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RECTIFIER!TECHNOLOGIES!LTD!
ABN:!82!058!010!692!
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ANNUAL!REPORT!!
2017!
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For personal use only RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
COMPANY PARTICULARS
BOARD OF DIRECTORS
Mr. Ying Ming Wang
Mr. Yanbin Wang
Mr. Valentino Vescovi
Mr. Nigel Machin (appointed on 3 April 2017)
SHARE REGISTRY
Computershare Investor Services Pty Ltd
452 Johnston Street
ABBOTSFORD, VIC 3067
Telephone: 1300 137 328
SECRETARY
Mr. Justyn Stedwell
REGISTERED AND BUSINESS OFFICE
Rectifier Technologies Ltd
24 Harker Street
BURWOOD, VIC 3125
Telephone:
Facsimile:
+ 61 3 9896 7550
+ 61 3 9896 7566
MANUFACTURING FACILITY- MALAYSIA
Rectifier Technologies (M) Sdn Bhd
No. 5 & 7, Jalan Laman Setia 7/8
Taman Laman Setia
81550 GELANG PATAH, JOHOR
MALAYSIA
Telephone: + 60 7 522 6006
Facsimile: + 60 7 522 6060
BANKERS
ANZ Banking Group Limited
10 Main Street, Box hill
MELBOURNE, VIC 3128
FINANCIERS
Scottish Pacific Benchmark Group
Level 2, 441 St Kilda Rd
MELBOURNE, VIC 3004
AUDITORS
Grant Thornton Audit Pty Ltd
525 Collins Street
MELBOURNE, VIC 3000
For personal use only
RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
CONTENTS
Chairman’s Report
Directors’ Report
Auditor’s Independence Declaration
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
Notes to the Financial Statements
Directors’ Declaration
Auditor’s Report
Additional Information
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17
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54
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
CHAIRMAN’S REPORT
Financial Results
The overall revenue in the 2017 financial year decreased to 6.9 Million compared to 8.5 Million during the 2016 financial year. The lower overall
revenue in the year to 30 June 2017 was due to the slowing down in sales of some of our key products used in the industrial market, however,
the company expects sales from these products to improve in the 2018 financial year.
Despite the decrease in sales in the 2017 financial year, gross margin increased to 59% compared to 54% in 2016 financial year. The
improvement in gross margin was due to the contribution of sales from higher margin products and cost saving on the manufacturing.
The company has reported a lower profit of $428K in year end of 2017 compared a profit of $1.7 million in year end of 2016. The decrease in
profit after tax was mainly impacted by a decrease in sales and dilution of profit from a once off expense of $720,000 (Note19) arising from the
issue of 30 million shares at a price below market value as approved by shareholders on 28 November 2016. However, funds from the share
issue has provided the company with funding to invest in future growth.
Although the year 2017 was very challenging to the company, the company continues to look for future growth of market share on the existing
and emerging electric vehicle charging market and renewable energy technologies industry. We have secured a new manufacturing facility in
Malaysia; the new manufacturing facility enable us to increase our production capacity for both new and existing customers in coming financial
year.
Revenue from continuing operations (refer to note 3)
Gross Profit
Gross Margin %
Profit/(loss) from continuing operations before tax
Income Tax Benefit/ (Expense)
Profit/(loss) from continuing operations after tax
Net Profit/(Loss)
($'000')
2017
2016
6,881
3,688
59%
258
170
428
428
8,459
4,063
54%
1,334
351
1,685
1,685
Funding
The subsidiary of Rectifier Technologies in Malaysia has a loan from a current director of the group for totalling of $81,721 at the end of
reporting period of 2017. The loan is non-interest bearing and the term of the loan is 12 months from 26 April 2017.
On 6 Feburary 2017, the subsidiary of Rectifier Technologies Malaysia obtained a loan of MYR$5,460,000 from Public Bank Berhad to acquire
a new manufacturing facility, the new manufaturing facility purchase agreement was signed prior to settlement on 23 November 2016. The loan
interest is variable and term of loan is 20 years. After monthly repayment, the balance of loan was MYR$5,454,213 at end of reporting period of
2017.
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
Outlook
We have continued our solid commitment to R&D and are decisively investing in projects primarily targeted at emerging markets. We have
released new products including the RT7e into our legacy markets which has provided a technology platform for the development of the EV DC
Home Charger and OEM products which have been released into our emerging markets. We believe that as we establish ourselves in these
emerging markets with the promotion of these products and as the markets themselves mature the volume of the sales for these products will
increase in the coming year. We also have worked to improve the performance of our existing products to recover declining sales in our legacy
markets.
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
Your directors present their report on the company and its controlled entities for the financial year ended 30 June 2017.
DIRECTORS’ REPORT
Directors
The names of directors in office at any time during or since the end of the year are:
Mr. Ying Ming Wang
Mr. Yanbin Wang
Mr. Valentino Vescovi
Mr. Nigel Machin
Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. Except Mr. Nigel Machin was
appointed as Directors on 3 April 2017. He was a founding director of Rectifier Technologies Pacific Pty Ltd (RTP) in 1992, and has been
involved in all product development since the company was founded. Currently he holds the position of Chief Power Engineer of RTP. Mr. Nigel
Machin holds a Bachelor of Engineering degree from Melbourne University.
Company Secretary
Mr. Justyn Stedwell was appointed as Company Secretary on 31 July 2014. He is a professional Company Secretary with over 10 years’
experience as a Company Secretary of ASX listed companies. Mr Stedwell holds Bachelor of Commerce from Monash University and a
Graduate Diploma in Accounting from Deakin University.
Principal Activities
The principal activities of the consolidated entity during the financial year were the design and manufacture of high efficiency power rectifiers,
and the production of electronic and specialised magnetic components.
Operating Results
The consolidated profit of the Group after providing for income tax amounted to $427,903 (2016: $1,684,565).
Review of Operations, Financial Position and Business Strategies
Specific information on the review of operations, financial position and business strategies is stated in the Chairman’s Report.
Likely Developments
Information on likely developments in the operations of the consolidated entity and the expected results of those operations in future financial
years is stated in the Chairman’s Report.
Dividends Paid or Recommended
No dividend was paid or recommended during the financial year.
Significant Changes in State of Affairs
There are no other significant changes in the state of affairs of the consolidated Group other than these referred to under the heading “Likely
Developments”.
Matters subsequent to the end of the financial year
There has not been any matter or circumstance occurring subsequent to the end of the financial year that has significantly affected, or may
significantly affect, the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in
future financial years.
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
Environmental Issues
DIRECTORS’REPORT
The consolidated entity’s operations are not subject to significant environmental regulation under the law of the Commonwealth or of a State.
