Fertoz Limited
ACN 145 951 622
Annual Report
For the year ended 31 December 2020
Fertoz Limited
Year ended 31 December 2020
Directors
Mr. Patrick Avery (Executive Chairman)
Mr. Adrian Byass – Non-Executive Director (Resigned on 23 June 2020)
Mr. James Chisholm – Non-Executive Director
Mr. Stuart Richardson – Non- Executive Director
Mr. Justyn Stedwell – Non-Executive Director (Appointed on 20 November 2020)
Mr. Ronald Wilkinson – Non-Executive Director (Resigned on 14 October 2020)
Company Secretary
Mr. Justyn Stedwell
Registered office and Principal
Place of business
Suite 103, Level 1, 2 Queen Street
Melbourne, VIC 3000
Share Register
Auditor
Canadian Lawyer
Australian Lawyers
Computershare Investor Services Pty Limited
Yarra Falls, 452 Johnston St
Abbotsford VIC 3067
BDO Audit Pty Ltd
Level 10
12 Creek Street
Brisbane QLD 4000
Ontario Lawyers
Petersen Law Professional Corporation
390 Bay Street, Suite 806
Toronto, Ontario, Canada, M5H
Sierra Legal Pty Ltd.
Level 5, 9 Sherwood Road
Toowong QLD 4066
Banker
Commonwealth Bank of Australia
Stock Exchange Listing
Australian Securities Exchange (FTZ)
Website
www.fertoz.com
Carbon in the atmosphere
Stored in plants
Fertoz Annual Report Commentary – December 2020
Stored in the soil
• Increased number of partners, distributors, customers
• Review of granulation procedures led to decision to acquire
granulator and offer Just-In-Time deliveries
• Review of weather events and related costs led to decision to
store ore in warehouses near ore source and also at locations
close to farmers
• Reduction in cost of satellite and drone imagery led to new
products and services to be introduced in 2021
• Monitoring of the Carbon Revolution resulted in development
of additional products and services in relation to carbon trading
ANNUAL REPORT – DECEMBER 2020
Chairman’s Message
Dear Fellow Shareholder,
I am pleased to present the 2020 Annual Report for Fertoz Limited (ASX: FTZ) and provide an overview
of our achievements for the period. We made significant progress during 2020 in sales, strategy
development, marketing reach, joint ventures and product development, all whilst in lockdown due
to Covid-19. As well, we conducted a study on the acquisition of a granulator so that we could begin
our own granulation and provide a Just-In-Time delivery service on granulated fertilizers, and we
started studying the potential for a new division, Fertoz Carbon, that would provide access to the
burgeoning carbon credits market. Our Australian operations also made good progress during Covid,
with increased sales and customers. And in all our operations, we will be pushing our new tag line –
Fertoz – Reducing Your Carbon Footprint.
As we noted throughout 2020, phosphate is a key ingredient in the world’s growing demand for food,
but during the year, food security became an increasingly important issue. With more online orders
for food, a huge increase in organic food consumption and the need to verify that foodstuffs were
handled according to Covid regulations, we saw rising interest in the development and applications of
an organic food blockchain.
Towards year-end with the outcome of the US elections decided but climate-related issues continuing
to rise, the Company identified the potential to trade carbon credits and offer additional services in
relation to these in the agriculture sector. Linked to this was the increasing visibility of precision
farming using digital information sourced from satellites and drones. Some US companies, such as
Indigo Ag, were quick to see the trend and are now looking at IPOs with valuations in excess of US$1
billion. While our market cap is well short of this, and our reach much, much smaller than Indigo Ag,
we are, nevertheless, moving into 2021 with a clear focus on supplementing our offerings with digital
and carbon services.
During 2020, we gained more evidence of the plant growth potential using Fertoz products. In 2020,
we were focussed on marketing the 15% growth potential from using our products to organic and
conventional farmers. Subsequent to year-end, we have expanded this and are now marketing the
15% growth potential to conventional fertilizer manufacturers, reforestation and timber management
corporations. Why? Because 15% growth in plant matter correlates to increased carbon sequestration,
and with carbon credits currently trading at US$20/ton, 15% growth across 3,000 acres of timber can
equate to an extra 2,700 tons of CO2e per year. In Canada, carbon credits are trading at approximately
C$20/ton but with the increase tax on excess CO2 announced by the Canadian Government, the price
for carbon credits is likely to rise significantly. Some countries in Europe are already seeing prices of
over US$100/tonne tax on excess CO2. We envisage a huge disruption in the ag markets is about to
occur due to the carbon revolution. And with our focus on putting carbon back into the soil, we think
we can position Fertoz to benefit from this disruption.
We have substantial stockpiles of phosphate ore ready for crushing, screening and sales, exploration
and development tenements in good-standing with permits in place, two contract granulators
proximate to key organic farming areas, a growing network of distributors and partners, retailers and
growers, and a dedicated and committed Fertoz team, who are always going the extra mile, spending
extra time outside of work hours and coming up with ideas that lead to increased sales. It is this team
that have developed our approach to carbon around four pillars:
Carbon tracking and trading
Fertoz products are a way to sequester significant amounts of carbon
•
•
• Measurement of soil organic and carbon matter
• Development and distribution of Carbon Trading Certificates, starting 1 May 2021
In 2020, we looked and are continuing to look for additional experienced personnel to join our
dynamic team. We need to ensure that sales personnel can sell organic products and commercial
phosphate blends, and that they not only generate enough income to cover their costs, but contribute
to overall profitability. With Covid-19 restrictions in place, it was very difficult to source the types of
people we required. We are hoping to correct that situation in 2021, but, as noted above, also looking
to expand our services into carbon and digital.
With more than 200 million people already vaccinated in the USA, we are seeing the economy re-open
and people are starting to once again look around for new challenges. The massive stimulus packages
available and coming in the USA will certainly help, and with economic growth in the USA expected to
be over 5% this year, we are quietly optimistic about our progress.
I would like to thank shareholders for their support over 2020. It was a tougher than expected year
due to weather and Covid, but 2021 is shaping up to be a great year for the Company, with some major
growth initiatives already underway.
Pat Avery
Executive Chairman
Fertoz Limited
Figure 1: On site ore processing, Butte, Montana
OPERATIONS REVIEW
Company Overview
Fertoz Limited (ASX: FTZ) is a premium phosphate company which mines, manufactures and markets
organic phosphate in North America, and markets a fused silica-calcium-phosphate in Australia, Asia
and the Pacific. The Company’s focus is on providing quality input supplies to organic and
conventional farmers looking for alternatives to standard, high-leaching fertilizers. These products
are supplied direct to farmers or through numerous distributors across the United States, Canada,
Australia, the Pacific and Asia.
In order to reduce costs, the Company has purchased its own granulation facility which is expected to
be delivered and commissioned in mid-2021. An in-house facility will also allow the North American
operations to offer Just-In-Time deliveries of granulated fertilizer blends to key agricultural
corporations in the Pacific North West of USA, a key target market for Fertoz.
With the carbon revolution likely to significantly disrupt the agriculture sector, the Company has
increased its range of products and services to cover carbon sequestration activities, facilitated by
access to low-cost satellite and drone imagery. Access to this digital data has also allowed the
Company to offer additional services to our customers, including offering fertilizer spreading patterns
across farms, that reduce costs and increase efficiencies of farming operations.
Fertoz’s key objective is to grow operations and profits, and then make dividend payments to
shareholders. With the huge growth in organic food orders during Covid, the carbon revolution and
focus on climate change now apparent in the USA, and increasing access to low-cost digital data, the
Company is well-positioned to capitalise on agricultural market disruptions.
Fertoz ESG Strategy
Governance
Planet
•
•
•
Board Composition
Ethics
Risk management
•
Reduction of CO2
• Water management
•
Carbon trading
People
•
•
•
Reduction in poverty
Increase in health
Inclusive
Prosperity
•
•
•
Share wealth
Enhance society
Education
North America
Processing and production
The Company’s move towards in-house granulation will significantly reduce costs associated with
processing the Company’s ore stockpiles but also enable product to be stored under cover in winter.
Over the last few years, harsh winter conditions have often led to double-handling of our phosphate
ore, a cost that was not able to be recouped from farmers. With the granulator expected to be
delivered and operational in Q3, the Company is forecasting a much easier Autumn and Winter period
in late 2021 in North America. These facilities will allow the Company to also develop speciality blends
for specific customers and have them delivered on a Just-In-Time basis, differentiating us from our
competitors.
As shown in the attached tenement listing, our tenements are still in good standing, as are our bulk
sample permits, and contract supply agreements in Montana and Mexico. With increasing sales in the
southern Alberta area over the last year, we expect to be accessing some of our Fernie ore in 2021,
rather than truck it from Montana. With Covid impacting everything in 2020, we placed our bulk
sampling at Fernie on hold, but, as noted above, the permit is valid and we expect to access that ore
in 2021.
Sales and Partnerships
Despite Covid, we increased our partnerships and distributorships in 2020, and now have more than
two dozen agreements in place, covering a number of states and organic farming regions in the USA
and all key ag provinces in Canada. Next on our list is to establish warehouse /storage facilities across
the USA and Canada so that farmers can get access to product from local sites, rather than have to
truck or rail them from production facilities in Montana or Alberta. Once we have our own granulation
facilities operational, we are expecting to deliver some product to key distributors on consignment
and this, alone, is expected to increase sales. At this stage, we are investigating consignment of our
key powders and granules, but as we secure suitable sites for distribution, we plan to add the broader
product suite containing humates, nitrogen, sulfur, gypsum and other inputs.
Some of our distributors failed to reach their goals in 2020 – in terms of production and sales. This
prompted a review of our production (leading to our decision to purchase our own granulator to
reduce costs) and partnership arrangements (leading to our decision to seek suitable storage and
distribution sites across Canada and the USA, and to investigate consignment arrangements). We
believe our enhanced strategy combining in-house granulation, Just-In-Time offerings and local
storage and consignment will positively impact sales in 2021 and 2022.
As well, with the increased availability of low-cost agricultural digital information, we embarked on
some research into potential additional services. These are being rolled out in 2021 and centre around
the interpretation of digital data, by satellite and drone, by Fertoz personnel who can then design
specific fertilizer spread patterns for our customers. This helps them reduce costs, increase efficiency
and produce more with less, and helps to put us into a more valuable position with our customers.
