
employee consultants to identify and assess the
best candidates if appropriate.
The Diversity Policy is available on the
company’s website.
39
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
CorporAtE GovErNANCE StAtEMENt
— continued —
Principles and recommendations
response
Compliance
Principle 3 – Promote ethical and responsible decision-making (continued)
3.3
3.4
Disclose in each annual report
the measurable objectives for
achieving gender diversity set
by the Board in accordance
with the diversity policy and
progress towards achieving
them.
Disclose in each annual report
the proportion of women
employees in the whole
organisation, women in senior
executive positions and
women on the Board.
The Board has not set the following measures
for achieving gender diversity in the
consolidated entity:
Does not comply.
Women on the Board
Women in senior executive positions
Women in the organisation
The board considers the company of insufficient
size to make it practical to set such targets.
The proportion of women employees in the
consolidated entity as at 30 June 2014 are as
follows:
Complies.
Women on the Board 0%
Women in senior executive positions 0%
Women in the organisation 0%
3.5
Provide the information
indicated in the Guide to
reporting on Principle 3
The Code of Conduct and Diversity Policy has
been disclosed on the company’s website and
is summarised in this Corporate Governance
Statement.
Does not comply.
The measureable objectives for achieving
gender diversity and progress towards achieving
them is not disclosed in this Corporate
Governance Statement as the board considers
the company of insufficient size to make it
practical to set such targets. As the operations
of the Company develop the Board will reassess
the setting of measurable diversity targets.
The proportion of women in the company
is disclosed in this Corporate Governance
Statement.
40
CORPORATE GOVERNANCE STATEMENT
Principles and recommendations
response
Compliance
Principle 4 – safeguard integrity in financial reporting
4.1
The Board should establish an
audit committee.
Does not comply.
The Board considers the Company is not
currently of a size, or its financial affairs of
such complexity, to justify the establishment
of an audit committee. The Board as a whole
is responsible for the selection and proper
application of accounting policies, the integrity
of financial reporting, the identification and
management of risk and review of operation
of the internal control systems. Whilst the
Board is not structured in the manner set out
in the Principles and Recommendations, the
Board is of the view that the experience and
professionalism of the persons on the Board is
sufficient to ensure that all significant matters are
appropriately addressed and actioned. Further
the Board does not consider that the Company
is of sufficient size to justify the appointment
of additional Directors for the sole purpose of
satisfying the Recommendations as it would
be cost prohibitive. As the operations of the
Company develop the Board will reassess the
formation of the Audit Committee.
4.2
The audit committee should
be structured so that it:
Not applicable see 4.1 above
Not applicable
see 4.1 above.
•
•
•
consists of only non-
executive directors;
consists of a majority of
independent directors;
is chaired by an
independent chair, who
is not chair of the Board;
and
•
has at least three
members.
4.3
The audit committee should
have a formal charter.
The Board has adopted an Audit and Risk
Committee Charter even though the company
does not have an audit committee.
Complies.
4.4
Provide the information
indicated in the Guide to
reporting on Principle 4.
This Charter is available on the company’s
website.
This information has been disclosed in the
directors’ report attached to this Corporate
Governance Statement and is summarised in
this Corporate Governance Statement.
Complies.
41
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
CorporAtE GovErNANCE StAtEMENt
— continued —
Principles and recommendations
response
Compliance
Principle 5 – make timely and balanced disclosure
5.1
Establish written policies
designed to ensure
compliance with ASX Listing
Rules disclosure requirements
and to ensure accountability
at a senior executive level for
that compliance and disclose
those policies or a summary
of those policies.
The company has adopted a Continuous
Disclosure Policy, to ensure that it complies with
the continuous disclosure regime under the ASX
Listing Rules and the Corporations Act 2001.
Complies.
This policy is available on the company’s website
at www.fertoz.com.au.
5.2
Provide the information
indicated in the Guide to
reporting on Principle 5.
The company’s Continuous Disclosure Policy
is available on the company’s website at www.
fertoz.com.au.
Complies.
Principle 6 – respect the rights of shareholders
6.1
Design a communications
policy for promoting
effective communication
with shareholders and
encouraging their
participation at general
meetings and disclose that
policy or a summary of that
policy.
The company has adopted a Shareholder
Communications Policy. The company uses
its website (www.ifrssystem.com), annual and
interim reports, market announcements, media
disclosures and webcasting to communicate
with its shareholders, as well as encourages
participation at general meetings.
This policy is available on the company’s website
at www.fertoz.com.au.
Complies.
6.2
Provide the information
indicated in the Guide to
reporting on Principle 6.
The company’s Shareholder Communications
Policy is available on the company’s website at
www.fertoz.com.au.
Complies.
Principle 7 – recognise and manage risk
7.1
Establish policies for the
oversight and management
of material business risks and
disclose a summary of these
policies.
The company has adopted a risk management
statement within the Audit and Risk
Committee Charter. As there is no Audit and
Risk Committee, the Board is responsible for
managing risk and is ultimately responsible for
such.
Complies.
The Audit and Risk Committee Charter is
available on the company’s website.
42
CORPORATE GOVERNANCE STATEMENT
Principles and recommendations
response
Compliance
Principle 7 – recognise and manage risk (continued)
The company has identified key risks within the
business. In the ordinary course of business,
management monitor and manage these risks.
Complies.
Key operational and financial risks are presented
to and reviewed by the Board at each Board
meeting.
Complies.
The Board has received a statement from the
Chief Executive Officer and Chief Financial
Officer that the declaration provided
in accordance with section 295A of the
Corporations Act 2001 is founded on a sound
system of risk management and internal control
and that the system is operating efficiently and
effectively in all material respects in relation to
the financial reporting risks.
7.2
7.3
The Board should require
management to design
and implement the risk
management and internal
control system to manage the
company’s material business
risks and report to it on
whether those risks are being
managed effectively. The
Board should disclose that
management has reported
to it as to the effectiveness of
the company’s management
of its material business risks.
The Board should disclose
whether it has received
assurance from the chief
executive officer (or
equivalent) and chief financial
officer (or equivalent) that
the declaration provided
in accordance with section
295A of the Corporations
Act is founded on a sound
system of risk management
and internal control and
that the system is operating
efficiently and effectively in all
material respects in relation
to financial reporting risks.
7.4
Provide the information
indicated in the Guide to
reporting on Principle 7.
The Board has adopted an Audit and Risk
Committee Charter which includes a statement
of the company’s risk policies.
Complies.
This Charter is available on the company’s
website.
The company has identified key risks within
the business and has received a statement of
assurance from the Chief Executive Officer and
Chief Financial Officer.
43
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
CorporAtE GovErNANCE StAtEMENt
— continued —
Principles and recommendations
response
Compliance
Principle 8 – remunerate fairly and responsibly
8.1
The Board should establish a
remuneration committee.
Does not comply.
The Board considers the Company is not
currently of a size, or its financial affairs of
such complexity, to justify the establishment
of a remuneration committee. The Board as
a whole is responsible for the remuneration
arrangements for the Directors and executives of
the company and considers it more appropriate
to set aside time at Board meetings each year to
specifically address matters that would ordinarily
fall to a Remuneration Committee.
8.2
The remuneration committee
should be structured so that
it:
Refer to 8.1
Does not comply.
•
•
•
consists of a majority of
independent directors;
is chaired by an
independent chair; and
has at least three
members.
Clearly distinguish the
structure of non-executive
directors’ remuneration from
that of executive directors
and senior executives.
8.3
Complies.
The company complies with the guidelines
for executive remuneration packages and
non-executive director remuneration. The
remuneration structure has been disclosed in
the directors’ report attached to the Corporate
Governance Statement.
No senior executive is involved directly in
deciding their own remuneration.
8.4
Provide the information
indicated in the Guide to
reporting on Principle 8.
The Board has adopted a Nomination and
Remuneration Committee Charter.
Complies.
This Charter is available on the company’s
website.
The company does not have any schemes for
retirement benefits other than superannuation
for senior executives.
Fertoz Limited’s corporate governance practices were in place for the financial year ended 30 June 2014 and
to the date of signing the directors’ report.
Various corporate governance practices are discussed within this statement. For further information
on corporate governance policies adopted by Fertoz Limited, refer to our website: www.fertoz.com.au
44
CORPORATE GOVERNANCE STATEMENT
BoaRD funCtions
The role of the Board is as follows:
•
•
•
•
•
Representing and serving the interests of shareholders by overseeing and appraising the strategies,
policies and performance of the company. This includes overviewing the financial and human resources
the company has in place to meet its objectives and the review of management performance;
Protecting and optimising company performance and building sustainable value for shareholders
in accordance with any duties and obligations imposed on the Board by law and the company’s
constitution and within a framework of prudent and effective controls that enable risk to be assessed
and managed;
Responsible for the overall Corporate Governance of Fertoz Limited and its controlled entities,
including monitoring the strategic direction of the company and those entities, formulating goals for
management and monitoring the achievement of those goals;
Setting, reviewing and ensuring compliance with the company’s values (including the establishment and
observance of high ethical standards); and
Ensuring shareholders are kept informed of the company’s performance and major developments
affecting its state of affairs.
responsibilities/functions of the Board include:
•
•
•
•
•
•
•
•
•
•
the appointment of the chairperson, company secretary and the composition of the Board;
the appointment of the chief executive officer/managing director, senior management team and
key staff (if any), the determination of the terms of such appointment (including remuneration and
termination) and the review of their performance;
formulation, review and approval of the Group’s direction, strategies, business objectives and targets;
reviewing, approving and monitoring significant business transactions, including capital expenditure,
acquisitions, divestments and organisational restructures;
monitoring the Group’s financial performance by reviewing and approving budgets, assessing the
Group’s performance against budgets and monitoring the adequacy and integrity of financial and other
reporting procedures;
approving annual, half yearly and quarterly accounts;
recommending to shareholders the appointment of the external auditor as and when their appointment
or re-appointment is required to be approved by them;
approving the issue of any shares, options or other securities in the Company (subject to compliance
with any applicable ASX Listing Rules);
ensuring that adequate internal control systems, procedures and standards, including risk management
systems, codes of conduct and legal compliance and ethical standards, are in place and complied with;
and
ensuring corporate accountability to shareholders primarily through adopting an effective shareholder
communications strategy.