Information on Directors
Mr. Ying Ming Wang
Qualification
Experience
Interest in Shares and Options
Mr. Yanbin Wang
Qualifications
Experience
Interest in Shares and Options
-
-
-
-
-
-
-
-
Director (Non-executive)
Ph. D in Science
Board Member since June 2006
224,643,616 Ordinary Shares of Rectifier Technologies Ltd
Director and CEO
Master of Law and Ph. D in International Relations
Board Member since August 2010
70,000,000 Ordinary Shares of Rectifier Technologies Ltd
Mr. Valentino Vescovi
-
Director (Non-executive)
Qualifications
Experience
Interest in Shares and Options
-
-
-
Master of Science, Bachelor of Science
Board member 2003-2010 and from 30 October 2012
37,821,196 Ordinary Shares, and 7,040,000 unlisted options exercisable at 2c each
Mr. Nigel Machin -
Director and Chief Power Engineer
Qualifications
Experience
Interest in Shares and Options
Audited Remuneration Report
-
-
-
Bachelor of Engineering Electrical
Board member since 3 April 2017
22,010,000 Ordinary Shares, and 1,800,000 unlisted options exercisable at 2c each
This report details the nature and amount of remuneration for each director of Rectifier Technologies Ltd and other key management
personnel. The Remuneration Report is audited.
Remuneration Policy
The remuneration policy of Rectifier Technologies Ltd has been designed to align director and executive objectives with shareholder and
business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key performance areas
affecting the consolidated entity’s financial results. The Board of Rectifier Technologies Ltd believes the remuneration policy to be appropriate
and effective in its ability to attract and retain the best executives and directors to run and manage the consolidated entity, as well as create
goal congruence between directors, executives and shareholders.
The Board’s policy for determining the nature and amount of remuneration for Board members and senior executives of the consolidated entity
is as follows:
The performance of executives is measured against criteria agreed annually with each executive and is based predominantly on the forecast
growth of the consolidated entity’s profits and shareholders’ value. All bonuses and incentives must be linked to predetermined performance
criteria. The Board has discretion in relation to approving incentives, bonuses and options. Any changes must be justified by reference to
measurable performance criteria.
The policy is designed to attract the highest calibre of executives and reward them for performance that results in long-term growth in
shareholder wealth.
Executives and Key management personnel are also entitled to participate in the share option arrangements.
The executive directors and key management personnel receive a superannuation guarantee contribution required by the Government, which
is currently 9.5%, and do not receive any other retirement benefits. Some individuals, however, have chosen to sacrifice part of their salary to
increase payments towards superannuation.
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
DIRECTORS’ REPORT
All remuneration paid to directors and executives is valued at the cost to the company and expensed. Should shares be given to directors or
executives, they would be valued as the difference between the market price of those shares and the amount paid by the director or executive.
Options are valued using an appropriate methodology.
The Board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and
responsibilities. The Board determines payments to the non-executive directors and reviews their remuneration annually, based on market
practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be
paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting. Fees for non-executive directors are not
linked to the performance of the consolidated entity.
Performance Based Remuneration
As part of each executive director and executive’s remuneration package there may be a performance-based component, consisting of key
performance indicators (KPI’s). The intention of this program is to facilitate goal congruence between directors/executives with that of the
business and shareholders. Where applicable, the KPI’s are set annually, with a certain level of consultation with directors/executives to
ensure buy-in. The measures are specifically tailored to the areas each director/executive is involved in and has a level of control over. The
KPI’s target areas the Board believes hold greater potential for Group expansion and profit, covering financial and non-financial as well as
short-term and long-term goals. The level set for each KPI is based on budgeted figures for the Group and respective industry standards.
Performance in relation to the KPI’s is assessed annually, with bonuses being awarded depending on the number and deemed difficulty of the
KPI’s achieved. Following the assessment, the KPI’s are reviewed by the Board in light of the desired and actual outcomes, and their
efficiency is assessed in relation to the Group’s goals and shareholder wealth, before the KPI’s are set for the following year.
In determining whether or not a KPI has been achieved, Rectifier Technologies Ltd bases the assessment on audited figures, however, where
the KPI involves comparison of individual performance within the Group, management reports which form the foundation for the Group audited
results are used.
Names and positions held of Directors and Key Management Personnel of the Group in office at any time during the financial year are:
Directors
Mr. Ying Ming Wang
Mr. Yanbin Wang
Chairman – Non-Executive
Director – Executive and Chief Executive Officer
Mr. Valentino Vescovi
Director – Non-Executive
Mr. Nigel Machin Director – Executive and Chief Power Engineer
Other Key Management Personnel
Mr. Paul Davis
Operations Manager – Rectifier Technologies Pacific Pty Ltd
Mr. Seong Bow Lee
General Manager – Rectifier Technologies (M) Sdn Bhd
Mr. Wang Yanbin and Mr Nigel Machin were executives of the parent entity in 2017.
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
DIRECTORS’ REPORT
Key Management Personnel Compensation Consolidated Entity
2017
Short-term employee benefits
Long-term
employee
benefits
Post-employment
benefits
Share-
based
payment
Cash salary
and fees
Cash bonus
Non-
monetary
benefits
Long Service
Leave
Super-
annuation
Retirement
benefits
Shares
Total
Name
$
$
$
$
$
$
$
$
Parent Entity Directors
Mr. Ying Ming Wang
-
-
-
Mr. Yanbin Wang (CEO)
269,073
23,054
30,290
Mr. Valentino Vescovi
3,500
-
Mr. Nigel Machin
32,564
2,774
Other Key Management Personnel
Subsidiary Entities
Mr. Paul Davis
Mr. Seong Bow Lee
Total
121,440
65,314
491,891
15,900
4,903
46,631
-
-
-
703
-
-
-
-
-
-
1,103
8,804
4,154
-
26,779
8,098
43,681
30,993
5,257
-
-
-
-
-
-
-
-
-
720,000
1,042,417
-
-
-
-
3,500
45,245
168,273
79,018
720,000
1,338,453
30 million shares were issued to the current director/CEO Mr. Yanbin Wang at shares price of $0.004 which was $0.024 below to market price of
$0.028 as approved by shareholders at AGM on 28 November 2016. The total discount expense of $720,000 was recorded as shares issue
expense presented in the remuneration of Mr. Yanbin Wang in 2017 financial year period. In 2017, 7.89% of Mr. Yanbin Wang’s remuneration,
7.85% of Mr. Nigel Machine’s remuneration, 6.98% of Mr. Seong Bow Lee’s remuneration and 11.85% of Mr. Paul Davis’ remuneration were
performance based. Mr. Nigel Machin was appointed as a director on 3 April 2017 and his remuneration after this appointment is presented
above.
2016
Short-term employee benefits
Long-term
employee
benefits
Post-employment
benefits
Share-
based
payment
Cash salary
and fees
Cash bonus
Name
$
$
Parent Entity Directors
Non-
monetary
benefits
$
Long Service
Leave
Super-
annuation
Retirement
benefits
Shares
Total
$
$
$
$
$
Mr. Ying Ming Wang
(87,409)
-
-
Mr. Yanbin Wang (CEO)
272,936
37,060
28,524
Mr. Valentino Vescovi
(55,583)
-
Other Key Management Personnel
Subsidiary Entities
Mr. Paul Davis
136,691
17,600
-
-
-
-
-
-
-
-
4,306
26,289
Mr. Seong Bow Lee
65,612
7,445
731
-
8,076
Total
332,247
62,105
29,255
4,306
34,365
-
-
-
-
-
-
100,918
13,509
-
338,520
58,218
2,635
20,000
204,886
-
81,864
179,136
641,414
In February 2016, the current and former directors agreed to accept payment of 15% of fee outstanding ($54,527) and have agreed to forgive
the remaining 85% ($308,983). The total outstanding fee of $54,527 was settled on 18 March 2016 and there was no outstanding fee owing to
the current and former directors on 30 June 2016. As the director fees were previously included in cash and fees, the amount forgiven in the
current year has been shown as a negative in 2016 financial year. In November 2015, 20,183,732 ($100,918) shares and 11,643,616 ($58,218)
shares issued respectively at $0.005 discounted $0.002 below market price to director Mr. Valentino Vescovi and Pudu Investments (Australia)
Pty Ltd, a company associated with director Mr. Ying Ming Wang as consideration for director loan repayment as approved by shareholders at
the 2015 AGM. Mr. Paul Davis has been issued 5,000,000 ($20,000) shares at $0.004 which was $0.003 below to market price as part of the
total 90,000,000 shares offered to the company’s senior management in February 2016.