Further partnerships in agriculture were researched in late 2020 – specifically, those related to carbon
sequestration and verification and carbon credit trading. The Company’s Board and management is
of the opinion that carbon sequestration and carbon credit trading is likely to become a major revenue
source for farmers. Already, a number of farmers are selling their carbon sequestration potential.
Although carbon credits are priced at around US$20/ton at present, this is expected to rise to around
US$100/ton over the coming years as the tax for excess CO2 increases from the current C$40/tonne
to C$170/tonne. Indeed, Canada has set a path to C$170/tonne by 2030, and European carbon
emitters are already being taxed at over US$60/tonne and in some European areas, over C$170/tonne
for excess carbon.
The Company’s research into this sector has resulted in the formation of some affiliations and
partnerships that are expected to position the Company to capitalise on the carbon revolution. We
can gain a leadership advantage in this market through two key factors:
1. The mining, manufacturing, and delivery of our rock phosphate produces just one sixth
the amount of CO2 as that of conventional fertilizer. Using our rock only, or in blends with
commercial fertilizer, can greatly aid a buyer in reducing their carbon footprint; and
2. Field trials have consistently shown application of Fertoz products can lead to a 15%
increase in crop growth, and thus in sequestration of carbon. What is also pertinent is
that Fertoz is a very low carbon emitter – the only CO2 generated is in crushing, granulating
and transporting ore – whereas conventional fertilizer manufacturers are significant
emitters of CO2. Indeed, every major conventional fertilizer manufacturing site in Canada
emits more than 50,000tpa of CO2. It would make sense for conventional fertilizer
manufacturers to buy organic fertilizers and mix it with their own products, just to cut
down their CO2 emissions. Based on the forecast tax for excess CO2 of C$170/tonne by
2030 and the government reducing the cap on CO2 production each year in Canada, major
fertilizer manufacturers will be looking for any way to reduce their CO2.
Both of these factors can lead to strong relationships with all buyers, organic and conventional and
yield significant credits and income for the dealer and growers.
We will build out a comprehensive carbon program based on the following four pillars:
1. Carbon tracking and trading
2. Sequestering carbon through our fertilizers
3. Measuring soil organic and carbon matter for farmers
4. Providing Carbon Trading Certificates beginning 1 May 2021 for potential future trading
Figure 2: Processing ore in Montana
Australia and New Zealand
Fertoz’s operation in Australia and the Asia-Pacific is known as Fertoz Agricultural Pty Ltd (FertAg).
Despite Covid, 2020 was a good year for these operations, with recurring sales and an increase in the
number of clients serviced by the Company. The FertAg team also trialled product on different crops,
all of which were successful. 2021 is shaping up to be a strong year as well, with increased orders,
even though prices have had to be increased to cover the increased freight rates due to Covid.
South East Asia
In 2019, FertAg was approved for import and sale in the Philippines by the Fertilizer and Pesticide
Authority and the first container of FertAg 0-15-0 was despatched to the Philippines. Sales have been
encouraging, and the Company has recently acquired a small delivery vehicle to distribute product to
farmers. Other distribution arrangements in PNG and NZ continue to be developed.
Figure 3: Local FertAg transport, Philippines
SAFETY
There were no lost time injuries or environmental incidents recorded during the 12 months ending 31
December 2020.
OUTLOOK
2021 is shaping up to be a good year for the Company, with the in-house granulator expected to
significantly reduce costs, and the digital offerings expected to drive more sales of our fertilizer blends.
As well, there is strong potential to increase revenues due to services related to the carbon market.
With on-site storage associated with our granulation facility in Butte, Montana, we will be able to
avoid the costs associated with frozen ore. With consignment inventory and/or remote storage
facilities across Canada and the USA to allow local deliveries, we think 2021 should be a good year for
the Company. As in the past, we will continue to extend our distribution network and sign up more
partners.
With Covid restrictions easing in the USA (but not Canada, yet) we are hoping to finally secure some
additional sales personnel to focus on California and potentially Texas, where we have experienced
some growing orders for our Krezco ore.
Updates to the Fertoz website and our Google presence are planned in 2021, to market our increased
services offerings in digital and carbon. We expect to continue with product development to meet
our customers’ needs and also continue with trials on different crops. Both of these are serious
competitive advantages for the Company and also represent substantial entry barriers to new players.
Additional marketing campaigns in Australia and Asia are also planned to benefit from the strong
rebound in economies post-Covid. As noted above, the USA, in particular, is forecast to experience
very strong economic growth in 2021 and 2022, and this should translate into higher demand for
fertilizers.
Since 1770, world carbon dioxide levels have increased from approximately 280ppm to 417ppm, a rise
equating to approximately 1 trillion additional tons of CO2 in the atmosphere.
World Carbon Dioxide Levels (parts per million)
450
400
350
300
250
200
150
100
50
0
1770
1820
1870
1920
1970
2020
Figure 4: Rise in worldwide atmospheric carbon dioxide
Plants can sequester much of this CO2, whether they be crops such as corn, wheat and millet, cover
crops such as legumes, grasslands, or forests. Addition of organic fertilizers such as Fertoz rock
phosphate powder increases plant growth and thus sequestration of carbon. Addition of Fertoz
products to forests can also significantly increase growth, and with approximately 6t/acre of CO2
sequestered in forests, and potentially 15% additional growth, the economics are compelling. Under
US carbon rules, owners of existing forests can accelerate their CO2 carbon credits in the first five
years, leading to even more compelling economics.
Based on the research summarised above, Fertoz plans to market the potential carbon offsets
available to forest owners and reforestation groups during 2021.
Cover cropping,
no-till practices,
reforestation
can all increase
the amount of
carbon credits
available to
farmers
Production of
Fertoz products
is low carbon
intensity,
allowing farmers
to secure more
carbon credits
for their crops
Fertoz products
enhance growth
leading to more
sequestration of
carbon
CORPORATE
Board appointment
During the year, Ron Wilkinson tendered his resignation to take up a position on the Board of a much
larger fertilizer business. Justyn Stedwell, the Company’s secretary, has filled the role vacated by Ron.
The Board is seeking an Australian-based director, with experience in the fertilizer market, but with
the Company’s move to carbon and digital, the search criteria has expanded to include people who
may not have the fertilizer experience, but do have experience in carbon markets and/or precision
farming.
Cash
The Company had $1.156 million in cash as at 31 December 2020 and no significant loan balances
owing. Cash and inventory (valued at cost) held by Fertoz at year end 2020 is estimated to be valued
at approximately $1.377 million. Subsequent to year-end, the Company undertook a Rights Offering,
raising $1.519 million.
APPENDIX 1 - TENEMENT
Project Name
Canada
Tenement
Number
Ownership Approx. Area (ha)
Expiry Date Registered Holder
Wapiti Project - British Columbia, 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
Munok 1
Belcourt 1
Munok 2
Belcourt 2
Belcourt 3
Belcourt 4
Belcourt Link
WAP 11
South 1
851942
851948
851952
851958
941760
941761
941762
941763
941764
941769
955278
956829
982744
1015556
1015557
1015558
1018104
1018106
1018107
1018108
1018109
1023921
1023922
1023923
1029417
1015626
1015627
1024783
1024803
1024806
1024805
1027037
1027038
1029488
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%
100%
100%
450.83
4/21/22
Fertoz International
451.02
4/21/22
Fertoz International
375.66
4/21/22
Fertoz International
451.2
4/21/22
Fertoz International
450.83
4/21/22
Fertoz International
469.87
4/21/22
Fertoz International
432.07
4/21/22
Fertoz International
413.49
4/21/22
Fertoz International
451.33
4/21/22
Fertoz International
432.53
4/21/22
Fertoz International
470.31
4/21/22
Fertoz International
37.56
4/21/22
Fertoz International
18.8
4/21/22
Fertoz International
375.54
4/21/22
Fertoz International
168.93
4/21/22
Fertoz International
376.35
4/21/22
Fertoz International
451.82
4/21/22
Fertoz International
451.75
4/21/22
Fertoz International
451.93
4/21/22
Fertoz International
452.09
4/21/22
Fertoz International
452.3
4/21/22
Fertoz International
150.2
4/21/22
Fertoz International
206.3
4/21/22
Fertoz International
150.1
4/21/22
Fertoz International
207.38
4/21/22
Fertoz International
169.58
4/21/22
Fertoz International
113.27
4/21/22
Fertoz International
603.05
4/21/22
Fertoz International
301.76
4/21/22
Fertoz International
188.7
4/21/22
Fertoz International
339.78
4/21/22
Fertoz International
282.59
4/21/22
Fertoz International
168.94
4/21/22
Fertoz International
112.64
4/21/22
Fertoz International
South 2
South Road 2
Wapiti Project total
Project Name
Fernie Project
Barnes (formerly Barnes Lake)
Barnes Lake
BL 2
BL 3
Barnes Lk West
South of Alberta 1
Barnes 5
Coal Mountain 1
Barnes Subtotal
1029489
1030777
100%
100%
376.16
4/21/22
Fertoz International
413.66
4/21/22
Fertoz International
11,870.32
Tenement
Number
1011319
1020873
1046619
1055454
1059393
1059412
1059422
Ownership Approx. Area (ha)
Expiry Date Registered Holder
100%
100%
100%
100%
100%
100%
100%
608.98
5/19/22
Fertoz International
629.88
4/18/22
Fertoz International
524.89
1/12/22
Fertoz International
83.97
10/09/22
Fertoz International
309.31
3/17/22
Fertoz International
104.96
3/18/22
Fertoz International
230.78
3/19/22
Fertoz International
2,492.77
Pump Station (formerly known as Crows Nest)
Crows Nest
Crows 2
1023062
1023064
100%
100%
1450.89 10/15/2021
Fertoz International
38.67 10/15/2021
Fertoz International
Pump Station Subtotal
1,489.56
Marten
Marten 1
Marten 2
Marten Nth
Marten E
Marten Subtotal
Graves Lake
Graves Lake 1
Graves 2
Graves 5
Graves 5
Graves 6
Graves 7
Graves 8
Graves 9
Graves 10
Graves Subtotal
Big Horn
RAM 1
RAM 2
1024365
1025533
1029979
1031107
1046685
1058774
1063603
1063646
1063647
1063598
1063648
1063655
1063656
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
754.32
6/29/21
Fertoz International
460.86
6/28/21
Fertoz International
334.99
8/01/21
Fertoz International
188.48
9/23/21
Fertoz International
1,738.65
499.54
10/14/22
Fertoz International
208.29
10/22/22
Fertoz International
208.42
10/04/21
Fertoz International
83.38
10/06/21
Fertoz International
228.87
10/06/21
Fertoz International
166.44
10/04/21
Fertoz International
41.60
10/06/21
Fertoz International
41.61
10/07/21
Fertoz International
41.66
10/07/21
Fertoz International
1,519.81
1047502
1050068
100%
100%
126.72 29/10/2021
Fertoz International
253.48 16/03/2021
Fertoz International
RAM 3
RAM 4
RAM 5
RAM 6
BIGHORN 7
Bighorn Southwest
BIG HORN Subtotal
Fernie Project Total
Crowsnest, Alberta,
Canada
TWP
TWP
Alberta Subtotal
Canada Total
1050069
1050660
1050661
1050662
1050686
1057281
100%
100%
100%
100%
100%
100%
168.93 16/03/2021
Fertoz International
105.64
3/10/21
Fertoz International
295.58
3/10/21
Fertoz International
253.5
3/10/21
Fertoz International
211.28
3/10/21
Fertoz International
211.28
10/29/21
Fertoz International
9318030431
9318100162
100%
100%
1,626.39
8,908.75
20,737.50
Fertoz International
Fertoz International
Fertoz Limited
Year ended 31 December 2020
DIRECTORS’ REPORT
The directors present their report, together with the audited 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 at the end of, or during, the year ended 31 December
2020.