In carrying out its responsibilities and functions, the Board may delegate any of its powers to a Board
committee, a director, employee or other person subject to ultimate responsibility of the directors under the
Corporations Act 2001.
45
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
CorporAtE GovErNANCE StAtEMENt
— continued —
Matters which are specifically reserved for the Board or its committees include the following:
•
•
•
•
•
•
•
•
•
appointment of a Chair;
appointment and removal of the Managing Director/CEO;
appointment of directors to fill a vacancy or as additional directors;
establishment of Board committees, their membership and delegated authorities;
approval of dividends;
development and review of corporate governance principles and policies;
approval of major capital expenditure, acquisitions and divestitures in excess of authority levels
delegated to management;
calling of meetings of shareholders; and
any other specific matters nominated by the Board from time to time.
stRuCtuRe of the BoaRD
The company’s constitution governs the regulation of meetings and proceedings of the Board. The Board
determines its size and composition, subject to the terms of the constitution. The Board does not believe that
it should establish a limit on tenure other than stipulated in the company constitution.
While tenure limits can help to ensure that there are fresh ideas and viewpoints available to the Board, they
hold the disadvantage of losing the contribution of directors who have been able to develop, over a period
of time, increasing insight in the company and its operation and, therefore, an increasing contribution to the
Board as a whole. It is intended that the Board should comprise a majority of independent non-executive
directors and comprise directors with a broad range of skills, expertise and experience from a diverse range
of backgrounds, including compliance with the Diversity Policy. It is also intended that the chair should be an
independent non-executive director. The Board regularly reviews the independence of each director in light
of their interests disclosed to the Board.
The Board only considers directors to be independent where they are independent of management and free
of any business or other relationship that could materially interfere with, or could reasonably be perceived to
interfere with, the exercise of their unfettered and independent judgment. The Board has adopted a definition
of independence based on that set out in Principle 2 of the ASX Corporate Governance Principles and
Recommendations (2nd edition). The Board will review the independence of each director in light of interests
disclosed to the Board from time to time. In accordance with the definition of independence above, and the
materiality thresholds set, the following directors of Fertoz Limited are considered to be independent:
name
Adrian Byass
Stephen Keith
Alex Penha
Peter Bennetto
position
Non-Executive Director
Non-executive Director (appointed 29 July 2014)
Alternative Non-Executive Director to Stephen Keith (appointed 29 July 2014)
Non-Executive Director (resigned 26 November 2013)
There are procedures in place, agreed by the Board, to enable directors in furtherance of their duties to seek
independent professional advice at the company's expense.
46
CORPORATE GOVERNANCE STATEMENT
The appointment date of each director in office at the date of this report is as follows:
name
James Chisholm
Lesley Szonyi
Adrian Byass
Peter Bennetto
Stephen Keith
Alex Penha
appointment Date
position
Reappointed 27 November 2013
Non-Executive Director, Chairman
Appointed 29 May 2012
Managing Director
Appointed 20 November 2012
Non-Executive Director
Resigned 26 November 2013
Non-Executive Director
Appointed 29 July 2014
Non-Executive Director
Alternative Non-Executive Director Appointed 29 July 2014
Further details on each director can be found in the directors’ report attached to this Corporate Governance
Statement.
DiveRsity poliCy
The company is committed to providing an inclusive workplace and recognises the value of individuals with
diverse skills, values, backgrounds and experiences will bring to the company. At the core of the company’s
diversity policy is a commitment to equality and respect. Diversity is recognising and valuing the unique
contribution people can make because of their individual background and different skills, experiences and
perspectives. People differ not just on the basis of race and gender, but also other dimensions such as
lifestyle, education, physical ability, age and family responsibility.
Whilst the achievement of diversity in all areas is important to the company, as required by the ASX Listing
Rules, the company has not set measureable objectives for achieving gender diversity as the board considers
the company of insufficient size to make it practical to set such targets. As the operations of the Company
develop the Board will reassess the setting of measurable diversity targets.
seCuRities tRaDing poliCy
under the company's Securities Trading Policy, directors, officers and employees of the company should not
trade in the company’s securities when he or she is in possession of price sensitive information that is not
generally available to the market.
Directors and senior management are likely to be in possession of unpublished price sensitive information
concerning the company by virtue of their position within the company. Therefore those persons are restricted
from dealing in the company’s securities in the thirty day period immediately preceding the release of price
sensitive information to the ASX (non-trading period).
In addition, directors, officers and employees can only deal in the company’s securities after having first
obtained clearance from the company, and must notify the Company Secretary when a trade has occurred.
As required by the ASX Listing Rules, the company requires the directors to disclose to the Company any
transaction conducted by directors in the securities of the company within 5 days of the transaction taking
place and the Company makes an announcement to the ASX within that period.
The Securities Trading Policy has been issued to ASX and can be found on the company’s website.
47
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
CorporAtE GovErNANCE StAtEMENt
— continued —
auDit anD Risk Committee
As at the date of this report, the company does not have an Audit & Risk Management Committee. The full
Board of Directors undertake the role of this Committee. Given the composition of the Board and the size
of the Company, it is felt that a separate committee is not yet warranted, however it is expected that as the
Company’s operations expand the needs in this regard will be monitored. however, the Company does have
an Audit and Risk Committee Charter which the Board has adopted.
Risk
The responsibility of overseeing risk falls within the Charter of the Audit and Risk Committee is conducted by
the Board. Management and the Board continually undertake risk assessments of the company’s operations,
procedures and processes. The risk assessments are aimed at identifying the following:
•
•
•
•
a culture of risk control and the minimisation of risk throughout the company, which is being done
through natural or instinctive process by employees of the company;
a culture of risk control that can easily identify risks as they arise and amend practices;
the installation of practices and procedures in all areas of the business that are designed to minimise
an event or incident that could have a financial or other effect on the business and its day to day
management; and
adoption of these practices and procedures to minimise many of the standard commercial risks, i.e.
taking out the appropriate insurance policies or ensuring compliance reporting is up to date.
Ceo anD Cfo CeRtifiCation
The Chief Executive Officer and Chief Financial Officer have given a written declaration to the Board required
by section 295A of the Corporations Act 2001 that in their view:
•
•
•
the company's financial report is founded on a sound system of risk management and internal
compliance and control which implements the financial policies adopted by the Board;
the company's risk management and internal compliance and control system is operating effectively in
all material respects;
the company’s financial statements and notes thereto comply with the accounting standards; and the
company’s financial statements and notes thereto give a true and fair view of the consolidated entity's
financial position as at 30 June 2014 and of its performance for the financial year ended on that date.
peRfoRmanCe
The performance of the Board and key executives is reviewed regularly using both measurable and qualitative
indicators.
On an annual basis, directors will provide written feedback in relation to the performance of the Board and
its Committees against a set of agreed criteria:
•
Each Committee of the Board will also be required to provide feedback in terms of a review of its own
performance.
48
CORPORATE GOVERNANCE STATEMENT
•
•
•
Feedback will be collected by the chair of the Board, or an external facilitator, and discussed by the
Board, with consideration being given as to whether any steps should be taken to improve performance
of the Board or its Committees.
The Chief Executive Officer will also provide feedback from senior management in connection with any
issues that may be relevant in the context of Board performance review.
Where appropriate to facilitate the review process, assistance may be obtained from third party
advisers.
RemuneRation
It is the company's objective to provide maximum stakeholder benefit from the retention of a high quality
Board and executive team by remunerating directors and key executives fairly and appropriately with reference
to relevant employment market conditions. To assist in achieving this objective, the Board, in assuming the
responsibilities of assessing remuneration to employees, links the nature and amount of executive directors'
and officers' remuneration to the company and consolidated entity's financial and operational performance.
The expected outcomes of the remuneration structure are:
•
•
•
retention and motivation of key executives;
attraction of high quality management to the company and consolidated entity; and
performance incentives that allow executives to share in the success of the Fertoz Limited.
For a more comprehensive explanation of the company's and consolidated entity’s remuneration framework
and the remuneration received by directors and key executives in the current period, please refer to the
remuneration report, which is contained within the directors' report.
There is no scheme to provide retirement benefits to executive or non-executive directors, except for
Government guaranteed superannuation contributions.
The Board which undertakes the role of the Nomination and Remuneration Committee is responsible for
determining and reviewing compensation arrangements for the directors themselves and the Chief Executive
Officer and executive team.
CoRpoRate soCial ResponsiBility
The company has embraced responsibility for the company's actions and encourages a positive impact
through its activities on the environment, employees, communities and stakeholders.