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
Key Management Personnel Compensation Consolidated Entity
Options and Rights Holdings
DIRECTORS’ REPORT
Number of share options of Rectifier Technologies Ltd held by Key Management Personnel in the parent and consolidated entity are as follows:
Balance
1.7.16
Options
Exercised
Net Change
Other
Balance
30.6.17
Total Vested
30.6.17
Total Vested &
Exercisable
Total Vested &
Unexercisable
Mr. Nigel Machin was appointed a director on 3 April 2017.
Number of share options of Rectifier Technologies Ltd held by Key Management Personnel in the parent and consolidated entity are as follows:
Balance
1.7.15
Options
Exercised
Net Change
Other
Balance
Total Vested
30.6.16
30.6.16
Total Vested &
Exercisable
Total Vested &
Unexercisable
-
-
-
-
2017
Parent Entity Directors
Mr. Ying Ming Wang
Mr. Yanbin Wang
Mr. Valentino Vescovi
7,040,000
Mr. Nigel Machin
Other Key Management
Personnel of the Group
Subsidiary Entities
Mr. Paul Davis
Mr. Seong Bow Lee
-
-
-
Total
7,040,000
2016
Parent Entity Directors
Mr. Ying Ming Wang
Mr. Yanbin Wang
Mr. Valentino Vescovi
7,040,000
Other Key Management
Personnel of the Group
Subsidiary Entities
Mr. Paul Davis
Mr. Seong Bow Lee
-
-
Total
7,040,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,040,000
7,040,000
7,040,000
1,800,000
1,800,000
1,800,000
1,800,000
-
-
-
-
-
-
-
-
1,800,000
8,840,000
8,840,000
8,840,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,040,000
7,040,000
7,040,000
-
-
-
-
-
-
7,040,000
7,040,000
7,040,000
-
-
-
-
-
-
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Key Management Personnel Compensation Consolidated Entity
DIRECTORS’ REPORT
Shareholdings
2017
Number of Shares held by Parent Entity Directors and Other Key Management Personnel in Rectifier Technologies Ltd.
Parent Entity Directors
Mr. Ying Ming Wang
Mr. Yanbin Wang
Mr. Valentino Vescovi
Mr. Nigel Machin
Other Key Management
Personnel of the Group
Subsidiary Entities
Mr. Paul Davis
Mr. Seong Bow Lee
Total
Balance
1.7.16
Received as
Director Loan
Repayment
224,643,616
40,000,000
37,821,196
-
5,000,000
2,767,550
310,232,362
-
-
-
-
-
-
-
Received as
Remuneration
Employee Share
Scheme
-
30,000,000
-
-
-
-
Net Change
Balance
Other
30.6.17
-
-
-
224,643,616
70,000,000
37,821,196
22,010,000
22,010,000
-
-
5,000,000
2,767,550
30,000,000
22,010,000
362,242,362
Mr. Nigel Machin was appointed a director on 3 April 2017.
2016
Number of Shares held by Parent Entity Directors and Other Key Management Personnel in Rectifier Technologies Ltd.
Parent Entity Directors
Mr. Ying Ming Wang
Mr. Yanbin Wang
Mr. Valentino Vescovi
Other Key Management Personnel
Personnel of the Group
Subsidiary Entities
Mr. Paul Davis
Mr. Seong Bow Lee
Total
Received as
Director Loan
Repayment
Received as
Remuneration
Employee
Share Scheme
Balance
1.7.15
Net Change
Balance
Other
30.6.16
213,000,000
11,643,616
40,000,000
-
17,837,464
20,183,732
-
-
-
-
-
(200,000)
224,643,616
40,000,000
37,821,196
-
2,767,550
-
-
5,000,000
-
-
-
5,000,000
2,767,550
273,605,014
31,827,348
5,000,000
(200,000)
310,232,362
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
Shares granted as remuneration
DIRECTORS’ REPORT
30 million shares were issued to the current director/CEO Mr. Yanbin Wang at shares price of $0.004 which was $0.024 below to market price
of $0.028 as approved by shareholders at AGM on 28 November 2016. The total discount expense of $720,000 was recorded as shares
issue expense in 2017 financial year period.
Remuneration Practices
The company’s policy for determining the nature and amount of emoluments of board members and senior executives of the company is as
follows:
The remuneration structure for executive officers, including executive directors, is based on a number of factors, including length of service,
particular experience of the individual concerned, and overall performance of the company or Group. The contracts for service between the
company and specified directors and executives are on a continuing basis, the terms of which are not expected to change in the immediate
future. Upon retirement specified directors and executives are paid employee benefit entitlements accrued to date of retirement. Any options
issued as remuneration under the Company’s Share Option Plan not exercised before or on the date of termination lapse.
The service contracts stipulate a range of one to three month resignation periods. The company may terminate an employment contract
without cause by providing up to 3 months’ written notice or making payment in lieu of notice, based on the individual’s annual salary
component together with an appropriate redundancy payment, depending on the individual contract terms. Termination payments are
generally not payable on resignation or dismissal for serious misconduct. In the instance of serious misconduct, the company can terminate
employment at any time. Any options not exercised before or on the date of termination will lapse.
The commentary above should be read in conjunction with the information provided in the Directors’ Report under Remuneration Policy.
Company Performance, Shareholder Wealth and Directors’ and Executives’ Remuneration
The remuneration policy has been tailored to increase goal congruence between shareholders and directors and executives. There have been
two methods applied in achieving this aim, the first being a performance based bonus which is based on key performance indicators, and the
second being the issue of options to the majority of directors and executives to encourage the alignment of personal and shareholder
interests. The company believes this policy to be the most effective manner to increase shareholder wealth.
The following table shows the gross revenue, profits and dividends for the last five years for the listed entity, as well as the share price at the
end of the respective financial years. The loss in 2013 resulted from lower sales and cost of restructuring the Australian business. The
significant improvement in net profit in 2014 was due to the increase in sales, the lower cost of production offshore, and R&D tax rebate. The
lower profit in 2015 as result of a once off warranty expense claim which diluted profit, and discontinued RTUK no longer contributed profit to
the Group in 2015 as it had in 2014. The full year results for 2016 represented a significant improvement of the company’s operational
performance, and resulted from the increase in sales and product margin. The lower overall sales in the year to 30 June 2017 were due to the
slowing down in sales of some of our key products used in the industrial market, however, the company expects sales from these products to
improve in the 2018 financial year. The decrease in net profit was mainly impacted by a decrease in sales and dilution of profit from a once off
expense of $720,000 arising from the issue of 30 million shares at a price below market value as approved by shareholders on 28 November
2016.