Directors
The following persons were directors of Fertoz Limited during the whole of the financial period and up to the date
of this report, unless otherwise stated:
Mr. Patrick Avery
Mr. Adrian Byass (Resigned on 23 June 2020)
Mr. James Chisholm
Mr. Stuart Richardson
Mr. Justyn Stedwell (Appointed on 20 November 2020)
Mr. Ronald Wilkinson (Resigned on 14 October 2020)
Principal activities
The Company’s key objective is to become a leading supplier of rock phosphate organic fertilizers in North America
and a profitable marketer of organic fertilizer products in Australia and develop sufficient profits to pay dividends
to shareholders.
Dividends
There were no dividends paid, recommended or declared during the current period or previous year.
Review of operations
Strategy
The Company’s main efforts are on the development and commercialisation of its high-grade phosphate resources
in North America, which can supply high-grade rock phosphate to organic and conventional fertilizer wholesalers,
retailers and farms that are seeking low-leaching phosphate products.
Board Changes
During the year ended 31 December 2020, Mr. Adrian Byass and Mr. Ronald Wilkinson resigned as directors and
Mr Justyn Stedwell was appointed as director.
Safety
There were no lost time, injuries or environmental incidents recorded during the period ended 31 December 2020.
Financials
The loss for the consolidated entity after providing for income tax amounted to $1,535,715 (2019: $1, 808,232).
Sales for the year ended 31 December 2020 were 53% higher than the previous year despite the restrictions due to
COVID 19 in North America. The Group also spent $134,800 (2019: $554,339) on exploration expenditure during
the year.
The Group impaired its inventory of phosphate materials in North America by an amount of $344,052. The
impairment was necessary given that further works required to be carried out on the materials before sales was
considered too expensive.
Available cash balance at year-end amounted to $1,156,678 (2019: $452,138).
Significant changes in the state of affairs
During the year ended 31 December 2020, the Group
(a)
(b)
raised $2,000,000 through the issuance of 25,000,000 shares
issued 922,500 ordinary shares to key members of the staff under the Employee Share Plan.
Other than disclosed in this report, in the opinion of the directors there were no significant changes in the state of
affairs of the Company during the financial period under review.
1 | P a g e
Fertoz Limited
Year ended 31 December 2020
DIRECTORS’ REPORT
Matters subsequent to the end of the financial year
On 8 March 2021, the Company announced a proposed capital raising of approximately $1,109,440 by way of a
non-renounceable pro-rata rights issue of 1 new share for every 7 shares held.
Likely developments and expected results of operations
The consolidated entity intends to continue its fertilizer development and production activities, to acquire further
suitable fertilizer projects as opportunities arise, to add more services in relation to carbon trading, and to
implement the Company’s ESG policies to become at least carbon neutral.
Environmental regulation
The consolidated entity is subject to environmental regulations under laws of British Columbia and Alberta, Canada
where it either holds or has a right to explore on such tenements. During the financial period the consolidated
entity’s activities recorded no non-compliance issues.
Corporate Governance
The Company’s corporate governance statement and Appendix 4G can be found on the Company’s website at:
https://www.fertoz.com/company/corporate-governance/
Information on directors
Mr. Patrick Avery, MBA
Executive Chairman,
Mr. Avery has over 30 years of experience working in the industries of fertilizer, mining, specialty chemicals,
petroleum, and construction/project management. In the fertilizer industry, he worked for 11 years with JR
Simplot, one of the largest privately held food and agribusiness companies in the USA, where he held senior
positions across all key business units such as mining, manufacturing, supply chain, wholesale sales and energy
management, managing over 1500 employees, three mines(two phosphate and one silica), five major
manufacturing facilities, and several warehouse/distribution locations, making dozens of products from chemical
fertilizers, to specialty chemicals for lawns, gardens, golf courses, industrial products, resins, and water treatment.
Mr. Avery was also president of Intrepid Potash, where he led all aspects of mining, manufacturing, logistics and
sales.
Mr Avery has not been a director of any other listed company in the last three years.
Interests in shares:
Interests in options:
Contractual rights to shares:
2,107,143
None
4,000,000 (see below)
a)
b)
c)
d)
1,000,000 fully paid ordinary shares upon the Company’s share price closing at 28c or above for 10
consecutive trading days before 1 June 2021.
1,000,000 fully paid ordinary shares upon the Company’s share price closing at 38c or above for 10
consecutive trading days before 1 June 2021.
1,000,000 fully paid ordinary shares upon the Company’s share price closing at 50c or above for 10
consecutive trading days before 1 June 2021.
1,000,000 fully paid ordinary shares upon the Company’s share price closing at 60c or above for 10
consecutive trading days before 1 June 2021.
2 | P a g e
Fertoz Limited
Year ended 31 December 2020
DIRECTORS’ REPORT
Information on directors (continued)
Mr. James Chisholm, B.Eng, MBA
Non-executive Director
Mr Chisholm is a qualified engineer, having worked in the engineering, mining, oil and gas sectors for the past 35
years. Mr. Chisholm has worked on numerous resource construction and maintenance projects around Australia,
primarily covering coal, iron ore, and agricultural mining and processing. Mr. Chisholm co-founded The Chairmen1
Pty Ltd which sold its assets to Guildford Coal Ltd (ASX: TER);Ebony Iron Pty Ltd, which sold its assets to Strategic
Minerals (AIM: SML); and hydrogen development company, Ebony Energy Ltd, which was recently acquired by
Hexagon Energy Materials Ltd (ASX: HXG). Mr. Chisholm is experienced in start-up exploration and development
companies.
He was also a director of Atrum Coal Ltd until mid-2019 (ASX: ATU). Other than Atrum Coal Ltd., Mr. Chisholm has
not been a director of a listed company for the last three years.
Interests in shares:
Interests in options:
Contractual rights to shares:
Mr. Stuart Richardson BBA, CPA
Non-executive Director
10,235,564
None
None
Mr Richardson has extensive experience over 35 years in capital markets both on Australia and overseas in the
field of investment banking and stockbroking. He is a founding director of Blackwood Capital Limited an Australian
based investment bank operating in capital markets, advisory and funds, management in equities and private
equity.
Mr. Richardson is also a former director of Abundant Produce Limited (ASX:ABT) (resigned on 24 April 2019) and
former director of XTD Limited (ASX:XTD) (resigned 1 November 2018)
Interests in shares:
Interests in options:
Contractual rights to shares:
9,559,460
None
None
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all other types of
entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of
all other types of entities, unless otherwise stated.
Mr. Justyn Stedwell
Non-executive Director/Company Secretary
Mr. Stedwell is a professional company secretary with over 14 years' experience as a Secretary of ASX listed
companies in various industries, including mining and exploration, IT & telecommunications, biotechnology and
agriculture. Mr. Stedwell’s qualifications include a Bachelor of Commerce (Economics and Management) from
Monash University, a Graduate Diploma of Accounting at Deakin University and a Graduate Diploma in Applied
Corporate Governance at the Governance Institute of Australia. He is currently Company Secretary at several ASX-
listed companies, including Atrum Coal Ltd (ASX:ATU), Lifespot Health Ltd (ASX: LSH); Cirralto Ltd (ASX:CRO),
Imugene Ltd (ASX:IMU), Rectifier Technologies Ltd (ASX:RFT), Golden Mile Resources Ltd (ASX:G88), and Broo Ltd
(ASX:BEE).
Interests in shares:
Interests in options:
Contractual rights to shares:
350,000
None
None
3 | P a g e
Fertoz Limited
Year ended 31 December 2020
DIRECTORS’ REPORT
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') and of each Board committee held
during the year ended 31 December 2020, and the number of meetings attended by each director were:
Year ended 31 December 2020
Board of Directors
Number eligible
to attend*
4
2
4
4
1
2
Number
attended
4
2
3
4
1
2
Mr. Patrick Avery
Mr. Adrian Byass1
Mr. James Chisholm
Mr. Stuart Richardson
Mr. Justyn Stewell2
Mr. Ronald Wilkinson3
*Represents the number of meetings held during the time the director held office or was a member of the relevant committee.
1 Resigned on 23 June 2020
2 Appointed on 20 November 2020
3 Resigned on 14 October 2020
The Board of the Company undertakes the responsibilities of both the Nomination and Remuneration Committee
and the Audit and Risk Committee.
REMUNERATION REPORT (audited)
The remuneration report details the key management personnel remuneration arrangements for the consolidated
entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
●
●
●
●
●
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional disclosures relating to key management personnel
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 the 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.