49
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
COnsOLiDaTeD sTaTemenT OF PrOFiT Or LOss
anD OTher COmPrehensiVe inCOme
FOr The year enDeD 30 JUne 2014
revenue from continuing operations
Other income
expenses
Depreciation
Employee benefits expense
Exploration expenditure not capitalised
Finance costs
Write off of exploration and evaluation assets
Loss on disposal of exploration and evaluation assets
Listing fees and share registry expenses
Professional services
Travel
Other expenses
Profit/(loss) before income tax expense from continuing operations
Income tax expense
note
4
2014
$
-
2013
$
-
74,371
74,371
14,650
14,650
1,121
625,532
38,447
-
630,632
390,738
44,379
298,098
48,774
130,286
(2,133,636)
1,542
926,543
-
575
560,048
290,515
-
79,247
4,637
18,813
(1,867,270)
-
-
Profit/(loss) after income tax expense for the year
(2,133,636)
(1,867,270)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income/(loss) for the year
(62,060)
(62,060)
-
-
(2,195,696)
(1,867,270)
Earnings per share attributable to the owners of Fertoz Limited
Basic earnings per share
Diluted earnings per share
23
23
(0.051)
(0.051)
(0.058)
(0.058)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
50
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
COnsOLiDaTeD sTaTemenT OF FinanCiaL POsiTiOn
as aT 30 JUne 2014
assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
non-current assets
Exploration and evaluation assets
Property, plant and equipment
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
net assets
equity
Issued capital
Reserves
Retained profits
note
2014
$
2013
$
6
7
8
9
10
2,240,672
59,216
19,100
788,308
445,405
-
2,318,988
1,233,713
1,983,400
27,289
1,728,918
1,039
2,010,689
1,729,957
4,329,677
2,963,670
11
153,824
105,787
153,824
105,787
153,824
105,787
4,175,852
2,857,883
12
13
8,320,798
927,440
(5,072,386)
4,175,852
4,929,395
867,238
(2,938,750)
2,857,883
The above statement of financial position should be read in conjunction with the accompanying notes
51
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
COnsOLiDaTeD sTaTemenT OF Cash FLOWs
FOr The year enDeD 30 JUne 2014
Cash flows from operating activities
Payments to suppliers and employees (inclusive of GST)
Other income received
Interest received
Interest paid
note
2014
$
2013
$
(916,582)
500
69,544
(436,484)
10,050
4,600
-
(575)
net cash inflow/(outflow) from operating activities
19
(846,538)
(422,409)
Cash flows from investing activities
Payment for property, plant and equipment
Payment for exploration and evaluation assets
Receipts from sale of mining tenements
net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Payments for equity raising costs
net cash inflow/(outflow) from financing activities
Net increase/(decrease) in cash and cash equivalents
(33,683)
(1,364,382)
50,000
-
(536,209)
250,000
(1,348,065)
(286,209)
4,000,000
(353,033)
1,716,629
(328,256)
3,646,967
1,388,373
1,452,364
679,755
Cash and cash equivalents at the beginning of the financial period
788,308
108,553
Cash and cash equivalents at the end of the financial period
6
2,240,672
788,308
The above statement of cash flows should be read in conjunction with the accompanying notes
52
CONSOLIDATED STATEMENT OF ChANGES IN EQuITY
COnsOLiDaTeD sTaTemenT OF Changes in eQUiTy
FOr The year enDeD 30 JUne 2014
issued
Capital
$
retained
Profits
$
share
Based
Payment
reserve
$
Translation
reserve
$
Total
equity
$
Balance at 1 July 2012
3,265,416 (1,071,480)
170,839
Profit/(loss) after income tax expense for the year
Other comprehensive income for the year
Total comprehensive profit/(loss) for the year
-
-
-
(1,867,270)
-
(1,867,270)
-
-
-
Transaction with owners in their capacity as owners:
Shares issued
Share-based payments
1,663,979
-
-
-
-
696,399
at 30 June 2013
4,929,395 (2,938,750)
867,238
-
-
-
-
-
-
-
2,364,775
(1,867,270)
-
(1,867,270)
1,663,979
696,399
2,857,883
Balance at 1 July 2013
Profit/(loss) after income tax expense for the year
Other comprehensive income for the year
Total comprehensive profit/(loss) for the year
4,929,395 (2,938,750)
(2,133,636)
-
(2,133,636)
-
-
-
867,238
-
-
-
-
-
(62,060)
(62,060)
2,857,883
(2,133,636)
(62,060)
(2,195,696)
Transaction with owners in their capacity as owners:
Shares issued
Share issue costs
Share-based payments
at 30 June 2014
4,000,000
(608,597)
-
-
-
-
-
-
122,262
-
-
-
4,000,000
(608,597)
122,262
8,320,798 (5,072,386)
989,500
(62,060)
4,175,852
The above statement of changes in equity should be read in conjunction with the accompanying notes
53
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
nOTes TO The COnsOLiDaTeD FinanCiaL sTaTemenTs
FOr The year enDeD 30 JUne 2014
note 1. signifiCant aCCounting poliCies
The principal accounting policies adopted in the preparation of the financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
new, revised or amending accounting standards and interpretations adopted
The consolidated entity has adopted all of the new, revised or amending Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the
current reporting period.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not
been early adopted.
Any significant impact on the accounting policies of the consolidated entity from the adoption of these
Accounting Standards and Interpretations are disclosed below. The adoption of these Accounting Standards
and Interpretations did not have any significant impact on the financial performance or position of the
consolidated entity.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
AASB 10 Consolidated Financial Statements
The consolidated entity has applied AASB 10 from 1 July 2013, which has a new definition of 'control'. Control
exists when the reporting entity is exposed, or has the rights, to variable returns from its involvement with
another entity and has the ability to affect those returns through its 'power' over that other entity. A reporting
entity has power when it has rights that give it the current ability to direct the activities that significantly
affect the investee's returns. The consolidated entity not only has to consider its holdings and rights but also
the holdings and rights of other shareholders in order to determine whether it has the necessary power for
consolidation purposes.
AASB 11 Joint Arrangements
The consolidated entity has applied AASB 11 from 1 July 2013. The standard defines which entities qualify as
joint arrangements and removes the option to account for joint ventures using proportional consolidation.
Joint ventures, where the parties to the agreement have the rights to the net assets are accounted for using
the equity method. Joint operations, where the parties to the agreements have the rights to the assets
and obligations for the liabilities, will account for its share of the assets, liabilities, revenues and expenses
separately under the appropriate classifications.
AASB 12 Disclosure of Interests in Other Entities
The consolidated entity has applied AASB 12 from 1 July 2013. The standard contains the entire disclosure
requirement associated with other entities, being subsidiaries, associates, joint arrangements (joint
operations and joint ventures) and unconsolidated structured entities. The disclosure requirements have been
significantly enhanced when compared to the disclosures previously located in AASB 127 'Consolidated and
Separate Financial Statements', AASB 128 'Investments in Associates', AASB 131 'Interests in Joint Ventures'
and Interpretation 112 'Consolidation - Special Purpose Entities'.
54
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards
arising from AASB 13
The consolidated entity has applied AASB 13 and its consequential amendments from 1 July 2013. The
standard provides a single robust measurement framework, with clear measurement objectives, for measuring
fair value using the 'exit price' and provides guidance on measuring fair value when a market becomes less
active. The 'highest and best use' approach is used to measure non-financial assets whereas liabilities are
based on transfer value. The standard requires increased disclosures where fair value is used.
AASB 119 Employee Benefits (September 2011) and AASB 2011-10 Amendments to Australian
Accounting Standards arising from AASB 119 (September 2011)
The consolidated entity has applied AASB 119 and its consequential amendments from 1 July 2013. The
standard eliminates the corridor approach for the deferral of gains and losses; streamlines the presentation
of changes in assets and liabilities arising from defined benefit plans, including requiring remeasurements to
be presented in other comprehensive income; and enhances the disclosure requirements for defined benefit
plans. The standard also changed the definition of short-term employee benefits, from 'due to' to 'expected
to' be settled within 12 months. Annual leave that is not expected to be wholly settled within 12 months is
now discounted allowing for expected salary levels in the future period when the leave is expected to be
taken.
AASB 127 Separate Financial Statements (Revised), AASB 128 Investments in Associates and Joint
Ventures (Reissued) and AASB 2011-7 Amendments to Australian Accounting Standards arising from the
Consolidation and Joint Arrangements Standards
The consolidated entity has applied AASB 127, AASB 128 and AASB 2011-7 from 1 July 2013. AASB 127 and
AASB 128 have been modified to remove specific guidance that is now contained in AASB 10, AASB 11 and
AASB 12 and AASB 2011-7 makes numerous consequential changes to a range of Australian Accounting
Standards and Interpretations. AASB 128 has also been amended to include the application of the equity
method to investments in joint ventures.
AASB 2012-2 Amendments to Australian Accounting Standards - Disclosures - Offsetting Financial Assets
and Financial Liabilities
The consolidated entity has applied AASB 2012-2 from 1 July 2013. The amendments enhance AASB 7
'Financial Instruments: Disclosures' and requires disclosure of information about rights of set-off and related
arrangements, such as collateral agreements. The amendments apply to recognised financial instruments
that are subject to an enforceable master netting arrangement or similar agreement.