2013
2014
2015
2016
2017
Revenue ($’000) (Including discontinued operation)
Net Profit/(Loss) ($’000)
Share Price at Year-end (cents)
Change in Share Price (cents)
Dividends Paid
6,860
(760)
0.1
-
-
8,039
576
0.3
0.2
-
6,602
128
0.7
0.5
-
8,459
1,685
2.9
2.2
-
6,881
428
1.7
1.2
-
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Options Issued as Part of Remuneration
DIRECTORS’ REPORT
Options may be issued to executives as part of their remuneration. Such options are generally not issued based on performance criteria, but
are issued to increase goal congruence between executives, directors and shareholders through the linkage between remuneration and
increasing shareholder value.
Employment Contracts of Directors and Senior Executives
The employment conditions of the CEO and specified executives are formalised in contracts of employment and all contracts require 4 weeks
notice, with no termination payments specified other than employee entitlements.
END OF AUDITED REMUNERATION REPORT
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Meetings of Directors
During the financial year, 4 meetings of directors and 2 audit committee meetings were held. Attendances were:
DIRECTORS’ REPORT
DIRECTORS’ MEETINGS
AUDIT COMMITTEE
Number eligible to attend
Number Attended
Number eligible to attend
Number Attended
Mr. Ying Ming Wang
Mr. Yanbin Wang
Mr. Valentino Vescovi
Mr. Nigel Machin
Indemnifying Officers or Auditor
4
4
4
2
4
4
4
2
2
2
2
1
2
2
2
1
During the financial year the Company has paid premiums to insure each of the directors and officers against liabilities for costs and
expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director or officer of
the Company and of any related body corporate, other than conduct involving a wilful breach of duty in relation to the Company. The amount
of the premium was $7,751 for all directors and officers.
The company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to
indemnify an officer or auditor of the company or of any related body corporate against a liability incurred as such an officer or an auditor.
Options
At the date of this report, the unissued ordinary shares of Rectifier Technologies Ltd under option are as follows:
Grant Date
Date of Expiry
Exercise Price
Number Under Option
June 2003
November 2003
No expiry date
No expiry date
2.0¢ per share
2.0¢ per share
13,280,000
8,360,000
21,640,000
No person entitled to exercise the option had or has any right by virtue of the option to participate in any share issue of another body
corporate.
Proceedings on Behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervened in any proceedings to which the
Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
Non-audit Services
The board of directors, in accordance with advice from the audit committee, review the provision of non-audit services during the year to ensure
that they are compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors satisfy
themselves that the services do not compromise the external auditor’s independence for the following reasons:
•
•
all non-audit services are reviewed and approved by the audit committee prior to commencement to ensure they do not adversely affect
the integrity and objectivity of the auditor; and
the nature of the services provided do not compromise the general principles relating to auditor independence as set out in the Code of
Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical Standards Board.
Details of the amounts paid to the auditors of the Company, Grant Thornton Audit Pty Ltd, and its related practices for audit and non-audit
services provided during the year are set out in Note 8 to the financial statements.
11
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
Auditors Independence Declaration
DIRECTORS’ REPORT
A copy of the auditors independence declaration as required under section 307C of the Corporations Act 2001 is set out on the following page.
Signed in accordance with a resolution of the Board of Directors.
…………………………………..
Mr. Yanbin Wang
Director
Melbourne
Dated this 28th day of September 2017
12
For personal use only
The Rialto, Level 30
525 Collins St
Melbourne Victoria 3000
Correspondence to:
GPO Box 4736
Melbourne Victoria 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF RECTIFIER TECHNOLOGIES
LIMITED
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor
for the audit of Rectifier Technologies Limited for the year ended 30 June 2017, I declare that, to
the best of my knowledge and belief, there have been:
a
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b
no contraventions of any applicable code of professional conduct in relation to the audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
A R J Nathanielsz
Partner - Audit & Assurance
Melbourne, 28 September 2017
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
For personal use only
RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2017
Revenue
Other income
Changes in inventories of finished goods and work in progress
Raw materials and consumables used
Employee benefits expense
Depreciation expense
Finance costs
Other expenses
Profit before income tax expense
Income tax benefit
Note
Consolidated Entity
2017
$
2016
$
3
3
4
4
5
6,345,249
535,199
81,183
(1,886,654)
(3,754,089)
(59,028)
(18,745)
(985,575)
257,540
170,363
7,628,331
830,655
4,666
(2,609,475)
(3,246,361)
(45,933)
(1,663)
(1,226,665)
1,333,555
351,010
Profit from continuing operations after income tax
427,903
1,684,565
Net profit after income tax attributable to owners of Rectifier
427,903
1,684,565
Technologies Limited
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation differences
(31,064)
(104,343)
Total other comprehensive income for the year
Total comprehensive income for the year
Basic earnings per share (cents per share):
9
Diluted earnings per share (cents per share):
The accompanying notes form part of these financial statements
(31,064)
396,839
0.03
0.03
(104,343)
1,580,222
0.13
0.12
14
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017
Note
Consolidated Entity
2017
$
2016
$
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Deferred tax assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Interest bearing liabilities
Provisions
Current tax liability
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Interest bearing liabilities
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
The accompanying notes form part of these financial statements
10
11
12
14
5
15
16
18
16
18
2,628,269
1,464,129
2,068,876
513,555
6,674,829
2,153,731
260,772
2,414,503
9,089,332
1,471,762
64,919
392,170
50,715
1,979,566
1,673,026
57,018
1,730,044
3,709,610
1,635,415
1,795,588
1,980,049
-
5,411,052
209,945
456,892
666,837
6,077,889
1,471,369
10,482
322,743
102,179
1,906,773
18,326
45,107
63,433
1,970,206
5,379,722
4,107,683
19
39,816,575
39,227
38,941,375
70,291
(34,476,080)
(34,903,983)
5,379,722
4,107,683
15
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2017
Note
Consolidated Entity
2017
$
2016
$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Finance costs
Income taxes paid
6,934,554
(5,617,961)
1,439
(17,487)
(83,228)
Net cash provided by operating activities
23
1,217,317
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
Payment for registration of new company
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Repayment of borrowings
Proceeds from borrowings
Net cash provided by/(used in) financing activities
Net increase in cash held
Cash and cash equivalents at beginning of the year
Effect of exchange rates on cash holdings in foreign currencies
Cash and cash equivalents at end of the year
10
The accompanying notes form part of these financial statements
(1,861,025)
(177)
(1,861,202)
155,200
(9,199)
1,603,822
1,749,823
1,105,938
1,635,415
(113,084)
2,628,269
7,740,892
(6,990,023)
1,088
(1,730)
(26,926)
723,301
(67,241)
-
(67,241)
360,000
(457,050)
-
(97,050)
559,010
958,252
118,153
1,635,415
16
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2017
Consolidated Entity
$
$
$
$
Share Capital
Accumulated Losses
Foreign Currency
Translation
Reserve
Total
Balance at 1.7.2015
38,088,583
(36,588,548)
174,634
1,674,669
Total comprehensive income for the year
-
1,684,565
(104,343)
1,580,222
Transactions with owners in their capacity
as owners:
Shares issued (Note 19)
Balance at 30.06.2016
852,792
-
-
852,792
38,941,375
(34,903,983)
70,291
4,107,683
Balance at 1.7.2016
38,941,375
(34,903,983)
70,291
4,107,683
Total comprehensive income for the year
-
427,903
(31,064)
396,839
Transactions with owners in their capacity
as owners:
Shares issued (Note 19)
Balance at 30.06.2017
875,200
39,816,575
-
-
875,200
(34,476,080)
39,227
5,379,722
The accompanying notes form part of these financial statements.