4 | P a g e
Fertoz Limited
Year ended 31 December 2020
DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
The framework seeks to align performance to shareholders' interests by:
●
●
having economic profit as a core component of plan design
focusing on sustained growth in shareholder wealth as well as focusing the executive on key non-
financial drivers of value attracting and retaining high calibre executives
and aligns the program participants' interests by:
rewarding capability and experience
reflecting competitive reward for contribution to growth in shareholder wealth
providing a clear structure for earning rewards
●
●
●
In accordance with best practice corporate governance, the structure of non-executive directors and executive
remunerations are separate.
Non-executive directors’ remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. 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, if the role is a non-executive, are determined based independently to the fees of other non-
executive directors based on comparative roles in the external market. The chairman is not present in any
discussions relating to the 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 has been set at $36,000 per annum.
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 Annual 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 has both fixed and variable components.
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 payable to eligible employees
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary 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 consolidated entity does not have short-term incentives ('STI') at this time
5 | P a g e
Fertoz Limited
Year ended 31 December 2020
DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
Consolidated entity performance and link to remuneration
The consolidated entity’s remuneration framework is designed to attract, retain and motivate those people who
can drive Fertoz’ culture and deliver its business strategy and supports alignment to long term overall company
performance and creation of shareholder value. Remuneration packages are structured that rewards meeting
individual, business unit and the entity’s targets and objectives, including maximising returns for shareholders.
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.
The earnings of the consolidated entity for the two years to 30 June 2018, six months ended 31 December 2018
and years ended 31 December 2019 and 2020 are summarised below:
20203
$
2,035,125
(1,525,380)
(1,535,715)
(1,535,715)
20193
$
1,326,264
(1,793,485)
(1,808,232)
(1,808,232)
20182
$
1,458,596
(1,246,690)
(1,246,690)
(1,246,690)
20181
$
1,486,285
(1,432,712)
(1,432,712)
(1,432,712)
20171
$
943,696
(1,185,315)
(1,185,640)
(1,185,640)
Sales revenue
EBITDA
EBIT
(Loss) after income tax
1Years ended 30 June
2Six months ended 31 December
3 Year ended 31 December
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year end ($)
Total dividends declared (cents per share)
Basic earnings per share (cents per share)
1At 30 June
2At 31 December
3 Year ended 31 December
20203
$
0.05
-
(1.01)
20193
$
0.08
-
(1.41)
20182
$
0.20
-
(1.05)
20181
$
0.175
-
(1.5)
20171
$
0.075
-
(1.3)
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 consolidated entity did not engage remuneration consultants during the year ended 31 December 2020.
Voting and comments made at the company's 2020 Annual General Meeting ('AGM')
At the 2020 AGM, the remuneration report for the year ended 31 December 2019 was adopted. The company did
not receive any specific feedback at the AGM regarding its remuneration practices.
6 | P a g e
Fertoz Limited
Year ended 31 December 2020
DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
Details of remuneration
Amounts of remuneration
Details of the remuneration of Key Management Personnel (“KMP”) of the consolidated entity are set out in the
following tables.
The key management personnel of the consolidated entity consisted of the following directors of Fertoz Limited:
Mr. Patrick Avery
Mr. Adrian Byass (resigned on 23 June 2020)
Mr. James Chisholm
Mr. Stuart Richardson
Mr. Justyn Stedwell (appointed on 20 November 2020)
Mr. Ronald Wilkinson (resigned on 14 October 2020)
For the year ended 31 December 2020
Short Term
Benefits
Post
Employment
Share Based Payments
Director
Patrick Avery
(Executive Chairman)
Adrian Byass1
James Chisholm
Stuart Richardson3
Justyn Stedwell1,2
Ronald Wilkinson1
Total
Salary and
fees
$
Superannuati
on
$
Options
$
Shares
$
Total
$
Fixed
(%)
241,161
9,000
12,000
12,000
-
27,000
301,161
-
-
-
-
-
-
-
142,936
-
-
-
-
-
142,936
-
-
-
-
-
-
-
384,097
9,000
12,000
12,000
-
27,000
435,097
63%
100%
100%
100%
-
100%
100%
Proportion of
remuneration
performance
related
LTI
(%)
37%
-
-
-
-
33%
-
1 See resignation and appointment dates as per above
2 Since his appointment as Director on 20 November 2020, Mr. Stedwell received $5,500 through an entity controlled by him as his capacity as
Corporate Secretary.
3During the year, capital raising fees of $20,000 were paid to a company controlled by Mr. Richardson.
For the year ended 31 December 2019
Short Term
Benefits
Post
Employment
Share Based Payments
Director
Salary and
fees
$
Superannuati
on
$
Options
$
Shares
$
Total
$
Fixed
(%)
Patrick Avery
(Executive Chairman)
James Chisholm
Adrian Byass
Stuart Richardson
Ronald Wilkinson1
Total
297,275
42,836
36,000
36,000
21,000
433,111
1 Mr. Wilkinson was appointed on 11 June 2019
-
-
-
-
-
-
-
-
-
-
-
-
84,202
-
-
-
-
84,202
381,477
42,836
36,000
36,000
21,000
517,313
78%
100%
100%
100%
100%
84%
Proportion of
remuneration
performance
related
LTI
(%)
22%
-
-
-
-
16%
7 | P a g e
Fertoz Limited
Year ended 31 December 2020
DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
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:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Patrick Avery
Executive Chairman
1 June 2018
3 years
Current base salary is US$207,000. Although the shareholders approved an increase in
the salary to US$240,000, at Mr Avery’s request, the salary remained at US$207,000
per annum for the first three months and was reduced to USD150,000 thereafter.
With effect to 1 June 2018, and following shareholders’ approval at a General Meeting held on 14 August 2018,
Mr. Avery received the following performance package:
a) 2,000,000 fully paid ordinary shares upon signing of consultancy agreement (already issued)
b) 1,000,000 fully paid ordinary shares upon the Company’s share price closing at 28c or above for 10
consecutive trading days before 1 June 2021.
c) 1,000,000 fully paid ordinary shares upon the Company’s share price closing at 38c or above for 10
consecutive trading days before 1 June 2021.
d) 1,000,000 fully paid ordinary shares upon the Company’s share price closing at 50c or above for 10
consecutive trading days before 1 June 2021.
e) 1,000,000 fully paid ordinary shares upon the Company’s share price closing at 60c or above for 10
consecutive trading days before 1 June 2021.
f) US$50,000 cash bonus paid once the Company reaches a minimum of $1m EBIT as shown in audited
annual accounts.
g) US$100,000 cash bonus paid once the Company reaches a minimum of $3m EBIT as shown in audited
annual accounts.
h) US$200,000 cash bonus paid once the Company reaches a minimum of $5m EBIT as shown in audited
annual accounts
The 2,000,000 shares in (a) above have already been issued.
The cash bonuses identified in f), g) and h) above remain unused as at 31 December 2020.
The fair values of the performance shares are determined based on the market price of the company’s shares at
the grant date using an appropriate valuation methodology (ie. Trinomial or Monte Carlo Simulation). The relevant
information for the valuation of these performance shares is as follows:
Grant date
Number Issued Hurdle Price Estimated vesting date
1 June 2018 1,000,000 $0.28 30 June 2020 $0.1527
30 September 2020 $0.1361
1 June 2018 1,000,000 $0.38
$0.1156
1 June 2018 1,000,000 $0.50 31 March 2021
$0.1062
1 June 2018 1,000,000 $0.60 30 June 2021
Grant date value
None of the above performance shares have vested as at 31 December 2020. The board has determined that there
is low to no probability that the performance shares will vest on or before their expiry date of 30 June 2021.
Key management personnel have no additional entitlement to termination payments in the event of removal for
misconduct.
8 | P a g e
Fertoz Limited
Year ended 31 December 2020
DIRECTORS’ REPORT
REMUNERATION REPORT (audited) (continued)
Share based compensation
Options
No option over ordinary shares was granted to and vested by directors and other key management personnel as
part of compensation during the year ended 31 December 2020.
Shareholding
The number of shares in the company held during the year ended 31 December 2020 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
Patrick Avery
James Chisholm
Adrian Byass
Stuart Richardson
Justyn Stedwell
Ronald Wilkinson
Balance at the
start of the year
Received as part
of remuneration
Additions
Disposals/ other
Balance at the
end of the year
2,107,143
9,110,564
679,664
7,032,460
-
-
18,929,811
-
-
-
-
-
-
-
-
1,125,000
-
2,527,000
350,000
-
4,002,000
-
-
(679,664) 1
-
-
-
(679,644)
2,107,143
10,235,564
-
9,559,460
350,000
-
22,252,167
1 Adrian Byass resigned on 23 June 2020. Balance at year end is $nil.
Additional disclosures relating to key management personnel
Performance shares
The number of performance shares which are treated as in-substance options 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:
Performance shares
Patrick Avery
James Chisholm
Adrian Byass
Stuart Richardson
Justyn Stedwell
Ronald Wilkinson
Balance at the
start of the year
4,000,000
-
-
-
-
-
4,000,000
Additions
Converted to
ordinary shares
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Disposals/ other
-
-
-
-
-
-
-
Balance at the
end of the year
4,000,000
-
-
-
-
-
4,000,000
Option holding
No options over ordinary shares in the company were held during the financial year by any director and other
members of key management personnel of the consolidated entity, including their personally related parties’
Other transactions with key management personnel and their related parties
There were no other transactions with key management personnel or their related parties.
******This concludes the remuneration report, which has been audited.******
9 | P a g e
Fertoz Limited
Year ended 31 December 2020
DIRECTORS’ REPORT
Shares under option
There were no unissued ordinary shares of Fertoz Limited under option at 31 December 2020
There were no options granted to officers who are among the five highest remunerated officers of the company
and the group, but are not key management persons.
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
Fertoz Ltd. issued 25,000,000 ordinary shares pursuant to an underwritten share purchase plan at $0.08 each and
922,000 ordinary shares to employees under the Employee Share Plan during the year ended 31 December 2020
and up to the date of this report.
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 year ended 31 December 2020, 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 the liability and the amount of the premium.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial period, indemnified or agreed to indemnify the
auditor of the company or any related entity against a liability incurred by the auditor.