AASB 2012-5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009-
2011 Cycle
The consolidated entity has applied AASB 2012-5 from 1 July 2013. The amendments affect five Australian
Accounting Standards as follows: Confirmation that repeat application of AASB 1 'First-time Adoption
of Australian Accounting Standards' is permitted; Clarification of borrowing cost exemption in AASB 1;
Clarification of the comparative information requirements when an entity provides an optional third column
or is required to present a third statement of financial position in accordance with AASB 101 'Presentation of
Financial Statements'; Clarification that servicing of equipment is covered by AASB 116 'Property, Plant and
Equipment', if such equipment is used for more than one period; clarification that the tax effect of distributions
to holders of equity instruments and equity transaction costs in AASB 132 'Financial Instruments:
55
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
NotES to tHE CoNSoLiDAtED FiNANCiAL StAtEMENtS
FOr The year enDeD 30 JUne 2014
note 1. signifiCant aCCounting poliCies (continued)
AASB 2012-5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009-
2011 Cycle (continued)
Presentation' should be accounted for in accordance with AASB 112 'Income Taxes'; and clarification of the
financial reporting requirements in AASB 134 'Interim Financial Reporting' and the disclosure requirements
of segment assets and liabilities.
AASB 2012-10 Amendments to Australian Accounting Standards - Transition Guidance and Other
Amendments
The consolidated entity has applied AASB 2012-10 amendments from 1 July 2013, which amends AASB
10 and related standards for the transition guidance relevant to the initial application of those standards.
The amendments clarify the circumstances in which adjustments to an entity's previous accounting for its
involvement with other entities are required and the timing of such adjustments.
AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management
Personnel Disclosure Requirement
The consolidated entity has applied 2011-4 from 1 July 2013, which amends AASB 124 'Related Party
Disclosures' by removing the disclosure requirements for individual key management personnel ('KMP').
Corporations and Related Legislation Amendment Regulations 2013 and Corporations and Australian
Securities and Investments Commission Amendment Regulation 2013 (No.1) now specify the KMP disclosure
requirements to be included within the directors' report.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the
Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply
with International Financial Reporting Standards as issued by the International Accounting Standards Board
('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where
applicable, the revaluation of available-for-sale financial assets, financial assets and liabilities at fair value
through profit or loss, investment properties, certain classes of property, plant and equipment and derivative
financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process of applying the consolidated entity's
accounting policies. The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements, are disclosed in Critical accounting
judgements, estimates and assumptions section of this note.
56
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated
entity only. Supplementary information about the parent entity is disclosed in note 22.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Fertoz Limited
('company' or 'parent entity') as at 30 June 2014 and the results of all subsidiaries for the year then ended.
Fertoz Limited and its subsidiaries together are referred to in these financial statements as the 'consolidated
entity'.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity
controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power to direct the activities of
the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated
entity. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated
entity are eliminated. unrealised losses are also eliminated unless the transaction provides evidence of the
impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary
to ensure consistency with the policies adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in
ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference
between the consideration transferred and the book value of the share of the non-controlling interest acquired
is recognised directly in equity attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of
profit or loss and other comprehensive income, statement of financial position and statement of changes
in equity of the consolidated entity. Losses incurred by the consolidated entity are attributed to the non-
controlling interest in full, even if that results in a deficit balance.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill,
liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences
recognised in equity. The consolidated entity recognises the fair value of the consideration received and the
fair value of any investment retained together with any gain or loss in profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on
the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM
is responsible for the allocation of resources to operating segments and assessing their performance.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Fertoz Limited’s functional and
presentation currency.
57
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
NotES to tHE CoNSoLiDAtED FiNANCiAL StAtEMENtS
FOr The year enDeD 30 JUne 2014
note 1. signifiCant aCCounting poliCies (continued)
Foreign currency translation (continued)
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange
rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian
dollars using the average exchange rates, which approximate the rate at the date of the transaction, for the
period. All resulting foreign exchange differences are recognised in other comprehensive income through
the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is
disposed of.
revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the consolidated entity and
the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received
or receivable.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method
of calculating the amortised cost of a financial asset and allocating the interest income over the relevant
period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based
on the applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior
periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to
apply when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or
substantively enacted, except for:
58
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
income tax (continued)
•
•
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset
or liability in a transaction that is not a business combination and that, at the time of the transaction,
affects neither the accounting nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or
joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date.
Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable
profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets
are recognised to the extent that it is probable that there are future taxable profits available to recover the
asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current
tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate
to the same taxable authority on either the same taxable entity or different taxable entity's which intend to
settle simultaneously.
Discontinued operations
A discontinued operation is a component of the consolidated entity that has been disposed of or is classified
as held for sale and that represents a separate major line of business or geographical area of operations, is
part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary
acquired exclusively with a view to resale. The results of discontinued operations are presented separately on
the face of the statement of profit or loss and other comprehensive income.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification.
An asset is current when: it is expected to be realised or intended to be sold or consumed in normal operating
cycle; it is held primarily for the purpose of trading; it is expected to be realised within twelve months after
the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used
to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-
current.
A liability is current when: it is expected to be settled in normal operating cycle; it is held primarily for the
purpose of trading; it is due to be settled within twelve months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least twelve months after the reporting
period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
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Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-
term, highly liquid investments with original maturities of three months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value. For the statement of
cash flows presentation purposes, cash and cash equivalents also includes bank overdrafts, which are shown
within borrowings in current liabilities on the statement of financial position.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using
the effective interest method, less any provision for impairment. Trade receivables are generally due for
settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable
are written off by reducing the carrying amount directly. A provision for impairment of trade receivables is
raised when there is objective evidence that the consolidated entity will not be able to collect all amounts due
according to the original terms of the receivables. Significant financial difficulties of the debtor, probability
that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments (more
than 60 days overdue) are considered indicators that the trade receivable may be impaired. The amount of
the impairment allowance is the difference between the asset's carrying amount and the present value of
estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-
term receivables are not discounted if the effect of discounting is immaterial.
Other receivables are recognised at amortised cost, less any provision for impairment.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently remeasured to their fair value at each reporting date. The accounting for subsequent changes
in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature
of the item being hedged.
Derivatives are classified as current or non-current depending on the expected period of realisation.
Cash flow hedges
Cash flow hedges are used to cover the consolidated entity's exposure to variability in cash flows that is
attributable to particular risk associated with a recognised asset or liability or a firm commitment which could
affect profit or loss. The effective portion of the gain or loss on the hedging instrument is recognised directly
in equity, whilst the ineffective portion is recognised in profit or loss. Amounts taken to equity are transferred
out of equity and included in the measurement of the hedged transaction when the forecast transaction
occurs.
Cash flow hedges are tested for effectiveness on a regular basis both retrospectively and prospectively
to ensure that each hedge is highly effective and continues to be designated as a cash flow hedge. If the
forecast transaction is no longer expected to occur, amounts recognised in equity are transferred to profit
or loss.
60
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
Cash flow hedges (continued)
If the hedging instrument is sold, terminated, expires, exercised without replacement or rollover, or if the
hedge becomes ineffective and is no longer a designated hedge, amounts previously recognised in equity
remain in equity until the forecast transaction occurs.
non-current assets or disposal groups classified as held for sale
Non-current assets and assets of disposal groups are classified as held for sale if their carrying amount will
be recovered principally through a sale transaction rather than through continuing use. They are measured
at the lower of their carrying amount and fair value less costs of disposal. For non-current assets or assets of
disposal groups to be classified as held for sale, they must be available for immediate sale in their present
condition and their sale must be highly probable.
An impairment loss is recognised for any initial or subsequent write down of the non-current assets and assets
of disposal groups to fair value less costs of disposal. A gain is recognised for any subsequent increases in
fair value less costs of disposal of a non-current assets and assets of disposal groups, but not in excess of any
cumulative impairment loss previously recognised.
Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and
other expenses attributable to the liabilities of assets held for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of disposal groups classified as held for sale are
presented separately on the face of the statement of financial position, in current assets. The liabilities of
disposal groups classified as held for sale are presented separately on the face of the statement of financial
position, in current liabilities.
Joint ventures
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the net assets of the arrangement. Investments in joint ventures are accounted for using the equity
method. under the equity method, the share of the profits or losses of the joint venture is recognised in profit
or loss and the share of the movements in equity is recognised in other comprehensive income. Investments
in joint ventures are carried in the statement of financial position at cost plus post-acquisition changes in the
consolidated entity's share of net assets of the joint venture. Goodwill relating to the joint venture is included
in the carrying amount of the investment and is neither amortised nor individually tested for impairment.
Income earned from joint venture entities reduce the carrying amount of the investment.
Joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have
rights to the assets, and obligations for the liabilities, relating to the arrangement. The consolidated entity
has recognised its share of jointly held assets, liabilities, revenues and expenses of joint operations. These
have been incorporated in the financial statements under the appropriate classifications.
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investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included
as part of the initial measurement, except for financial assets at fair value through profit or loss. They are
subsequently measured at either amortised cost or fair value depending on their classification. Classification
is determined based on the purpose of the acquisition and subsequent reclassification to other categories
is restricted.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired
or have been transferred and the consolidated entity has transferred substantially all the risks and rewards
of ownership.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are either: i) held for trading, where they are acquired for
the purpose of selling in the short-term with an intention of making a profit; or ii) designated as such upon
initial recognition, where they are managed on a fair value basis or to eliminate or significantly reduce an
accounting mismatch. Except for effective hedging instruments, derivatives are also categorised as fair value
through profit or loss. Fair value movements are recognised in profit or loss.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets, principally equity securities, that are
either designated as available-for-sale or not classified as any other category. After initial recognition, fair
value movements are recognised in other comprehensive income through the available-for-sale reserve in
equity. Cumulative gain or loss previously reported in the available-for-sale reserve is recognised in profit or
loss when the asset is derecognised or impaired.