17
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 1:
Corporate information
The financial statements of Rectifier Technologies Limited for the year ended 30 June 2017 were authorised for issue in accordance with
a resolution of the directors on 27 September 2017 and covers the consolidated entity consisting of Rectifier Technologies Limited and its
subsidiaries as required by the Corporations Act 2001.
The financial report is presented in Australian dollars, unless otherwise noted.
Rectifier Technologies Limited is a company limited by shares and incorporated in Australia, whose shares are publicly traded on the
Australian Stock Exchange.
The address of the registered office and principal place of business is 24 Harker Street, Burwood, Vic 3125, Australia.
NOTE 2:
Summary of significant accounting policies
a.
Basis of preparation
The consolidated financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting
Standards, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. Rectifier
Technologies Limited is a for-profit entity for the purpose of preparing the financial statements.
Compliance with IFRS as adopted in Australia ensures that the financial statements and notes of the consolidated entity comply with
International Financial Reporting Standards (IFRS).
Historical cost convention
These financial statements have been prepared under the historical cost basis, except for available-for-sale financial assets that have
been measured at fair value.
b.
Basis of Consolidation
Subsidiaries
The Group financial statements consolidate those of the Rectifier Technologies Limited and all of its subsidiaries as of 30 June 2017.
Rectifier Technologies Limited controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary
and has the ability to affect those returns through its power over the subsidiary. All subsidiaries have a reporting date of 30 June. All
transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on
transactions between Group companies. Where unrealised losses on intra-Group asset sales are reversed on consolidation, the underlying
asset is also tested for impairment from a Group perspective. Amounts reported in the financial statements of subsidiaries have been
adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date
of acquisition, or up to the effective date of disposal, as applicable.
Subsidiaries are accounted for at cost by the parent entity and are included in the balances disclosed in note 27.
c.
Income Tax
The income tax expense for the period is the tax payable on the current period's taxable income based on the national income tax rate for
each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax base of
assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for all temporary differences, between carrying amounts of assets and liabilities for
financial reporting purposes and their respective tax bases, at the tax rates expected to apply when the assets are recovered or liabilities
settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. Exceptions are made for certain
temporary differences arising on initial recognition of an asset or a liability if they arose in a transaction, other than a business combination,
that at the time of the transaction did not affect either accounting profit or taxable profit.
Deferred tax assets are only recognised for deductible temporary differences and unused tax losses if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax bases of investments
in subsidiaries, associates and interests in joint ventures where the parent entity is able to control the timing of the reversal of the temporary
differences and it is probable that the differences will not reverse in the foreseeable future.
18
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 2:
Summary of significant accounting policies (Cont’d)
c.
Income Tax (Cont’d)
Current and deferred tax balances relating to amounts recognised directly in other comprehensive income or directly in equity are also
recognised in other comprehensive income or directly in equity, respectively.
Tax Consolidation
Rectifier Technologies Limited and its Australian wholly-owned subsidiaries have implemented the tax consolidation legislation for the whole
of the financial year. Rectifier Technologies Limited is the head entity in the tax consolidated Group. The separate taxpayer within a Group
approach has been used to allocate current income tax expense and deferred tax expense to wholly-owned subsidiaries that form part of
the tax consolidated Group. Rectifier Technologies Limited has assumed all the current tax liabilities and the deferred tax assets arising
from unused tax losses for the tax consolidated Group via intercompany receivables and payables because a tax funding arrangement has
been in place for the whole financial year. The amounts receivable/payable under tax funding arrangements are due upon notification by the
head entity, which is issued soon after the end of each financial year. Interim funding notices may also be issued by the head entity to its
wholly-owned subsidiaries in order for the head entity to be able to pay tax instalments. These amounts are recognised as current
intercompany receivables or payables (refer to note 25).
d.
Inventories
Raw materials, Work in Progress and Finished goods
Inventories are measured at the lower of cost and net realisable value. The cost of manufactured products includes direct materials, direct
labour and an appropriate portion of variable and fixed overheads. Overheads are applied on the basis of normal operating capacity. Costs
are assigned on the basis of weighted average costs. Net realisable value is the estimated selling price in the ordinary course of business,
less the estimated selling cost of completion and selling expenses.
e.
Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment losses.
Plant and equipment
Plant and equipment are measured on the cost basis less depreciation and impairment losses. Historical costs include costs directly
attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by
management. Freehold land is not depreciated but is subject to impairment testing if there is any indication of impairment.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other
repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
Depreciation
The depreciable amount of all fixed assets including capitalised leased assets is depreciated on a straight line basis over their useful lives to
the consolidated entity commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter
of either the unexpired period of the lease or the estimated useful lives of the improvements.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Leasehold improvements
Plant and equipment
Leased plant and equipment
Depreciation Rate
10%
20-40%
20-33%
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of the reporting period.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its
estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These
gains and losses are included in profit or loss.
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 2:
Summary of significant accounting policies (Cont’d)
f.
Leases
Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as
finance leases and capitalised at inception of the lease at the fair value of the leased property, or if lower, at the present value of the
minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss over the lease
period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.
Leases where the lessor retains substantially all the risks and rewards of ownership of the net asset are classified as operating leases.
Payments made under operating leases (net of incentives received from the lessor) are charged to profit or loss on a straight-line basis
over the period of the lease.
Capital work-in-progress consists of property, plant and equipment for intended use as production facilities. The amount is stated at cost and
includes capitalisation of interest incurred on borrowings related to property, plant and equipment under construction/installation until the
property, plant and equipment are ready for their intended use.
g.
Intangibles
Research and development
Under AASB 138 Intangible Assets, costs associated with the research phase of the development of an asset must be expensed in the
period as incurred.
An intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the
following are demonstrated:
•
•
•
•
•
•
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the development and to use or sell the
intangible asset; and
the ability to measure reliably the expenditure attributable to the intangible asset during its development.
Expenditure capitalised comprises cost of materials, services, direct labour and an appropriate portion of overheads. Other development
costs are expensed when they are incurred. Capitalised development expenditure is stated at cost less accumulated amortisation and any
impairment losses and amortised over the period of expected future sales from the related projects. The carrying value of development
costs is reviewed annually when the asset is not yet available for use, or when events or circumstances indicate that the carrying value
may be impaired.
h.
Impairment of Assets
At the end of each reporting period, the Group assesses whether there is any indication that individual assets have been impaired.
Where impairment indicators exist, recoverable amount is determined and impairment losses are recognised in profit or loss where the
asset's carrying value exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs to sell and
value in use. For the purpose of assessing value in use, the estimated future cash flows are discounted to their present value using a pre-
tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Where it is not possible to estimate recoverable amount for an individual asset, recoverable amount is determined for the cash-generating
unit to which the asset belongs.