During the financial period, the company has not paid a premium in respect of a contract to insure the auditor of
the company or any related entity.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings
on behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of
taking responsibility on behalf of the company for all or part of those proceedings.
Non-audit services
Amounts paid or payable to BDO (QLD) Pty Ltd, a related company of the auditor, for non-audit services provided
during the year ended 31 December 2020 by the auditor related to preparation of the tax return and taxation
advice of $9,457 (2019: $13,685).
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 20 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.
10 | P a g e
Fertoz Limited Year ended 31 December 2020 DIRECTORS’ REPORT 11 | Page Non-audit services Officers of the company who are former partners of BDO Audit Pty Ltd There are no officers of the company who are former 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. This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001. On behalf of the directors ________________________________ Patrick Avery 30 March 2021 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 31 December 2020 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
Director
BDO Australia Ltd
Brisbane
30 March 2021
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.
12 | P a g e
Fertoz Limited
Year ended 31 December 2020
CONTENTS
Contents
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
Directors' declaration
Independent auditor's report to the members of Fertoz Limited
Shareholder information
14
15
16
17
18
37
38
39
General information
The financial statements cover Fertoz Limited as a consolidated entity consisting of Fertoz Limited and the entities
it controlled at the end of, or during, the period. The financial statements are presented in Australian dollars,
which is Fertoz Limited's functional and presentation currency.
Fertoz Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business are:
Registered office and principal place of business
Suite 103, Level 1, 2 Queen Street
Melbourne, VIC 3000
A description of the nature of the consolidated entity's operations and its principal activities are included in the
directors' report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 30 March,
2021. The directors have the power to amend and reissue the financial statements.
13 | P a g e
Fertoz Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 31 December 2020
Revenue from contracts with customers
Cost of goods sold
Other Income
Expenses
Audit & accounting
Consultant fees & employee Compensation
Depreciation
Directors fees (non-executive)
Executive Director
Insurance
Investor relations
Legal
Listing fees and share registry
Marketing & selling
Office rent
Expected credit loss on receivables
Provision for impairment of inventory
Share based payment
Travel
Other expenses
Total expenses
Finance
Interest income
Interest paid
Realized exchange loss/(gain)
Loss before income tax expense
Income tax expense
Loss after income tax expense for the year
Note
4
2
8a
8b
5
4
6
Year ended
31 December
2020
$
2,035,125
(1,534,843)
500,282
70,021
169,046
182,067
10,335
60,000
241,161
74,312
44,100
-
73,859
623,327
13,421
-
344,052
205,666
-
63,602
2,104,948
(589)
6,003
(4,344)
1,070
(1,535,715)
-
(1,535,715)
Year ended
31 December
2019
$
1,326,264
(1,266,897)
59,367
15,846
203,990
160,225
14,747
135,836
297,275
26,281
48,077
(2,917)
71,318
549,909
41,657
(27,633)
-
236,452
44,017
66,566
1,865,800
(3,237)
6,027
14,855
17,645
(1,808,232)
-
(1,808,232)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation gain/(loss)
Other comprehensive income for the year, net of tax
(540,682)
(540,682)
183,216
183,216
Total comprehensive income for the year
(2,076,397)
(1,625,016)
Loss per share for profit attributable to the owners of Fertoz Limited
Basic loss per share (cents)
Diluted loss per share (cents)
27
27
(1.01)
(1.01)
(1.41)
(1.41)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
14 | P a g e
Fertoz Limited
Consolidated statement of financial position
As at 31 December 2020
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total current assets
Non-current assets
Exploration and evaluation assets
Property, plant and equipment
Environmental Bonds
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Translation reserve
Retained losses
Total equity
Note
2020
2019
$
$
7
8
8b
9
10
11
12
13
14
15
1,156,678
255,183
221,032
89,407
1,722,300
5,536,663
67,121
304,604
5,908,388
452,138
249,227
622,531
15,871
1,339,767
5,833,645
82,840
328,451
6,244,936
7,630,688
7,584,703
394,466
-
394,466
394,466
340,864
-
340,864
340,864
7,236,222
7,243,839
21,532,474
2,136,430
(141,000)
(16,291,681)
7,236,222
19,606,629
1,993,494
399,682
(14,755,966)
7,243,839
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
15 | P a g e
Fertoz Limited
Consolidated statement of changes in equity
For the year ended 31 December 2020
Balance at 1 January 2020
Loss after income tax expense for the period
Other comprehensive income for the period
Total comprehensive profit/(loss) for the period
Transaction with owners in their capacity as owners:
Shares issued (Note 15)
Shares issuance costs (Note 15)
Share-based payments (Note 28)
At 31 December 2020
Issued capital
$
19,606,629
-
-
-
2,062,730
(136,885)
-
21,532,474
Accumulated
losses
$
(14,755,966)
Share Based
Payment Reserve
$
Translation
Reserve
$
1,993,494
399,682
Total equity
$
7,243,839
(1,535,715)
-
(1,535,715)
-
-
-
(16,291,681)
-
-
-
-
-
142,936
2,136,430
-
(540,682)
(540,682)
-
-
-
(141,000)
Balance at 1 January 2019
19,468,490
(12,947,734)
1,909,292
216,466
Loss after income tax expense for the period
Other comprehensive income for the period
Total comprehensive profit/(loss) for the period
Transaction with owners in their capacity as owners:
Shares issued
Share issue costs
Share-based payments
At 31 December 2019
-
-
-
152,250
(14,111)
-
19,606,629
(1,808,232)
-
(1,808,232)
-
-
-
(14,755,966)
-
-
-
-
-
84,202
1,993,494
-
183,216
183,216
-
-
-
399,682
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
(1,535,715)
(540,682)
(2,076,397)
2,062,730
(136,885)
142,936
7,236,223
8,646,514
-
(1,808,232)
183,216
(1,625,016)
152,250
(14,111)
84,202
7,243,839
16 | P a g e
Fertoz Limited
Consolidated statement of cashflows
For the year ended 31 December 2020
Note
2020
$
2019
$
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Net cash inflow / (outflow) from operating activities
Cash flows from investing activities
Purchase of equipment
Payment for security deposit
Payment for exploration and evaluation assets
Net cash inflow / (outflow) from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Payments for equity raising costs
Drawdown of borrowings
Net cash inflow / (outflow) from financing activities
26
15
15
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial period
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial period
7
2,001,145
(2,967,417)
372
-
(965,900)
-
-
-
(134,800)
(134,800)
-
-
2,000,000
(136,886)
-
1,863,114
762,414
452,138
(57,874)
1,156,678
2,090,841
(3,840,833)
3,237
(6,027)
(1,752,782)
(44,758)
(180,376)
(554,339)
(779,473)
-
(14,111)
27,280
13,169
(2,519,086)
2,930,139
41,085
452,138
The above consolidated statement of cashflows should be read in conjunction with the accompanying notes
17 | P a g e
Fertoz Limited
Notes to the consolidated financial statements
For the year ended 31 December 2020
Note 1. Significant accounting policies
Corporate Information
The financial report of Fertoz Limited for the year ended 31 December 2020 was approved by the board on 30 March 2021.
Fertoz Limited (the Company) is a public company limited by shares incorporated and domiciled in Australia. The Company’s registered
office is located at Suite 103, Level 1, 2 Queen Street, Melbourne, VIC 3000.
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’). The Company is a for-profit entity for financial reporting purposes under Australian Accounting Standards.
The separate financial statements of the parent entity, Fertoz Ltd., have not been presented within this financial report as permitted by the
Corporations Act 2001.
Historical cost convention
The financial statements have been prepared under the historical cost convention.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the consolidated entity’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 2.
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 24.
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.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Fertoz Limited (‘company’ or ‘parent entity’)
as at 31 December 2020 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.
18 | P a g e
Fertoz Limited
Notes to the consolidated financial statements
For the year ended 31 December 2020
Note 1. Significant accounting policies (continued)
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.
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 rates at the dates of the transactions, 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 reclassified through profit or loss when the foreign operation or net investment is disposed of.
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 the 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 be applied when the assets are
recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
● 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 at each reporting date. Deferred tax assets
recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be
recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits
available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax
liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable
entity or different taxable entities which intend to settle simultaneously.
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 classified as current when: it is either 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 12 months after the reporting period; or the asset is cash or
cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All
other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in normal operating cycle; it is held primarily for the purpose of
trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the
liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
19 | P a g e
Fertoz Limited
Notes to the consolidated financial statements
For the year ended 31 December 2020
Note 1. Significant accounting policies (continued)
Cash and cash equivalents
Cash and cash equivalents include 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.
Inventories
Inventories are stated at the lower of cost and net realisable value on a weighted average basis. Cost comprises direct materials and
delivery costs, direct labour, import duties and other taxes, an appropriate proportion of variable and fixed overhead expenditure based on
normal operating capacity, and, where applicable, transfers from cash flow hedging reserves in equity. Costs of purchased inventory are
determined after deducting rebates and discounts received or receivable.
Stock in transit is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net of rebates and
discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the
estimated costs necessary to make the sale.
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:
Plant and equipment
3-8 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
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
Right-of-use assets
A right-of-use asset is recognized at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the
initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any
lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs
expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset,
whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease term, the
depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease
liabilities.
The group has elected not to recognize a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months
or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred.
Lease liabilities
A lease liability is recognized at the commencement date of a lease. The lease liability is initially recognized at the present value of the lease
payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the consolidated entity’s incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives
receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees,
exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties.
The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a
change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of
a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use
asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
20 | P a g e
Fertoz Limited
Notes to the consolidated financial statements
For the year ended 31 December 2020
Note 1. Significant accounting policies (continued)
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.
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.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently
measured at amortised cost using the effective interest method.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which
they are incurred.
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 and annual leave expected to be settled within 12 months of the
reporting date are measured at the amounts expected to be paid when the liabilities are settled.
Other long-term employee benefits
The liability for long service leaves not expected to be settled within 12 months of the reporting date are measured as the present value of
expected future payments to be made in respect of services provided by employees up to the reporting date. 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 corporate bond rate with terms to maturity and currency that match, as closely as
possible, the estimated future cash outflows.
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.