Impairment of financial assets
The consolidated entity assesses at the end of each reporting period whether there is any objective evidence
that a financial asset or group of financial assets is impaired. Objective evidence includes significant financial
difficulty of the issuer or obligor; a breach of contract such as default or delinquency in payments; the
lender granting to a borrower concessions due to economic or legal reasons that the lender would not
otherwise do; it becomes probable that the borrower will enter bankruptcy or other financial reorganisation;
the disappearance of an active market for the financial asset; or observable data indicating that there is a
measurable decrease in estimated future cash flows.
The amount of the impairment allowance for financial assets carried at cost is the difference between the
asset's carrying amount and the present value of estimated future cash flows, discounted at the current
market rate of return for similar financial assets.
Available-for-sale financial assets are considered impaired when there has been a significant or prolonged
decline in value below initial cost. Subsequent increments in value are recognised in other comprehensive
income through the available-for-sale reserve.
62
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
Property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. historical
cost includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and
equipment (excluding land) over their expected useful lives as follows:
Furniture, fittings and equipment
3-8 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each
reporting date.
Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period
of the lease or the estimated useful life of the assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic
benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds
are taken to profit or loss. Any revaluation surplus reserve relating to the item disposed of is transferred
directly to retained profits.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the
arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the
use of a specific asset or assets and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee
substantially all the risks and benefits incidental to ownership of leased assets, and operating leases, under
which the lessor effectively retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets,
or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal
component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the
remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter
of the asset's useful life and the lease term if there is no reasonable certainty that the consolidated entity will
obtain ownership at the end of the lease term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a
straight-line basis over the term of the lease.
exploration and evaluation assets
Exploration and evaluation expenditure in relation to separate areas of interest for which rights of tenure
are current is carried forward as an asset in the statement of financial position where it is expected that the
expenditure will be recovered through the successful development and exploitation of an area of interest,
or by its sale; or exploration activities are continuing in an area and activities have not reached a stage which
permits a reasonable estimate of the existence or otherwise of economically recoverable reserves. Where a
project or an area of interest has been abandoned, the expenditure incurred thereon is written off in the year
in which the decision is made.
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impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-
use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate
specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent
cash flows are grouped together to form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to
the end of the financial year and which are unpaid. Due to their short-term nature they are measured at
amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of
recognition.
Provisions
Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as
a result of a past event, it is probable the consolidated entity will be required to settle the obligation, and
a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is
the best estimate of the consideration required to settle the present obligation at the reporting date, taking
into account the risks and uncertainties surrounding the obligation. If the time value of money is material,
provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision
resulting from the passage of time is recognised as a finance cost.
employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave
expected to be settled within 12 months of the reporting date are recognised in current liabilities in respect
of employees' services up to the reporting date and are measured at the amounts expected to be paid when
the liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the
reporting date are recognised in non-current liabilities, provided there is an unconditional right to defer
settlement of the liability. The liability is measured as the present value of expected future payments to
be made in respect of services provided by employees up to the reporting date using the projected unit
credit method. Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields at the
reporting date on national government bonds with terms to maturity and currency that match, as closely as
possible, the estimated future cash outflows.
64
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are
incurred.
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in
exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of
services, where the amount of cash is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently
determined using either the Binomial or Black-Scholes option pricing model that takes into account the
exercise price, the term of the option, the impact of dilution, the share price at grant date and expected
price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term
of the option, together with non-vesting conditions that do not determine whether the consolidated entity
receives the services that entitle the employees to receive payment. No account is taken of any other vesting
conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity
over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value
of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the
vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at
each reporting date less amounts already recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by
applying either the Binomial or Black-Scholes option pricing model, taking into consideration the terms and
conditions on which the award was granted. The cumulative charge to profit or loss until settlement of the
liability is calculated as follows:
•
•
during the vesting period, the liability at each reporting date is the fair value of the award at that date
multiplied by the expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the
liability at the reporting date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the
cash paid to settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to
market conditions are considered to vest irrespective of whether or not that market condition has been met,
provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not
been made. An additional expense is recognised, over the remaining vesting period, for any modification
that increases the total fair value of the share-based compensation benefit as at the date of modification.
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Share-based payments (continued)
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy
the condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or
employee and is not satisfied during the vesting period, any remaining expense for the award is recognised
over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any
remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled
award, the cancelled and new award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure
purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date; and assumes that
the transaction will take place either: in the principle market; or in the absence of a principal market, in the
most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming they act in their economic best interest. For non-financial assets, the fair value measurement
is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for
which sufficient data are available to measure fair value, are used, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that
reflects the significance of the inputs used in making the measurements. Classifications are reviewed each
reporting date and transfers between levels are determined based on a reassessment of the lowest level
input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise
is either not available or when the valuation is deemed to be significant. External valuers are selected based
on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability
from one period to another, an analysis is undertaken, which includes a verification of the major inputs
applied in the latest valuation and a comparison, where applicable, with external sources of data.
issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the
company.
66
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether
equity instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity
instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of
any non-controlling interest in the acquiree. For each business combination, the non-controlling interest in
the acquiree is measured at either fair value or at the proportionate share of the acquiree's identifiable net
assets. All acquisition costs are expensed as incurred to profit or loss.
On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities
assumed for appropriate classification and designation in accordance with the contractual terms, economic
conditions, the consolidated entity's operating or accounting policies and other pertinent conditions in
existence at the acquisition-date.
Where the business combination is achieved in stages, the consolidated entity remeasures its previously held
equity interest in the acquiree at the acquisition-date fair value and the difference between the fair value and
the previous carrying amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value.
Subsequent changes in the fair value of contingent consideration classified as an asset or liability is recognised
in profit or loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement
is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-
controlling interest in the acquiree and the fair value of the consideration transferred and the fair value of
any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and
the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain
purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on
the acquisition-date, but only after a reassessment of the identification and measurement of the net assets
acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's
previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts
the provisional amounts recognised and also recognises additional assets or liabilities during the measurement
period, based on new information obtained about the facts and circumstances that existed at the acquisition-
date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or
(ii) when the acquirer receives all the information possible to determine fair value.
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earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Fertoz Limited,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of
ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued
during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to
take into account the after income tax effect of interest and other financing costs associated with dilutive
potential ordinary shares and the weighted average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary shares.
goods and services Tax ('gsT') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred
is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of
the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount
of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables
in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or
financing activities which are recoverable from, or payable to the tax authority, are presented as operating
cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to,
the tax authority.
new accounting standards and interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not
yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended
30 June 2014. The consolidated entity's assessment of the impact of these new or amended Accounting
Standards and Interpretations, most relevant to the consolidated entity, are set out below.
68
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
AASB 9 Financial Instruments and its consequential amendments
This standard and its consequential amendments are applicable to annual reporting periods beginning on
or after 1 January 2017 and completes phases I and III of the IASB's project to replace IAS 39 (AASB 139)
'Financial Instruments: Recognition and Measurement'. This standard introduces new classification and
measurement models for financial assets, using a single approach to determine whether a financial asset
is measured at amortised cost or fair value. The accounting for financial liabilities continues to be classified
and measured in accordance with AASB 139, with one exception, being that the portion of a change of fair
value relating to the entity's own credit risk is to be presented in other comprehensive income unless it would
create an accounting mismatch. Chapter 6 'hedge Accounting' supersedes the general hedge accounting
requirements in AASB 139 and provides a new simpler approach to hedge accounting that is intended to
more closely align with risk management activities undertaken by entities when hedging financial and non-
financial risks. The consolidated entity will adopt this standard and the amendments from 1 July 2017 but the
impact of its adoption is yet to be assessed by the consolidated entity.
AASB 2012-3 Amendments to Australian Accounting Standards - Offsetting Financial Assets and
Financial Liabilities
The amendments are applicable to annual reporting periods beginning on or after 1 January 2014. The
amendments add application guidance to address inconsistencies in the application of the offsetting
criteria in AASB 132 'Financial Instruments: Presentation', by clarifying the meaning of 'currently has a legally
enforceable right of set-off'; and clarifies that some gross settlement systems may be considered to be
equivalent to net settlement. The adoption of the amendments from 1 July 2014 will not have a material
impact on the consolidated entity.
AASB 2013-3 Amendments to AASB 136 - Recoverable Amount Disclosures for Non-Financial Assets
These amendments are applicable to annual reporting periods beginning on or after 1 January 2014. The
disclosure requirements of AASB 136 'Impairment of Assets' have been enhanced to require additional
information about the fair value measurement when the recoverable amount of impaired assets is based on
fair value less costs of disposals. Additionally, if measured using a present value technique, the discount rate
is required to be disclosed. The adoption of these amendments from 1 July 2014 may increase the disclosures
by the consolidated entity.
AASB 2013-4 Amendments to Australian Accounting Standards - Novation of Derivatives and
Continuation of Hedge Accounting
These amendments are applicable to annual reporting periods beginning on or after 1 January 2014 and
amends AASB 139 'Financial Instruments: Recognition and Measurement' to permit continuation of hedge
accounting in circumstances where a derivative (designated as hedging instrument) is novated from one
counter party to a central counterparty as a consequence of laws or regulations. The adoption of these
amendments from 1 July 2014 will not have a material impact on the consolidated entity.
AASB 2013-5 Amendments to Australian Accounting Standards - Investment Entities
These amendments are applicable to annual reporting periods beginning on or after 1 January 2014 and allow
entities that meet the definition of an 'investment entity' to account for their investments at fair value through
profit or loss. An investment entity is not required to consolidate investments in entities it controls, or apply
AASB 3 'Business Combinations' when it obtains control of another entity, nor is it required to equity account or
proportionately consolidate associates and joint ventures if it meets the criteria for exemption in the standard.