20
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 2:
Summary of significant accounting policies (Cont’d)
i.
Investments and Other Financial Assets
All investments and other financial assets are initially stated at cost, being the fair value of consideration given plus acquisition costs.
Purchases and sales of investments are recognised on trade date which is the date on which the Group commits to purchase or sell the
asset.
Available-for-sale financial assets
Available-for-sale financial assets comprise investments in listed and unlisted entities and any non-derivatives that are not classified as
any other category of financial assets, and are classified as non-current assets (unless management intends to dispose of the investment
within 12 months of the end of the reporting period). After initial recognition, these investments are measured at fair value with gains or
losses recognised in other comprehensive income (available-for-sale investments revaluation reserve). Where there is a significant or
prolonged decline in the fair value of an available for sale financial asset (which constitutes objective evidence of impairment) the full
amount including any amount previously charged to other comprehensive income, is recognised in profit or loss. Purchases and sales of
available for sale financial assets are recognised on settlement date with any change in fair value between trade date and settlement date
being recognised in other comprehensive income. On sale the amount held in available for sale reserves associated with that asset is
recognised in profit or loss.
Investments in subsidiaries, associates and joint venture entities are accounted for in the consolidated financial statements as described in
note 1(b) and in the parent entity financial information at cost in accordance with the cost alternative permitted in separate financial
statements under AASB 127 Consolidated and Separate Financial Statements.
Reversals of impairment losses on equity instruments classified as available-for-sale cannot be reversed through profit or loss. Reversals
of impairment losses on debt instruments classified as available-for-sale can be reversed through profit or loss where the reversal relates
to an increase in the fair value of the debt instrument occurring after the impairment loss was recognised in profit or loss.
The fair value of quoted investments are determined by reference to Stock Exchange quoted market bid prices at the close of business at
the end of the reporting period. For investments where there is no quoted market price, fair value is determined by reference to the current
market value of another instrument which is substantially the same or is calculated based on the expected cash flows of the underlying net
asset base of the investment.
Loans and receivables
Non-current loans and receivables include loans due from related parties repayable within 365 days of end of reporting period. As these
are non-interest bearing, fair value at initial recognition requires an adjustment to discount these loans using a market-rate of interest for a
similar instrument with a similar credit rating. The discount is debited on initial recognition to the investment account.
Impairment losses are measured as the difference between the investment's carrying amount and the present value of the estimated future
cash flows, excluding future credit losses that have not been incurred. The cash flows are discounted at the investment's original effective
interest rate. Impairment losses are recognised in profit or loss.
j.
Foreign Currency Transactions and Balances
The functional and presentation currency of Rectifier Technologies Limited and its Australian subsidiaries is Australian dollars ($AUD).
Foreign currency transactions are translated into the functional currency using the exchange rates ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the end of reporting
period. Foreign exchange gains and losses resulting from settling foreign currency transactions, as well as from restating foreign currency
denominated monetary assets and liabilities, are recognised in profit or loss, except when they are deferred in other comprehensive
income as qualifying cash flow hedges or where they relate to differences on foreign currency borrowings that provide a hedge against a
net investment in a foreign entity. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates
at the date when fair value was determined.
21
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 2:
Summary of significant accounting policies (Cont’d)
j.
Foreign Currency Transactions and Balances (Cont’d)
The functional currency of the overseas subsidiaries is the Malaysian ringgit and the US dollars. At the end of the reporting period, the
assets and liabilities of these overseas subsidiaries are translated into the presentation currency of Rectifier Technologies Limited at the
closing rate at the end of the reporting period and income and expenses are translated at the weighted average exchange rates for the
year. All resulting exchange differences are recognised in other comprehensive income as a separate component of equity (foreign
currency translation reserve). On disposal of a foreign entity, the cumulative exchange differences recognised in foreign currency
translation reserves relating to that particular foreign operation is recognised in profit or loss.
k.
Employee Benefits
Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to the end of the reporting
period. Benefits accruing to employees in respect of wages and salaries, annual leave, long service leave and sick leave are recognised
when it is probable that settlement will be required and the liability is capable of being measured reliably. Employee benefits that are
expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related
on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to
be made for those benefits.
Long Service Leave
Liabilities for long service leave are recognised as part of the provision for employee benefits and measured as the present value of
expected future payments to be made in respect of services provided by employees to the end of reporting period using the projected unit
credit method. Consideration is given to expect future salaries and wages levels, experience of employee departures and periods of
service. Expected future payments are discounted using high quality corporate bonds rates at the end of the reporting period with terms to
maturity and currency that match, as closely as possible, the estimated future cash outflows.
l.
Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an
outflow of economic benefits will result and that outflow can be reliably measured. Where the effect of the time value of money is material,
provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the
time value of money and, where appropriate, the risks specific to the liability.
m.
Cash and Cash Equivalents
For the purposes of the Statement of Cash Flows, cash and cash equivalents includes cash on hand and deposits held at call, net of any
bank overdrafts. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash, which
are not subject to insignificant risk of changes in value and have a maturity of three months or less at the date of acquisition.
n.
Trade receivables
Trade receivables are recognised at original invoice amounts less an allowance for uncollectible amounts and have repayment terms
between 30 and 90 days. Collectability of trade receivables is assessed on an ongoing basis. Debts which are known to be uncollectible
are written off. An allowance is made for doubtful debts where there is objective evidence that the Group will not be able to collect all
amounts due according to the original terms. Objective evidence of impairment includes financial difficulties of the debtor, default
payments or debts more than 90 days overdue. On confirmation that the trade receivable will not be collectible the gross carrying value of
the asset is written off against the associated provision. From time to time, the Group elects to renegotiate the terms of trade receivables
due from customers with which it has previously had a good trading history. Such renegotiations will lead to changes in the timing of
payments rather than changes to the amounts owed and are not, in the view of the directors, sufficient to require the derecognition of the
original instrument.
Trade receivable are recognised gross of any debtor financing facility used.
22
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 2:
Summary of significant accounting policies (Cont’d)
o.
Revenue Recognition
Revenue is recognised at the fair value of consideration received or receivable. Amounts disclosed as revenue are net of returns, trade
allowances and duties and taxes paid.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have passed to the buyer and can be
reliably measured. Risks and rewards are considered passed to buyer when goods have been delivered to the customer.
Revenue from product licensing is recognised on the transfer of intellectual property in accordance with contractual obligations.
Royalties are recognised on an accrual basis in accordance with the substance of the agreement.
Dividends are recognised when the right to receive payment is established.
Interest revenue is recognised as interest accrues using the effective interest method. The effective interest method uses the effective
interest rate which is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial asset. All
revenue is stated net of the amount of goods and services tax (GST).
R&D rebates are recognised on an accrual basis as other income once the amount can be reliably estimated.
p.
Trade and other Payables
Trade and other payables represent liabilities for goods and services provided to the Group prior to the year end and which are unpaid.
These amounts are unsecured and have 30-60 day payment terms.
q.
Interest-bearing liabilities
All loans and borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss
over the period of the loans and borrowings using the effective interest method.
All borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least
12 months after the end of the reporting period.
r.
Borrowing Costs
Borrowing costs incurred for the construction of a qualifying asset are capitalised during the period of time that it is required to complete
and prepare the asset for its intended use or sale. Other borrowing costs are expensed when incurred.
s.