21 | P a g e
Fertoz Limited
Notes to the consolidated financial statements
For the year ended 31 December 2020
Note 1. Significant accounting policies (continued)
Employee benefits (continued)
The cost of equity-settled transactions is measured at fair value on grant date. Fair value is independently determined using either the
Monte Carlo, Trinomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, market
based vesting conditions, 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 is 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 Monte Carlo 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.
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 principal 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 interests. 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 at each reporting date and transfers between levels are determined
based on a reassessment of the lowest level of 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.
The carrying values of financial assets and financial liabilities approximate their fair values due to their short-term nature.
22 | P a g e
Fertoz Limited
Notes to the consolidated financial statements
For the year ended 31 December 2020
Note 1. Significant accounting policies (continued)
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.
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.
Revenue Recognition
Sale of phosphate
Sales of phosphate is recognised when the phosphate is delivered to the customer and there is no unfulfilled obligation that could affect the
customers’ acceptance of the phosphate. Delivery occurs when the phosphate has been shipped to the specific location, the risks of
obsolescence and loss have been transferred to the customer, and either the customer has accepted the phosphate in accordance with the
sales contract the acceptance provisions have lapsed, or the group has objective evidence that all criteria for acceptance have been
satisfied.
Incremental Costs of obtaining Customer Contracts
Incremental costs incurred in obtaining customer contracts are capitalised and amortised over the term, where the term is greater than 12
months.
Unsatisfied performance obligations
The Group continues to recognise its contract liabilities under AASB 15 in respect of any unsatisfied performance obligations, which are
disclosed as Unearned revenue in the Consolidated Statement of Financial Position.
Financing components
The Group does not recognise adjustments to transition prices or Contract balances where the period between the transfer of promised
goods or services to the customer and payment by customer does not exceed one year.
Loss making contracts
A provision for loss making contracts is recorded for the difference between the expected costs of fulfilling a contract and the expected
remaining economic benefits to be received where the forecast remaining costs exceed the forecast remaining benefits.
23 | P a g e
Fertoz Limited
Notes to the consolidated financial statements
For the year ended 31 December 2020
Note 1. Significant accounting policies (continued)
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.
Trade and other receivables
Trade and other receivables are held for collection of contractual cash flows where those cash flows represent solely payments of principal
and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective
interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses),
together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss
and other comprehensive income.
Change in Accounting Policies and Accounting Standards
There were no new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board
(‘AASB’) that are mandatory for the current reporting period and that had a material impact on the financial statements.
Note 2. 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.
Revenue recognition
The group has recognised revenue net of trade discounts and adjustment for moisture content during the year. The customer is entitled to
receive a discount if the moisture contents in the product are above certain levels as specified in the contract. Management have
determined that the discount applied as a result of moisture content has been adjusted for when recognising the revenue and a significant
reversal in the amount of revenue recognised will not occur, therefore it is appropriate to recognise revenue on the invoiced amount net of
discounts upon delivery of the product.
Trade Receivables
The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all
trade receivables. To measure expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and
the days past due. The group has concluded that the expected loss rates for trade receivables are a reasonable approximation based on
payment profiles of sales over a period of 36 months before 31 December 2020 and the corresponding historical credit losses experienced
within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors
affecting the ability of the customers to settle the receivables.
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 Monte Carlo or Black-Scholes model
taking into account the terms and conditions upon which the instruments were granted. These models require a number of assumptions to
be made including the expected future volatility of the share price, the estimated vesting date and the risk-free interest rate. 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.
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.
24 | P a g e
Fertoz Limited
Notes to the consolidated financial statements
For the year ended 31 December 2020
Note 2. Critical accounting judgements, estimates and assumptions (continued)
Going Concern
The financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and
the realisation of assets and settlement of liabilities in the normal course of business.
As disclosed in the financial statements, the Group achieved a net loss after tax of $1,535,715 and net operating cash outflows of $965,900
for the year ended 31 December 2020. As at 31 December 2020 the Group had cash of $1,156,678 .
Subsequent to balance date the Company announced a non-renounceable rights offer to raise up to approximately $1,100,000. This offer is
expected to close on 30 March 2021.
The ability of the Group to continue as a going concern is principally dependent upon the following conditions:
•
•
•
the ability of the Group to meet its cashflow forecasts;
the ability of the Group to raise capital, as and when necessary; and
the ability of the Group to sell non-core assets.
These conditions give rise to material uncertainty which may cast significant doubt over the Group’s ability to continue as a going concern.
However, the directors highlight that the Company has a proven ability to raise the necessary funding or settle debts via the issuance of
shares, as evidenced by the raising of $2,000,000 during the year; and further, that the Company is already operating an expanding rock
phosphate and organic fertilizer business and plans to continue to expand this business in the coming year.
Should the Group be unable to continue as a going concern, it may be required to realise its assets and extinguish its liabilities other than in
the ordinary course of business, and at amounts that differ from those stated in the financial report. This financial report does not include
any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts or classification of liabilities and
appropriate disclosures that may be necessary should the Group be unable to continue as a going concern.
Short term lease
The Group has short-term office lease arrangement that are month-to-month lease. The lease arrangement is such that, either party to the
contract can give notice to terminate the arrangement or the contract does not oblige either party to make a payment on termination. As a
result, the Group has assessed the lease arrangement to be non- enforceable, therefore continues to recognise any lease payments as an
expense through the profit or loss.
Note 3. Operating segments
Identification of reportable operating segments
The consolidated entity is organised into two operating segments based on geographical location being Australian and Canadian operations,
reflected by the subsidiaries in the Group. 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 CODM reviews earnings before and after tax. The accounting policies adopted for internal reporting to the CODM are consistent with
those adopted in the financial statements.
Where applicable, corporate costs, finance costs, interest revenue, tax 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 consolidated entity basis thus disclosed under
unallocated category
Consolidated – 31 December 2020
Australia
Revenue
Sales of phosphate fertilizer
Other income
Total revenue and other income
$
856,594
70,021
926,615
North
America
$
1,178,531
-
1,178,531
Unallocated
$
-
-
-
Total
$
2,035,125
70,021
2,105,146
Profit/(Loss) before income tax expense
Income tax revenue
79,733
(1,064,705)
(550,743)
(1,535,715)
-
-
-
-
Profit/(Loss) after income tax expense
79,733
(1,064,705)
(550,743)
(1,535,715)
Assets
Segment assets
Segment liabilities
Segment net assets
551,881
(84,190)
471,691
6,462,104
(212,572)
6,249,532
616,703
(97,704)
518,999
7,630,688
(394,466)
7,236,222
25 | P a g e
Fertoz Limited
Notes to the consolidated financial statements
For the year ended 31 December 2020
Note 3. Operating segments (Continued)
Consolidated – 31 December 2019
Australia
Revenue
Sales of phosphate fertilizer
Other revenue
Total revenue
$
774,333
15,846
790,179
North
America
$
551,931
-
551,931
Unallocated
$
-
-
-
Total
$
1,326,264
15,846
1,342,110
Profit/(Loss) before income tax expense
Income tax revenue
(67,574)
(1,172,790)
(567,868)
(1,808,232)
-
-
-
-
Profit/(Loss) after income tax expense
(67,574)
(1,172,790)
(567,868)
(1,808,232)
Assets
Segment assets
Segment liabilities
Segment net assets
Segment non-current asset
297,052
2,523
299,575
7,029,101
(252,551)
6,776,550
258,550
(90,836)
167,714
7,584,703
(340,864)
7,243,839
Non-current assets, excluding financial instruments and deferred tax assets, located
in:
Australia
Canada
Note 4. Revenue
Sales Revenue
Sale of phosphate fertilizer products – at point in time
Other income
Interest
Covid 19 cashflow and Jobkeeper funding
Other income
Note 5. Expenses
Loss before income tax includes the following specific expenses
Share based payments
Impairment of inventory
Consolidated
2020
$
2019
$
-
5,908,388
5,908,388
-
6,244,936
6,244,936
Consolidated
2020
$
2019
$
2,035,125
2,035,125
1,326,264
1,326,264
589
58,250
11,771
70,021
3,237
-
15,846
15,846
Consolidated
2020
$
2019
$
205,666
344,052
236,452
-
26 | P a g e
Fertoz Limited
Notes to the consolidated financial statements
For the year ended 31 December 2020
Note 6. Income tax
Income tax expenses
Current tax expense
Deferred tax expense
Aggregate income tax expenses
Consolidated
2020
$
(237,398)
237,398
-
2019
$
(358,377)
358,377
-
Numerical reconciliation of income tax and tax at statutory rate
Profit/ (loss) before income tax expenses from continuing operations
(1,535,715)
(1,808,232)
Tax at statutory tax rate of 27.5% (2019: 27.5%)
Prior year under/ over provision
Tax effect on amounts which are not deductible/(taxable) in calculating income
Tax adjustment for tax rate variance in foreign jurisdictions
Entertainment expenses
Share-based payments
Deferred tax assets derecognised/(recognised)
Income tax expense
Deferred tax assets and liabilities
Recognised deferred tax assets
Carried forward losses
Accruals and provisions
Other deductible temporary differences
Deferred tax asset at 27.5% (2019:15%)
Recognised deferred tax liabilities
Assessable temporary differences
Exploration and evaluation assets
Deferred tax liability at 27.5% (2019:30%)
Net deferred tax assets/(liabilities)
Unrecognised deferred tax assets
Unused tax losses
Unused capital losses
Capital raising costs in equity
Accruals and provisions
Other deductible temporary differences
(422,322)
776
133,088
1
56,558
(237,398)
237,398
-
830,499
-
-
830,499
-
(830,499)
(830,499)
-
(497,264)
(73,947)
146,599
1,210
65,024
(358,377)
358,377
-
875,047
-
-
875,047
-
(875,047)
(875,047)
-
18,070,971
10,000
229,479
40,070
20,981
18,371,502
10,667,609
10,000
271,833
51,598
1,078
11,002,748
Deferred tax assets not taken up at 27.5%% (2019: 27.5%)
5,052,163
3,025,756
Note 7. Current assets – Cash and cash equivalents
Cash at bank
Consolidated
2020
$
1,156,678
1,156,678
2019
$
452,138
452,138
Reconciliation to cash and cash equivalents at the end of the financial year
The above figures are reconciled to cash and cash equivalents at the end of the financial year as shown in the statement of cash flows as
follows:
Balances as above
Balance as per statement of cashflows
1,156,678
1,156,678
452,138
452,138
27 | P a g e
Fertoz Limited
Notes to the consolidated financial statements
For the year ended 31 December 2020
Note 8a. Current assets – Trade and other receivables
Trade receivables
Less: expected credit loss provision
Other receivables
Consolidated
2020
$
255,914
(11,214)
10,483
255,183
2019
$
175,336
(11,214)
85,105
249,227
Upon initial recognition of the amount receivable, the Group has applied the simplified approach permitted by AASB 9 which requires
expected lifetime losses to be recognized from initial recognition of the receivable.