The adoption of these amendments from 1 July 2014 will have no impact on the consolidated entity.
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FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
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note 1. signifiCant aCCounting poliCies (continued)
new accounting standards and interpretations not yet mandatory or early adopted (continued)
Annual Improvements to IFRSs 2010-2012 Cycle
These amendments are applicable to annual reporting periods beginning on or after 1 July 2014 and
affects several Accounting Standards as follows: Amends the definition of 'vesting conditions' and 'market
condition' and adds definitions for 'performance condition' and 'service condition' in AASB 2 'Share-based
Payment'; Amends AASB 3 'Business Combinations' to clarify that contingent consideration that is classified
as an asset or liability shall be measured at fair value at each reporting date; Amends AASB 8 'Operating
Segments' to require entities to disclose the judgements made by management in applying the aggregation
criteria; Clarifies that AASB 8 only requires a reconciliation of the total reportable segments assets to the
entity's assets, if the segment assets are reported regularly; Clarifies that the issuance of AASB 13 'Fair Value
Measurement' and the amending of AASB 139 'Financial Instruments: Recognition and Measurement' and
AASB 9 'Financial Instruments' did not remove the ability to measure short-term receivables and payables
with no stated interest rate at their invoice amount, if the effect of discounting is immaterial; Clarifies that
in AASB 116 'Property, Plant and Equipment' and AASB 138 'Intangible Assets', when an asset is revalued
the gross carrying amount is adjusted in a manner that is consistent with the revaluation of the carrying
amount (i.e. proportional restatement of accumulated amortisation); and Amends AASB 124 'Related Party
Disclosures' to clarify that an entity providing key management personnel services to the reporting entity
or to the parent of the reporting entity is a 'related party' of the reporting entity. The adoption of these
amendments from 1 July 2014 will not have a material impact on the consolidated entity.
Annual Improvements to IFRSs 2011-2013 Cycle
These amendments are applicable to annual reporting periods beginning on or after 1 July 2014 and
affects four Accounting Standards as follows: Clarifies the 'meaning of effective IFRSs' in AASB 1 'First-time
Adoption of Australian Accounting Standards'; Clarifies that AASB 3 'Business Combination' excludes from
its scope the accounting for the formation of a joint arrangement in the financial statements of the joint
arrangement itself; Clarifies that the scope of the portfolio exemption in AASB 13 'Fair Value Measurement'
includes all contracts accounted for within the scope of AASB 139 'Financial Instruments: Recognition and
Measurement' or AASB 9 'Financial Instruments', regardless of whether they meet the definitions of financial
assets or financial liabilities as defined in AASB 132 'Financial Instruments: Presentation'; and Clarifies that
determining whether a specific transaction meets the definition of both a business combination as defined
in AASB 3 'Business Combinations' and investment property as defined in AASB 140 'Investment Property'
requires the separate application of both standards independently of each other. The adoption of these
amendments from 1 July 2014 will not have a material impact on the consolidated entity.
Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the financial statements. Management continually
evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and
expenses. Management bases its judgements, estimates and assumptions on historical experience and
on other various factors, including expectations of future events, management believes to be reasonable
under the circumstances. The resulting accounting judgements and estimates will seldom equal the related
actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next
financial year are discussed below.
70
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
Share-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by reference to
the fair value of the equity instruments at the date at which they are granted. The fair value is determined
by using either the Binomial or Black-Scholes model taking into account the terms and conditions upon
which the instruments were granted. The accounting estimates and assumptions relating to equity-settled
share-based payments would have no impact on the carrying amounts of assets and liabilities within the next
annual reporting period but may impact profit or loss and equity.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity
considers it is probable that future taxable amounts will be available to utilise those temporary differences
and losses.
Exploration and evaluation costs
Exploration and evaluation costs have been capitalised on the basis that the consolidated entity will commence
commercial production in the future, from which time the costs will be amortised in proportion to the depletion
of the mineral resources. Key judgements are applied in considering costs to be capitalised which includes
determining expenditures directly related to these activities and allocating overheads between those that
are expensed and capitalised. In addition, costs are only capitalised that are expected to be recovered either
through successful development or sale of the relevant mining interest. Factors that could impact the future
commercial production at the mine include the level of reserves and resources, future technology changes,
which could impact the cost of mining, future legal changes and changes in commodity prices. To the extent
that capitalised costs are determined not to be recoverable in the future, they will be written off in the period
in which this determination is made.
going concern
The directors acknowledge that to continue the exploration and development of the Group's exploration
projects, the budgeted cash flows from operating and investing activities for the future will necessitate
further funding. In the event that the Group is unable to raise future funding requirements, there exists a
material uncertainty regarding the Group’s ability to continue as a going concern and realise its assets and
settle its liabilities and commitments in the normal course of business and at the amounts stated in the
financial statements. The financial report does not include any adjustments relating to the recoverability
or classification of recorded assets amounts, or to the classification of liabilities which might be necessary
should the Group not be able to continue as a going concern.
71
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
NotES to tHE CoNSoLiDAtED FiNANCiAL StAtEMENtS
FOr The year enDeD 30 JUne 2014
note 2 - segment RepoRting
The consolidated entity is organised into three operating segments based on geographical location being
Australian, Canadian and uSA operations. These operating segments are based on the internal reports that
are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers
('CODM') in assessing performance and in determining the allocation of resources.
The board as a whole will regularly review the identified segments in order to allocate resources to the
segment and to assess its performance.
Where applicable, corporate costs, finance costs, interest revenue, tax, creditors, debtors and foreign currency
gains and losses are not allocated to segments as they are not considered part of the core operations of the
segments and are managed on a group basis.
Consolidated 30/06/2014
australia
Canada
Usa
Unallocated
Total
Revenue
Other revenue
Total revenue
-
-
Loss before income tax expense
(1,021,370)
Income tax revenue
-
Loss after income tax expense
(1,021,370)
-
-
-
-
-
-
-
-
-
-
74,371
74,371
74,371
74,371
(1,112,266)
(2,133,636)
-
-
(1,112,266))
(2,133,636)
Assets
Segment assets
Segment liabilities
segment net assets
australia
Canada
Usa
Unallocated
Total
421,995
1,444,397
226,348
-
-
-
421,995
1,444,397
226,348
2,236,936
(153,824)
2,083,112
4,329,676
(153,824)
4,175,852
Consolidated 30/06/2013
australia
Canada
Usa
Unallocated
Total
Revenue
Other revenue
Total revenue
-
-
Loss before income tax expense
(850,863)
Income tax revenue
-
Profit after income tax expense
(850,863)
-
-
-
-
-
-
-
-
-
-
14,650
14,650
14,650
14,650
(1,016,707)
(1,867,270)
-
-
(1,016,707)
(1,867,270)
Assets
Segment assets
Segment liabilities
segment net assets
australia
Canada
Usa
Unallocated
Total
1,443,718
285,200
-
-
1,443,718
285,200
-
-
-
1,234,752
(105,787)
1,128,965
2,963,670
(105,787)
2,857,883
72
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
note 3 - RemuneRation of auDitoRs
During the financial year the following fees were paid or payable for services provided by BDO Audit Pty Ltd,
the auditor of the company, its network firms and unrelated firms:
Audit and review of financial statements
Other Services
note 4 - otheR inCome
Interest income
Other income
note 5 - inCome tax
income tax expense
a.
Income tax expense
Current tax expense
Deferred tax expense
Prior year under/over provision
income tax expense
b.
Numerical reconciliation of income tax expense
Accounting Profit/(Loss) Before Tax
Prima facie tax on accounting profit/(loss) at the statutory income tax rate 30.00%
Entertainment expenses
Share based payments
Prior year under/over provision
Deferred tax assets derecognised / (recognised)
Total income tax expense
73
2014
$
26,480
5,414
31,894
2013
$
10,000
32,112
42,112
2014
$
73,871
500
74,371
2013
$
4,600
10,050
14,650
2014
$
(411,535)
329,000
82,535
2013
$
(280,159)
280,159
-
-
-
2014
$
(2,133,636)
2013
$
(1,867,270)
(640,091)
821
29,179
(610,091)
82,535
527,556
-
(560,181)
-
193,848
(366,333)
-
366,333
-
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
NotES to tHE CoNSoLiDAtED FiNANCiAL StAtEMENtS
FOr The year enDeD 30 JUne 2014
note 5 - inCome tax (continued)
Deferred tax assets and liabilities
recognised deferred tax assets
Carried forward tax losses
Accruals and provisions
Other deductible temporary differences
Capital raising costs in equity
Deferred tax asset at 30% (2013: 30%)*
recognised deferred tax liabilities
Assessable temporary differences
Exploration and evaluation assets
Deferred tax liabilities at 30%: (2013: 30%)*
net deferred tax assets / (liabilities)
Unrecognised deferred tax assets
unused tax losses
unused capital losses
Capital raising costs in equity
Deferred tax asset not taken up at 30% (2013: 30%)
270,845
36,001
69,627
-
376,473
451,063
-
37,512
-
488,575
-
(376,473)
(376,473)
(24,662)
(463,913)
(488,575)
-
-
2014
$
3,880,683
-
384,633
4,265,316
2013
$
2,199,010
-
-
2,199,010
1,279,595
659,703
In order to recoup carried forward losses in future periods, either the Continuity of Ownership Test (COT) or
Same Business Test (SBT) must be passed. There is $1,184,048 of losses incurred pre 1 December 2010 that
are carried forward under SBT. The remainder of losses are carried forward at 30 June 2014 under COT.