Goods and Services Tax (GST)
Revenues, expenses are recognised net of GST except where GST incurred on a purchase of goods and services is not recoverable from
the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the
taxation authority is included as part of receivables or payables in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and
financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
t.
New accounting standards and interpretations
The following new accounting standards, amendments to standards and interpretations have been issued, but are not mandatory as at 30
June 2017. They may impact the Group in the period of initial application. They are available for early adoption, but have not been applied
in preparing these financial statements:
23
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 2:
Summary of significant accounting policies (Cont’d)
t.
New accounting standards and interpretations (Cont’d)
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all previous versions
of AASB 9 and completes the project to replace AASB139 'Financial Instruments: Recognition and Measurement'. AASB 9 introduces new
classification and measurement models for financial assets. A financial asset shall be measured at amortised cost, if it is held within a
business model whose objective is to hold assets in order to collect contractual cash flows, which arise on specified dates and solely
principal and interest. All other financial instrument assets are to be classified and measured at fair value through profit or loss unless the
entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading)
in other comprehensive income ('OCI'). For financial liabilities, the standard requires the portion of the change in fair value that relates to
the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting
requirements are intended to more closely align the accounting treatment with the risk management activities of the entity. New
impairment requirements will use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment will be measured under a
12-month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the
lifetime ECL method is adopted. The standard introduces additional new disclosures. The consolidated entity will adopt this standard from
1 January 2018. The company has made a preliminary assessment of the changes and does not expect any material impact on
implementation other than a reclassification of AFS financial assets to fair value through OCI. There are no AFS financial assets to the
Company on 30 June 2017.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a single standard for
revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods
or services. The standard will require: contracts (either written, verbal or implied) to be identified, together with the separate performance
obligations within the contract; determine the transaction price, adjusted for the time value of money excluding credit risk; allocation of the
transaction price to the separate performance obligations on a basis of relative stand-alone selling price of each distinct good or service,
or estimation approach if no distinct observable prices exist; and recognition of revenue when each performance obligation is satisfied.
Credit risk will be presented separately as an expense rather than adjusted to revenue. For goods, the performance obligation would be
satisfied when the customer obtains control of the goods. For services, the performance obligation is satisfied when the service has been
provided, typically for promises to transfer services to customers. For performance obligations satisfied over time, an entity would select
an appropriate measure of progress to determine how much revenue should be recognised as the performance obligation is satisfied.
Contracts with customers will be presented in an entity's statement of financial position as a contract liability, a contract asset, or a
receivable, depending on the relationship between the entity's performance and the customer's payment. Sufficient quantitative and
qualitative disclosure is required to enable users to understand the contracts with customers; the significant judgements made in applying
the guidance to those contracts; and any assets recognised from the costs to obtain or fulfil a contract with a customer. The consolidated
entity will adopt this standard from 1 January 2018 but the impact of its adoption is yet to be assessed by the consolidated entity.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB 117 'Leases'
and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a 'right-of-use' asset will be
capitalised in the statement of financial position, measured as the present value of the unavoidable future lease payments to be made
over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal
computers and small office furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease
payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for
lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal or
dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset
(included in operating costs) and an interest expense on the recognised lease liability (included in finance costs).
24
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 2:
Summary of significant accounting policies (Cont’d)
t.
New accounting standards and interpretations (Cont’d)
In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease
expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be improved as
the operating expense is replaced by interest expense and depreciation in profit or loss under AASB 16. For classification within the
statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either operating or
financing activities) component. For lessor accounting, the standard does not substantially change how a lessor accounts for leases. The
consolidated entity will adopt this standard from 1 July 2019 but the impact of its adoption is yet to be assessed by the consolidated.
u.
Fair values
Fair values may be used for financial asset and liability measurement and as well as for sundry disclosures.
Fair values for financial instruments traded in active markets are based on quoted market prices at the end of reporting period. The
quoted market price for financial assets is the current bid price.
The fair value of financial instruments that are not traded in an active market are determined using valuation techniques. Assumptions
used are based on observable market prices and rates at the end of reporting period. The fair value of long-term debt instruments is
determined using quoted market prices for similar instruments. Estimated discounted cash flows are used to determine fair value of the
remaining financial instruments.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their
short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows
at the current market interest rate that is available to the Group for similar financial instruments.
v.
Share capital
Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of a financial liability.
The company’s ordinary shares are classified as equity instruments. Equity instruments issued by the company are recorded at the
proceeds received, net of direct issue costs.
w.
Share-based payments
Share-based compensation benefits are provided to employees via the Rectifier Technologies Limited Employee Option Plan and an
employee share scheme.
The fair value of options granted under the Rectifier Technologies Limited Employee Option Plan is recognised as an employee benefit
expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which
the employees become unconditionally entitled to the options.
The fair value at grant date is independently determined using the Monte-Carlo Simulation option pricing model that takes into account the
exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying
share, the expected dividend yield and the risk free interest rate for the term of the option. The fair value of the options granted is adjusted
to reflect market vesting conditions, but excludes the impact of any non-market vesting conditions (for example, profitability and sales
growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become
exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. The impact of the
revision to the original estimates, if any, is recognised in profit or loss with a corresponding adjustment to equity.
Under the employee share scheme, shares issued to employees for no cash consideration vest immediately on grant date. On this date,
the market value of the shares issued is recognised as an employee benefits expense with a corresponding increase in equity.
25
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 2:
Summary of significant accounting policies (Cont’d)
x.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with Australian Accounting Standards requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The
consolidated entity makes certain judgements and assumptions concerning the future. These estimates and assumptions have an
inherent risk in respect of estimates based on future events which could have a material impact on the assets and liabilities in the next
financial year are outlined below:
1.
Provision for stock obsolescence
The Group calculates the provision for stock obsolescence based on slow-moving inventory on hand for more than 12 months.
2.
R & D tax rebate
The Group has recognised the R&D rebate relating to the 2017 year on an accrual basis. As the return has not yet been submitted, the
Group has made an estimate of the likely refund amount based on past history of successful claims.
3.
Taxation
The Group has significant transactions between the Australian and Malaysian subsidiary and significant judgment involved in determining
the transfer price of goods and services exchanged. Management believe the prices exchange are determined on a fair and reasonable
basis and reflect an appropriate basis under the tax legislation of Australia and Malaysia.
4. 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 the Monte Carlo Simulation model taking into
account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-
settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting
period but may impact profit or loss and equity.
y.
Earnings per Share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit or loss attributable to members of Rectifier Technologies Limited, adjusted for
the after-tax effect of preference dividends on preference shares classified as equity, by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus elements in ordinary shares during the year. The weighted average number of
issued shares outstanding during the financial year does not include shares issued as part of the Employee Share Loan Plan that are
treated as in-substance options.
Diluted earnings per share
Earnings used to calculate diluted earnings per share are calculated by adjusting the basic earnings by the after-tax effect of dividends
and interest associated with dilutive potential ordinary shares. The weighted average number of shares used is adjusted for the weighted
average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary
shares.