Upon initial recognition of the amount receivable, the Group has applied the simplified approach permitted by AASB 9 which requires
expected lifetime losses to be recognized from initial recognition of the receivable. An allowance for expected loss was recognised
based on a probability of default of 5% at the date of subsequent recognition of the receivable. At 31 December 2020, a provision on
certain receivables amounting to $11,214 was maintained.
Note 8b. Current assets – Inventory
Inventory consists of the following
Crushed raw ore
Finished products
Consolidated
2020
$
194,038
26,994
221,032
2019
$
510,078
112,453
622,531
During the year ended 31 December 2020, the company impaired inventory in North America by an amount of $344,052 following
deterioration of the fertilizers due weather conditions.
Note 9. Current assets – Other current assets
GST receivable
Other prepayments
Note 10. Non-current assets – Exploration and evaluation assets
Exploration and evaluation assets, at cost
Reconciliations of the carrying amounts at the beginning and the end of the current
and previous financial year are set out below
Movements in property, plant and equipment
Carrying amount at beginning of the period
Additions
Foreign exchange movement
Carrying amount at the end of period
Consolidated
2020
$
9,295
80,112
89,407
2019
$
15,871
-
15,871
Consolidated
2020
$
2019
$
5,536,663
5,833,645
5,833,645
134,800
(431,782)
5,536,663
5,142,252
554,339
137,054
5,833,645
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 area of interest.
28 | P a g e
Fertoz Limited
Notes to the consolidated financial statements
For the year ended 31 December 2020
Note 11. Non-current assets – Property, plant and equipment
Plant and equipment, at cost
Less: accumulated depreciation
Movements in property, plant and equipment
Carrying amount at beginning of the year
Additions
Depreciation
Foreign exchange movement
Carrying amount at the end of year
Note 12. Non-curent assets – Environmental bonds
Movements in Environmental bonds
Carrying amount at beginning of the year
Additions
Foreign exchange movement
Carrying amount at the end of the year
Note 13. Current liabilities -Trade and other payables
Trade creditors
Accruals
Other payables
Refer to note 18 for further information on financial instruments.
Note 14. Current liabilities -Borrowings
Debtor financing facility
Consolidated
2020
$
152,702
(85,581)
67,121
2019
$
164,290
(81,450)
82,840
82,840
-
51,256
44,758
(10,335)
(14,747)
(5,384)
67,121
1,573
82,840
Consolidated
2020
$
328,451
-
(23,847)
304,604
2019
$
144,571
180,376
3,504
328,451
Consolidated
2020
$
312,848
67,657
13,961
394,466
2019
$
291,753
49,111
-
340,864
Consolidated
2020
$
2019
$
-
-
-
-
The Company has a debtor financing facility arrangement whereby it may drawdown on this facility upon the issuance of an invoice to a
customer up to a total facility limit of $1,000,000 with any amount drawn down to be repaid within 90 days of the drawdown. No amounts
were drawn down at year end.
29 | P a g e
Fertoz Limited
Notes to the consolidated financial statements
For the year ended 31 December 2020
Note 15. Equity – Issued share capital
Ordinary shares – fully paid
Movements in share capital
Details
Date
Balance
Shares1
Shares1
Shares1
Share issuance costs4
Balance
Private placement2
Shares3
Share issuance costs4
Balance at 31 December 2020
31 December 2018
25 June 2019
1 July 2019
29 November 2019
31 December 2019
31 December 2019
21 February 2020
12 August 2020
2020
Number of
shares
2019
Number of
shares
2020
$
2019
$
155,321,628
129,399,128
21,532,474
19,606,629
No of Shares
128,069,128
400,000
150,000
780,000
-
129,399,128
25,000,000
922,500
-
155,321,628
Issued Price
($)
0.135
0.135
0.10
-
0.08
0.068
-
Amount
($)
19,468,490
54,000
20,250
78,000
(14,111)
19,606,629
2,000,000
62,730
(136,885)
21,532,474
1 Shares were issued to members of the staff (non-directors) for achieving certain milestones at the discretion of the Board, the fair value of the shares
measured based on the share price at grant date.
2 On 21 February 2020, the Company completed an underwritten share purchase plan of 25,000,000 shares at 0.08 each for a total of $2,000,000.
3 On 12 August 2020, the Company issued 922,500 shares to staff under the Employee Share Plan, when the shares were traded at $0.068
4 Share issuance costs were incurred with respect of the share purchase plan, of which $14,111 in legal fees were incurred in the previous year. An amount of
$20,000 was paid to a company related to a director during the current year.
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.
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 and developer, the Group does not establish a return on capital. Capital management requires the
maintenance of strong cash balance to support ongoing exploration and development.
Note 16. Equity – Reserves
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to
Australian dollars.
Share based payment reserve
The reserve is used to recognise share-based payments made to suppliers and employees.
Note 17. Equity – dividends
Dividends
No dividends were paid during the year.
30 | P a g e
Fertoz Limited
Notes to the consolidated financial statements
For the year ended 31 December 2020
Note 18. Financial Instruments
Financial risk management objectives
The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest
rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity.
Risk management is carried out by the Chief Financial Officer under policies approved by the Board of Directors (“the Board”). These
policies include identification and analysis of the risk exposure of the consolidated entity and appropriate procedures, controls and risk
limits. The Chief Financial Officer identifies, evaluates and hedges financial risks within the consolidated entity's operating units and reports
to the Board on a monthly basis.
Market risk
Foreign currency risk
The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through
foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a
currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.
The carrying amount of the consolidated entity's foreign currency denominated financial assets and financial liabilities at the reporting date
were as follows:
US Dollars
Canadian Dollars
Assets
Liabilities
2020
$
175,031
352,404
527,435
2019
$
58,916
337,178
396,094
2020
$
(116,363)
(68,923)
(185,286)
2019
$
(47,631)
(192,290)
(239,921)
The consolidated entity had net financial assets denominated in foreign currencies of $342,149 as at 31 December 2020 (2019: $156,474).
Based on this exposure, had the Australian dollar weakened by 5% or strengthened by 5% against these foreign currencies with all other
variables held constant, the consolidated entity's net financial assets would have been $17,107 (2019: $7,809) lower and $17,107 (2019:
$7,809) higher respectively.
The policy of the consolidated entity is to sell phosphate-based fertilizer at the spot price and it has not entered into any hedging contracts.
The consolidated entity's revenues were exposed to fluctuation in the price of this commodity. If the average selling price for the financial
year had increased/decreased by 10% the change in the profit before income tax for the consolidated group would have been an increase
/decrease of $203,512 (2019: $132,626). If there was a 10% increase or decrease in market price of inventory, the net realizable value of
inventory on hand would increase/(decrease) by $22,103 (2019: ($48,655)). As the phosphate-based fertilizer on hand are held at cost there
would be no impact on profit or loss.
Interest rate risk
The consolidated entity has no interest rate risk.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated
entity. The consolidated entity has a strict code of credit, including obtaining agency credit information, confirming references and setting
appropriate credit limits. The consolidated entity obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to
credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets,
as disclosed in the statement of financial position and notes to the financial statements. The consolidated entity does not hold any
collateral.
The Company has bank deposits with the Commonwealth Bank of Australia and Toronto Dominion Bank which both have a Standard and
Poors short term credit rating of A-1+.
31 | P a g e
Fertoz Limited
Notes to the consolidated financial statements
For the year ended 31 December 2020
Note 18. Financial Instruments (continued)
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.
Financing arrangements
Unused borrowing facilities at the reporting date:
Debtor financing facility (unused)
Weighted
average interest
rate
%
-%
Weighted
average interest
rate
%
-%
Consolidated – 2020
Non-derivatives
Non-interest bearing
Trade payables and other payables
Total non-derivatives
Consolidated – 2019
Non-derivatives
Non-interest bearing
Trade payables and other payables
Total non-derivatives
Consolidated
2020
$
1,000,000
1,000,000
2019
$
1,000,000
1,000,000
1 year or less
$
Between 1 and 2
years
$
Between 2 and 5
years
$
Over 5 years
$
Total contractual
cashflow
$
394,466
394,466
-
-
-
-
1 year or less
$
Between 1 and 2
years
$
Between 2 and 5
years
$
Over 5 years
$
340,684
340,684
-
-
-
-
-
-
-
-
394,466
394,466
Total contractual
cashflow
$
340,684
340,684
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above. Unless
otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Note 19. Key Management Personnel Compensation
Compensation
The aggregate compensation made to directors and other members while they were key management personnel of the consolidated entity
is set out below:
Short-term remuneration
Share-based payment
Consolidated
2020
$
292,161
142,936
435,097
2019
$
433,111
84,202
517,313
32 | P a g e
Fertoz Limited
Notes to the consolidated financial statements
For the year ended 31 December 2020
Note 20. Auditors remuneration
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 services – BDO Audit Pty Ltd.
Tax services – BDO(QLD) Pty Ltd
Note 21. Contingency
There were no contingent assets or liabilities at balance date.
Note 22. Commitments
Consolidated
2020
$
50,017
9,457
59,474
2019
$
47,500
13,685
61,185
Exploration
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 (C$10 – C$40 per hectare) or to incur exploration expenditures in lieu (C$5 -C$20 per hectare).
These work requirement outlays 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
Consolidated
2020
$
107,071
208,995
-
2019
$
415
386,594
-
During the year, the Government of British Columbia, Canada, has extended the validity (Good to date) of the tenements to 31 December
2021.
Note 23. Related Party transactions
Parent entity
Fertoz Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 25.
Key management personnel
Disclosures relating to key management personnel are set out in note 19 and the remuneration report in the directors' report.