Deferred tax assets which have not been recognised as an asset, will only be obtained if:
i.
the Company derives future assessable income of a nature and of an amount sufficient to enable the
losses to be realised;
ii.
the Company continues to comply with the conditions for deductibility imposed by the law; and
iii.
no changes in tax legislation adversely affect the Company in realising the losses.
*
The deferred tax asset and liabilities recognised above include deferred tax assets and liabilities of Fertoz International Inc
recognised at the Canadian tax rate of 15%.
74
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
note 6 - Cash anD Cash equivalents
Cash at bank
Cash on term deposit
Restricted cash
note 7 - tRaDe anD otheR ReCeivaBles
Other receivables
Environmental bond
Prepaid capital raising costs
GST receivable
note 8 - otheR assets
Prepayments
note 9 - exploRation anD evaluation assets
at cost
Movements in exploration and evaluation during the year were as follows:
Carrying amount at beginning of period
Additions
Disposals
Less: write off of exploration and evaluation assets
Foreign exchange movement
Carrying amount at end of period
2014
$
130,528
2,100,000
10,144
2013
$
788,308
-
-
2,240,672
788,308
2014
$
4,327
44,745
-
10,144
59,216
2013
$
8,873
-
411,033
25,499
445,405
2014
$
19,100
2013
$
-
2014
$
1,983,400
2013
$
1,728,918
2014
$
1,728,918
1,331,653
(440,738)
(630,632)
(5,801)
1,983,400
2013
$
2,293,272
536,209
(540,515)
(560,048)
-
1,728,918
Recoverability of the carrying amount of exploration assets is dependent on the successful development and
commercial exploitation of projects, or alternatively, through the sale of the areas of interest.
75
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
NotES to tHE CoNSoLiDAtED FiNANCiAL StAtEMENtS
FOr The year enDeD 30 JUne 2014
note 10 - pRopeRty, plant anD equipment
At cost
Less: Accumulated depreciation
Movements in property, plant and equipment:
Carrying amount at beginning of financial year
Additions
Depreciation expensed
Depreciation capitalised (exploration and evaluation assets)
Carrying amount at end of financial year
note 11 - tRaDe anD otheR payaBles
Trade creditors and accruals
2014
$
38,315
(11,026)
27,289
2014
$
1,039
33,684
(1,121)
(6,313)
27,289
2013
$
4,632
(3,593)
1,039
2013
$
2,581
-
(1,542)
-
1,039
2014
$
153,824
153,824
2013
$
105,787
105,787
Trade creditors are unsecured and are normally settled within 30 to 60 days.
note 12 - issueD Capital
Ordinary shares - fully paid
Movement in ordinary share capital:
Consolidated
2013
shares
45,009,595 25,009,595
2014
shares
Consolidated
2013
$
4,929,395
2014
$
8,320,798
Details
Balance at 1 July 2012
Issue of shares
Rights Issue
Share consolidation: 3.25:1
Issue of shares
Share issue costs
Balance at 1 July 2013
Issue of shares
Share issue costs
Balance at 30 June 2014
Date
27 July 2012 - 24 January 2013
31 January 2013 - 21 April 2013
4 April 2013
11 June 2013
2 September 2013
issue price ($)
0.0925
0.03
0.0975
0.20
no of shares
34,424,332
4,974,764
25,215,421
(44,733,127)
5,128,205
25,009,595
20,000,000
45,009,595
$
3,265,416
460,166
756,463
500,000
(52,650)
4,929,395
4,000,000
(608,597)
8,320,798
76
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
note 12 - issueD Capital (continued)
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the
company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares
have no par value and the company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon
a poll each share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
note 13 - RetaineD eaRnings
Retained profit/(loss) at the beginning of the year
Profit/(loss) after income tax expense for the year
retained profit/(loss) at the end of the year
2014
$
(2,938,750)
(2,133,636)
(5,072,386)
2013
$
(1,071,480)
(1,867,270)
(2,938,750)
note 14 - finanCial instRuments
Financial risk management objectives
The consolidated entity's directors monitor and manage the financial risks relating to the operation of the
Group. These risks include market risk (including interest rate risk), credit risk and liquidity risk. The Group's
overall risk management program focuses on managing these risks and implementing and monitoring of
controls around the cash management function.
Categories of financial instruments
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial Liabilities
Trade and other payables
Total financial liabilites
2014
$
2013
$
2,240,672
59,216
2,299,888
788,308
445,405
1,233,713
153,824
153,824
105,787
105,787
77
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
NotES to tHE CoNSoLiDAtED FiNANCiAL StAtEMENtS
FOr The year enDeD 30 JUne 2014
note 14 - finanCial instRuments (continued)
The Board of directors has overall responsibility for the establishment and oversight of the risk management
framework which is summarised below:
Credit risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date
to recognised financial assets is the carrying amount of those assets, net of any provision for doubtful debts,
as disclosed in the statement of financial position and notes to the financial statements. The Group's cash at
bank is deposited with the Commonwealth Bank of Australia. Other than this the Group does not have any
material credit risk exposure to any single debtor or group of debtors under financial instruments entered
into by the Group.
Liquidity risk
Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly
cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become
due and payable.The consolidated entity manages liquidity risk by maintaining adequate cash reserves and
available borrowing facilities by continuously monitoring actual and forecast cash flows and matching the
maturity profiles of financial assets and liabilities.
The following are the contractual maturities of financial liabilities:
maturity analysis 2014
Trade and Other Payables
maturity analysis 2013
Trade and Other Payables
Carrying
Value
$
153,824
Contractual
Cash Flow
$
153,824
Carrying
Value
$
105,787
105,787
Contractual
Cash Flow
$
105,787
105,787
< 6 months
6-12 months
1-3 years
> 3 years
$
153,824
$
-
$
-
$
-
< 6 months
6-12 months
1-3 years
> 3 years
$
105,787
105,787
$
-
-
$
-
-
$
-
-
Fair value of financial instruments
The carrying value of financial assets and financial liabilities recorded in the financial statements approximate
their respective net fair values.
78
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
note 15 - Capital Risk management
The Board's policy is to maintain a strong base so to maintain investor, creditor and market confidence and
to sustain future development of the business. As an emerging explorer, the Group does not establish a
return on capital. Capital management requires the maintenance of strong cash balance to support on going
exploration.
note 16 - key management peRsonnel
Compensation
The aggregate compensation made to directors and other members of key management personnel of the
consolidated entity is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
note 17 - RelateD paRties
Ka. ey management personnel
Consolidated
2013
$
332,175
27,248
525,922
885,345
2014
$
375,254
25,612
94,239
495,105
Disclosures relating to key management personnel are set out on Note 16 and the remuneration report
in the directors' report.
b.
Transactions with related parties
There were no other related party tramsactions.
note 18 - gRoup entities
subsidiaries
Fertoz International Inc (incorporated 28 February 2012)
Fertoz uSA LLC (Incorporated 28 October 2013)
Canada
uSA
Country of incorporation
Ownership Ownership
2013
100%
-
2014
100%
100%
79
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
NotES to tHE CoNSoLiDAtED FiNANCiAL StAtEMENtS
FOr The year enDeD 30 JUne 2014
note 19 - ReConCiliation of pRofit afteR inCome tax to net Cash flows fRom
opeRating aCtivities
Profit/(Loss) after income tax expense for the year
Adjustments for:
Depreciation
Share-based payment expense
Write off of exploration and evaluation assets
Loss on disposal of exploration and evaluation assets
Capital raising costs expensed
Movements in operating assets and liabilities:
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
net cash inflow/(outflow) from operating activities
note 20 - shaRe-BaseD payments
Share-based payment expense recognised during the year ended 30 June 2014:
Options issued to directors
Options issued to other management
Options issued to other parties
Details of options outstanding at year ended 30 June 2014 are as follows:
2014
grant date
29/05/2012
29/05/2012
29/05/2012
29/05/2012
6/07/2012
3/09/2012
3/09/2012
3/09/2012
24/04/2013
1/05/2013
1/05/2013
Total
expiry date
exercise
price ($)
1/09/2017
1/09/2017
1/09/2017
1/09/2017
1/09/2017
1/09/2017
1/09/2017
1/09/2017
1/09/2017
1/09/2017
1/09/2017
0.25
0.35
0.45
0.55
0.25
0.25
0.35
0.45
0.25
0.25
0.25
Balance at
beginning of
year
1,846,154
1,230,769
1,230,769
615,385
307,692
307,692
307,692
307,692
4,000,000
307,692
153,846
granted
during the
year
-
-
-
-
-
-
-
-
-
-
-
expired/forfeited/
consolidated
during the year
-
-
-
-
-
-
-
-
-
-
-
10,615,384
-
-
80
2014
$
(2,133,636)
2013
$
(1,867,270)
1,121
97,263
630,632
390,738
180,469
1,542
560,972
560,048
290,515
-
(41,458)
28,333
(10,048)
41,832
(846,538)
(422,409)
2014
$
93,239
3,976
25,047
122,262
2013
$
525,922
23,024
12,026
560,972
exercised
Balance at
end of year
-
-
-
-
-
-
-
-
-
-
-
-
1,846,154
1,230,769
1,230,769
615,385
307,692
307,692
307,692
307,692
4,000,000
307,692
153,846
10,615,384
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
note 20 - shaRe-BaseD payments (continued)
2013
grant date
expiry date
29/05/2012
29/05/2012
29/05/2012
29/05/2012
6/07/2012
3/09/2012
3/09/2012
3/09/2012
24/04/2013
1/05/2013
1/05/2013
Total
1/09/2017
1/09/2017
1/09/2017
1/09/2017
1/09/2017
1/09/2017
1/09/2017
1/09/2017
1/09/2017
1/09/2017
1/09/2017
exercise
price ($)
Balance at
beginning of
year
0.25
0.35
0.45
0.55
0.25
0.25
0.35
0.45
0.25
0.25
0.25
6,000,000
4,000,000
4,000,000
2,000,000
-
-
-
-
-
-
-
granted
during the
year
-
-
-
-
1,000,000
1,000,000
1,000,000
1,000,000
4,000,000
307,692
153,846
expired/forfeited/
consolidated
during the year
(4,153,846)
(2,769,231)
(2,769,231)
(1,384,615)
(692,308)
(692,308)
(692,308)
(692,308)
-
-
-
16,000,000
8,461,538
(13,846,154)
exercised
Balance at
end of year
-
-
-
-
-
-
-
-
-
-
-
-
1,846,154
1,230,769
1,230,769
615,385
307,692
307,692
307,692
307,692
4,000,000
307,692
153,846
10,615,384
No share options were granted during the financial year with all share options outstanding at year end
exercisable. The weighted average remaining contractual life of share options outstanding at 30 June 2014
was 3.2 years (2013: 4.2 years).