33 | P a g e
Fertoz Limited
Notes to the consolidated financial statements
For the year ended 31 December 2020
Note 24. Parent entity information
Set out below is the supplementary information about the parent entity, Fertoz Limited.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive loss
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued share capital
Share based payment reserve
Accumulated loss
Total equity
Parent
2020
$
2019
$
(1,383,663)
(1,383,663)
(1,665,707)
(1,665,707)
Parent
2020
$
598,740
5,385,824
83,743
83,743
2019
$
258,550
5,045,634
90,836
90,836
21,532,474
1,798,595
(18,028,988)
5,302,081
19,606,629
1,993,494
(16,645,325)
4,954,798
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 31 December 2020 and 2019.
Contingent liabilities
The parent entity had no contingent liabilities as at 31 December 2020 and 2019.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 31 December 2020 and 2019.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1, except for the
following:
●
●
● Dividends received from subsidiaries are recognised as other income by the parent entity.
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Investments in joint ventures are accounted for at cost, less any impairment, in the parent entity.
Note 25. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in note 1:
Name
Principal place of business /
Country of incorporation
Fertoz International Inc.
Fertoz Agriculture Pty Ltd.
Canada
Australia
Ownership interest
2020
%
100%
100%
2019
%
100%
100%
34 | P a g e
Fertoz Limited
Notes to the consolidated financial statements
For the year ended 31 December 2020
Note 26. Reconciliation of profit after income tax to net cash from operating activities
Loss after income tax expense for the year
Adjustments for:
Share-based payments
Depreciation
Expected credit loss
Impairment of inventory
Change in operating assets and liabilities
Decrease/(Increase) in trade and other receivables
Decrease/(Increase) in inventories
(Decrease)/increase in trade and other payables
Net cash used in operating activities
Consolidated
2020
$
2019
$
(1,535,715)
(1,808,232)
205,667
10,335
-
344,052
236,452
14,747
(27,633)
-
(79,492)
35,652
53,601
(965,900)
649,006
(135,979)
(681,143)
(1,752,782)
Non-cash transactions
During the year ended 31 December 2020, the Company issued 922,500 shares (2019: 1,330,000) to staff members, valued at $62,730
(2019: $152,250).
Note 27. Loss per share
Earnings per share for profit/(loss) from continuing operations
Loss after income tax expense for the period
Weighted average number of shares used in calculating basic earnings per share
Consolidated
2020
$
2019
$
(1,535,715)
(1,808,232)
Number
151,262,340
Number
128,421,347
Weighted average number of shares used in calculating diluted earnings per share
151,262,340
128,421,347
Basic loss per share
Diluted loss per share
Cents
1.01
1.01
Cents
1.41
1.41
At 31 December 2020, there were Nil (2019: nil) options 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.
35 | P a g e
Fertoz Limited
Notes to the consolidated financial statements
For the year ended 31 December 2020
Note 28. Share-based payments
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of contract of services in terms of
options and shares issued to directors amounting to $(194,899) (2019: $84,202) and to consultants, under the performance scheme,
amounting $62,730 (2019: $152,250).
At 31 December 2020, the following In-Substance options were outstanding and remain in escrow until the relative performance huddles
are met as per below:
31 December 2020 and 2019
Grant date
01/06/2018
Expiry date
01/06/2021
Exercise
price
$0.00
Weighted average exercise price
Balance at
the start of
the year
4,000,000
4,000,000
$0.00
Granted
-
-
$0.00
Exercised /
vested
-
-
$0.00
Expired/
forfeited/
other
-
-
$0.00
Balance at
the end of
the year
4,000,000
4,000,000
$0.00
Performance
Shares
Number
Expiry Date
Milestone for release from escrow
Issue Price
Chairman Shares
1,000,000
01/06/2021
1,000,000
01/06/2021
1,000,000
01/06/2021
1,000,000
01/06/2021
4,000,000
The Company’s share price closing at 28c or above for 10
consecutive trading days
The Company’s share price closing at 38c or above for 10
consecutive trading days
The Company’s share price closing at 50c or above for 10
consecutive trading days
The Company’s share price closing at 60c or above for 10
consecutive trading days
Nil
Nil
Nil
Nil
If the performance hurdles are not met by expiry date the shares will be returned to the Company.
Valuation Model
The fair value of options and in-substance options are determined at grant date, by the Company, using a trinomial option pricing model or
probabilistic pricing model that takes into account the share price at grant date, exercise price, performance hurdles prices if any, expected
volatility (determined by reference to historical volatility of the share price), option life, the risk free rate, and the fact that the options or
in-substance options are not tradeable. The inputs used for the binomial option pricing model and probabilistic pricing model for options
granted during the period ended 31 December 2018 were as follows:
Grant date
Expiry date
Number
Share price
Issued at grant date
Exercise
price
Performance
hurdle price
Expected Dividend
volatility
Fair value
yield Interest rate at grant date
Risk-free
01/06/2018 01/06/2021
01/06/2018 01/06/2021
01/06/2018 01/06/2021
01/06/2018 01/06/2021
1,000,000
1,000,000
1,000,000
1,000,000
$0.18
$0.18
$0.18
$0.18
-
-
-
-
$0.28
$0.38
$0.50
$0.60
81%
81%
81%
81%
0%
0%
0%
0%
2.06%
2.06%
2.06%
2.06%
$0.1527
$0.1361
$0.1156
$0.1062
Note 29. Events since the end of the financial year
On 8 March 2021, the Company announced a proposed capital raising of approximately $1,109,440 by way of a non-renounceable pro-rata
rights issue of 1 new share for every 7 shares held.
36 | P a g e
Fertoz Limited Directors’ Declaration For the year ended 31 December 2020 37 | Page In the directors' opinion: ● the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; ● the attached financial statements and notes comply with International Financial Reporting Standards and Interpretations as issued by the International Accounting Standards Board as described in note 1 to the financial statements; ● the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at 31 December 2020 and of its performance for the financial period ended on that date; and ● 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 directors have been given the declarations required by section 295A of the Corporations Act 2001. Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. On behalf of the directors ________________________________ Patrick Avery Chairman 30 March 2021 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 Audit of the Financial Report
Opinion
We have audited the financial report of Fertoz Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 31 December 2020, 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, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 31 December 2020 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 2 in the financial report which describes the events and/or conditions which
give rise to the existence of a material uncertainty that may cast significant doubt about the group’s
ability to continue as a going concern and therefore the group may be unable to realise its assets and
discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this
matter.
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.
38 | P a g e
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Carrying value of exploration and evaluation assets
Key audit matter
How the matter was addressed in our audit
Refer to note 10 of the financial report.
Our procedures included, but are not limited to the following:
The Group carries exploration and evaluation
• Obtaining evidence that the Group has valid rights to
assets in relation to the application of the
explore in the areas represented by the capitalised
Group’s accounting policy for exploration and
exploration and evaluation expenditure by obtaining
evaluation assets.
The recoverability of exploration and
evaluation asset is a key audit matter due to
supporting documentation such as licence agreements
and also considering whether the Group maintains the
tenements in good standing.
the significance of the total balance as a
• Making enquiries of management with respect to the
proportion of total assets and the level of
status of ongoing exploration programs in the respective
procedures undertaken to evaluate
areas of interest.
management’s application of the
requirements of AASB 6 Exploration for and
Evaluation of Mineral Resources (‘AASB 6’) in
light of any indicators of impairment that may
be present.
•
Enquiring of management, reviewing ASX announcements
and reviewing directors' minutes to ensure that the
Group had not decided to discontinue activities in any
applicable areas of interest and to assess whether there
are any other facts or circumstances that existed to
indicate impairment testing was required.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 31 December 2020, but does not include
the financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
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.
39 | P a g e
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 4 to 9 of the directors’ report for the year
ended 31 December 2020.
In our opinion, the Remuneration Report of Fertoz Limited, for the year ended 31 December 2020,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit Pty Ltd
A J Whyte
Director
Brisbane, 30 March 2021
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.
40 | P a g e
Fertoz Limited
Shareholder information
31 December 2020
The shareholder information set out below was applicable as at 24 March 2020
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
Number of holders
of ordinary shares
1 to 1,000
1001 to 10,000
10,001 to 100,000
100,001 to 1,000,000
1,000,001 and over
Holding less than a marketable parcel
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Name
LENARK PTY LTD
TWO TOPS PTY LTD
MR WILLIAM BOOTH
MR PATRICK AVERY
YARANDI INVESTMENTS PTY LTD
BOSTON FIRST CAPITAL PTY LTD
ASHABIA PTY LTD
NIREB NOMINEES PTY LTD
PINNACLE SUPERANNUATION PTY LIMITED
WISEVEST PTY LTD
PASAGEAN PTY LIMITED
WILLSTREET PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
OAK CAPITAL NOMINEES PTY LTD
GUNDY PARK PTY LTD
MR GARY GYNN + MRS BARBARA MARY GYNN
BOSTON FIRST CAPITAL PTY LTD
HENDERSON INTERNATIONAL PTY LIMITED
STRATEGIC DEVELOPMENT PARTNERS (AUST)
PTY LTD
EASTERN UNION INVESTMENTS PTY LTD
Units
9,510,499
7,638,393
6,252,828
6,107,143
5,690,926
5,596,025
4,911,000
4,757,838
3,474,393
2,938,489
2,637,173
2,579,631
2,453,519
2,152,500
2,008,199
1,957,000
1,781,435
1,777,500
1,703,571
1,610,000
20
98
210
136
33
75
% Units
6.16
4.95
4.05
3.96
3.69
3.62
3.18
3.08
2.25
1.90
1.71
1.67
1.59
1.39
1.30
1.27
1.15
1.15
1.10
1.04
Total
77,538,062
50.22
41 | P a g e
Fertoz Limited
Shareholder information
31 December 2020
Substantial holders
Substantial holders in the Company are set out below:
Boston first Capital
Mr James Chisholm held in the name of Lenark Pty Ltd
and related party Left Brain Strategies Pty Ltd
Malcolm John Weber
Two Tops Pty Ltd
*% of total shares issued of 128,069,128
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
Number held
% of total shares issued*
6,456,462
6.07%
10,235,564
9,622,489
8,749,505
6.63%
6.2%
5.66%
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one
vote.
Options
There are no voting rights attached to the options.
42 | P a g e