The weighted average fair value of options granted during year ended 30 June 2013 prior to the share
consolidation on 4 April 2013 was 4.0 cents (2012: 4.1 cents). The fair value at grant date was determined by
the Company using a Black-Scholes option pricing model that takes into account the share price at grant
date, exercise price, expected volatility, option life, the risk free rate, and the fact that the options are not
tradeable. The inputs used for the Black-Scholes option pricing model for options granted during the year
ended 30 June 2013 prior to the share consolidation on 4 April 2013 were as follows:
Grant date
Expiry date
Market price at grant date
Exercise price
Expected volatility
Dividend yield
Risk-free interest rate
Fair value at grant date
06/07/2012 - 03/09/2012
1/09/2017
$0.0925
$0.25 - $0.45
93%
0%
2.28% - 2.42%
$0.048 - $0.027
Options granted after the share consolidation on 4 April 2013 were granted to service providers. The fair
value of these options was determined with reference to the fair value of the services provided.
81
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
NotES to tHE CoNSoLiDAtED FiNANCiAL StAtEMENtS
FOr The year enDeD 30 JUne 2014
note 21 - Commitments
So as to maintain current rights to tenure of exploration tenements, the group will be required to outlay
amounts in respect of tenement rent to the relevant governing authorities and to meet certain annual
exploration expenditure commitments. These outlays (exploration expenditure and rent), which arise in
relation to granted tenements are as follows:
Due within one year
Due after one year and within five years
Due after five years
2014
$
211,000
1,354,000
-
2013
$
150,000
985,000
-
1,565,000
1,135,000
In addition to the above commitments, in relation to the groups Dry Ridge project, Fertoz has the right to
explore the project until 30 August 2016 and can exercise its option to acquire an 80% interest in the project
by paying a further uS$450,000. In addition, Fertoz can acquire the remaining 20% interest in the project for
uS$200,000 at any time before 9 December 2016.
note 22 - paRent entity infoRmation
The following information relates to the parent entity, Fertoz Ltd. The information presented has been
prepared using accounting policies that are consistent with those presented in Note 1.
Financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
net assets
Shareholders' equity
Issued capital
Share-based payment reserve
Accumulated loss
Total equity
Profit/(loss) for the year
Total comprehensive income/(loss) for the year
82
2014
$
3,987,278
384,689
4,371,967
2013
$
1,526,111
1,449,246
2,975,357
134,120
-
134,120
105,787
-
105,787
4,237,847
2,869,570
8,320,798
989,500
(5,072,451)
4,237,847
4,929,395
867,238
(2,927,063)
2,869,570
2014
$
(2,133,636)
(2,133,636)
2013
$
(1,867,270)
(1,867,270)
NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS
note 22 - paRent entity infoRmation (continued)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2014 and
30 June 2013.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2014 and 30 June 2013.
Capital commitments
The parent entity had no capital commitments as at 30 June 2014 and 30 June 2013.
note 23 - eaRnings peR shaRe
earnings per share for profit from continuing operations attributable to the owners
of Fertoz Limited
Profit/(loss) after income tax
Weighted average number of ordinary shares used in calculated basic
earnings per share
Basic and diluted earnings per share
2014
$
(2,133,636)
2013
$
(1,867,270)
41,502,746 32,186,179
(0.051)
(0.058)
At 30 June 2014, 10,615,384 (2013: 10,615,384) options were outstanding which could potentially dilute
basic earnings per share in the future. Because there is a loss from continuing operations, these would have
an anti-dilutive effect and therefore diluted earnings per share is the same as the basic earnings per share.
note 24 - events suBsequent to RepoRting Date
No other matters or circumstances have arisen since the end of the financial year that will significantly affect,
or may significantly affect the group’s operations, the results of those operations or the group’s state of affairs
in future financial years.
83
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
DireCTOrs' DeCLaraTiOn
The directors of the Company declare that:
1.
The financial statements, comprising the consolidated statement of profit or loss and other
comprehensive income, consolidated statement of financial position, consolidated statement of cash
flows, consolidated statement of changes in equity and accompanying notes:
a.
comply with Australian Accounting Standards and the Corporation Regulations 2001; and
b.
give a true and fair view of the consolidated entity's financial position as at 30 June 2014 and of its
performance for the year ended on that date.
In the directors’ opinion there are reasonable grounds to believe that the company will be able to pay
its debts as and when they become due and payable.
The consolidated entity has included in the notes to the financial statements an explicit and unreserved
statement of compliance with International Financial Reporting Standards;
The remuneration disclosures set out in the Directors' Report (as part of the audited Remuneration
Report) for the year ended 30 June 2014 comply with section 300A of the Corporation Act 2001. The
Directors have been given the declarations by the chief executive officer and chief financial officer
required by section 295A of the Corporations Act 2001.
2.
3.
4.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on
behalf of the directors by:
James Chisholm
Chairman
26 September 2014
84
INDEPENDENT AuDIT REPORT
inDePenDenT aUDiT rePOrT
Tel: +61 7 3237 5999
Fax: +61 7 3221 9227
www.bdo.com.au
Level 10, 12 Creek St
Brisbane QLD 4000
GPO Box 457 Brisbane QLD 4001
Australia
INDEPENDENT AUDITOR’S REPORT
To the members of Fertoz Limited
Report on the Financial Report
We have audited the accompanying financial report of Fertoz Limited, which comprises the
consolidated statement of financial position as at 30 June 2014, the consolidated statement of profit or
loss and other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, notes comprising a summary of
significant accounting policies and other explanatory information, and the directors’ declaration of the
consolidated entity comprising the company and the entities it controlled at the year’s end or from
time to time during the financial year.
Directors’ Responsibility 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 Note 1, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the company’s
preparation of the financial report that gives a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the directors of Fertoz Limited, would be in the same terms if given to the directors
as at the time of this auditor’s report.
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
85
FERTOz LIMITED ACN 145 951 622 | ANNuAL REPORT 30 JuNE 2014
Opinion
In our opinion:
(a) the financial report of Fertoz Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2014
and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in
Note 1.
Emphasis of matter
Without modifying our opinion, we draw attention to Note 1 in the financial report, which indicates
that the ability of the consolidated entity to continue as a going concern is dependent upon securing
future funding, successful exploration and subsequent exploitation of the consolidated entity’s
tenements, and/or sale of non-core assets. These conditions, along with other matters as set out in
Note 1, indicate the existence of a material uncertainty that may cast significant doubt about the
consolidated entity’s ability to continue as a going concern and therefore, the consolidated entity may
be unable to realise its assets and discharge its liabilities in the normal course of business.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 27 to 33 of the directors’ report for the
year ended 30 June 2014. 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.
Opinion
In our opinion, the Remuneration Report of Fertoz Limited for the year ended 30 June 2014 complies
with section 300A of the Corporations Act 2001.
BDO Audit Pty Ltd
A J Whyte
Director
Brisbane, 26 September 2014
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional
Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
86
COrPOraTe DireCTOry
Directors Mr James Chisholm – Non-Executive Chairman
Dr Leslie (Les) Szonyi – Managing Director
Mr Adrian Byass – Non-Executive Director
Mr Stephen Keith – Non-Executive Director
Mr Alex Penha – Non-Executive Alternative Director
Company secretary Mr Julien McInally
registered office and
principal place of business
40 Balgowlah St
Wakerley, Qld 4154
share register Computershare Investor Services Pty Limited
Yarra Falls, 452 Johnston St
Abbotsford VIC 3067
auditor BDO Audit Pty Ltd
Level 10,
12 Creek Street
Brisbane QLD 4000
Canadian Lawyers Ontario Lawyers
Peterson Law Professional Corporation
390 Bay Street, Suite 806
Toronto, Ontario, Canada, M5h
British Columbia Lawyers
Anfield Sujir Kennedy & Durno LLP (ASKD Law)
1600 - 609 Granville Street
Vancouver, British Columbia, Canada, V7Y 1C3
australian Lawyers McMahon Clark
62 Charlotte St
Brisbane, QLD, 4000
Bankers Commonwealth Bank of Australia Ltd
stock exchange listing Fertoz Limited shares are listed on the Australian
Securities Exchange (ASX code: FTz)
Website www.fertoz.com
Fertoz Ltd (ACN 145 951 622)