26
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 3:
REVENUE AND OTHER INCOME
Revenue
sale of goods
interest received
sundry income
-
-
-
-
Other income
-
-
-
R&D tax rebate
debt forgiveness
R&D development
NOTE 4:
PROFIT FROM CONTINUING ACTIVITIES
Profit before income tax has been determined after the following expenses:
Cost of sales
Finance costs:
-
-
directors and director-related entities
other persons
Total finance costs
Depreciation of non-current assets:
-
-
-
plant and equipment
leasehold improvements
motor vehicle
Total depreciation
Consolidated Entity
2017
$
2016
$
6,245,098
7,481,796
1,513
98,638
1,051
145,484
6,345,249
7,628,331
458,535
-
76,664
535,199
521,671
308,984
-
830,655
Consolidated Entity
2017
$
2016
$
2,556,862
3,418,385
-
18,745
18,745
48,255
15
10,758
59,028
-
1,663
1,663
34,369
17
11,547
45,933
Rental expense on operating leases - minimum lease payments
162,900
133,387
Personnel Expenses - defined contributions superannuation
318,441
293,183
Research and development costs expensed
1,153,936
1,241,251
Profit/ (loss) on disposal of property, plant and equipment
(304)
-
Impairment of inventory
-
103,061
27
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 5:
INCOME TAX EXPENSE
Current tax
Deferred tax - temporary differences
Deferred tax – tax losses
Tax losses carried forward previously not brought to account
Deferred tax assets in relation to temporary differences previously not brought to account
Reconciliation of the effective tax rate
The prima facie tax on profit before income tax is reconciled to the income tax expense as
follows:
Consolidated Entity
2017
$
(47,973)
83,431
112,689
(318,510)
-
(170,363)
2016
$
782,076
50,062
-
(860,162)
(322,986)
(351,010)
Profit before income tax
257,540
1,333,555
Prima facie tax payable on profit/ (loss) before income tax at 27.5% (2016: 30%)
-
consolidated entity
70,823
400,068
Add: Tax effect of:
-
-
-
-
-
R&D expenditures
Controlled foreign company attributed income
Discount on shares
Other non-allowable items
Effect of change in tax rate
Less Tax effect of:
-
-
-
-
Other non-assessable items
Foreign income tax offset
R&D tax offset
Effect of lower rates of tax on overseas income
Tax effect of carry-forward tax losses not previously bought to account
Tax effect of temporary differences not previously brought to account
Income tax attributable to entity
Reconciliation to continuing / discontinued operations
Consolidated profit before income tax
Less profit before tax relating to discontinued operations
Profit before income tax from continuing operations
Consolidated income tax expense
Less income tax expense relating to discontinued operations
Income tax expense from continuing operations
437,351
71,871
198,000
56,109
23,074
857,228
(126,097)
(59,308)
(513,556)
(10,120)
148,147
(318,510)
-
(170,363)
-
-
-
448,881
-
848,949
-
-
-
(16,811)
832,138
(860,162)
(322,986)
(351,010)
257,540
1,333,555
-
-
257,540
1,333,555
(170,363)
(351,010)
-
-
(170,363)
(351,010)
28
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 5:
INCOME TAX EXPENSE (Cont’d)
Consolidated Entity
2017
$
2016
$
Unrecognised deferred tax assets
Unused capital losses for which no deferred tax asset recognised relating to the Australian
entities in the tax consolidated group
18,409,594
18,409,594
Unused capital losses for which no deferred tax asset recognised relating to the overseas
subsidiaries
Unused revenue losses for which no deferred tax asset recognised relating to the
Australian entities in the tax consolidation group
Unused revenue losses for which no deferred tax asset recognised relating to the
overseas subsidiaries
-
-
18,409,594
18,409,594
-
-
-
980,371
-
980,371
Potential tax benefit at applicable tax rates
5,062,638
5,816,989
Deferred tax assets have not been recognised in the statement of financial position for the following items:
Unused capital losses
Unused tax losses
Deductible temporary differences
Potential tax benefit at applicable tax rates
18,409,594
18,409,594
-
-
980,371
-
18,409,594
19,389,965
5,062,638
5,816,989
The capital losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of this item
because it is not probable that future taxable profits will be available against which the group can utilise the benefits from these capital
losses.
29
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016
NOTE 5:
INCOME TAX EXPENSE (Cont’d)
The following table regarding DTA during the current reporting period:
Deferred Tax Assets
Provision for stock obsolescence
Accrued superannuation
Accruals - Other
Unrealised FX Loss
Employee entitlements
Provision for staff bonuses
Blackhole expenditure
Tax losses
Deferred tax movement
1 July 2016
$
Recognised in Profit &
Loss
$
38,114
4,930
31,010
9,346
110,355
83,137
-
180,000
456,892
(13,824)
675
(4,718)
3,994
13,172
(83,137)
407
(112,689)
(196,120)
30 Jun 2017
$
24,290
5,606
26,292
13,339
123,527
-
407
67,311
260,772
The Group has unused capital losses of $18,409,592 and unused tax losses of $244,767 which provide a potential tax benefit of $67,311.
During the period, previously unrecognised tax losses of $1,158,219 have been brought to account by the Group. These represent
amounts used to offset the current year taxable profit of the Group, as well as the budgeted Research and Development expenditure in
FY17 which offsets against tax losses when claimed under the research and development tax incentive.
NOTE 6:
DIVIDENDS
No dividends declared or paid during the year ended 30 June 2017. The amounts of franking credits available for subsequent reporting
periods are:
Opening balance of franking account
Deferred debit that will arise from the receipt of the R&D tax offset from prior year
Balance of franking account at year end
Consolidated Entity
2017
$
(1,257,659)
(515,535)
-
2016
$
(735,998)
(521,671)
-
Deferred debit balance of franking account at the end of the reporting period
(1,773,194)
(1,257,659)
30
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 7:
KEY MANAGEMENT PERSONNEL
a.
Names and positions held of Parent Entity Directors and other Key Management Personnel in office at any time during
the financial year are:
Parent Entity Directors
Mr. Ying Ming Wang
Mr. Yanbin Wang
Mr. Valentino Vescovi
Chairman – Non-Executive
Executive Director & Chief Executive Officer
Director – Non-Executive
Mr. Nigel Machin Executive Director & Chief Power Engineer
Other Key Management Personnel
Mr. Paul Davis
Operations Manager – Rectifier Technologies Pacific Pty Ltd
Mr. Seong Bow Lee
General Manager – Rectifier Technologies (M) Sdn Bhd
b.
Key Management Personnel Compensation
Short-term employee benefits
Long-term employee benefits
Post-employment benefits
Share-based payments
Consolidated Entity
2017
$
569,515
5,257
43,681
720,000
1,338,453
2016
$
423,607
4,306
34,365
179,136
641,414
There were 20,183,732 ($100,918) ordinary shares and 11,643,616 ($58,218) ordinary shares issued respectively to director Mr. Valentino
Vescovi and Pudu Investments (Australia) Pty Ltd, a company associated with director Mr. Ying Ming Wang as consideration for director
loan repayment approved by shareholders at the 2015 AGM. 5,000,000 ($20,000) ordinary shares was issued to Mr. Paul Davis as part of
the total 90,000,000 ordinary shares offered to the company’s senior management in February 2016.
30 million shares were issued to the current director/CEO Mr. Yanbin Wang at shares price of $0.004 which was $0.024 below to market
price of $0.028 as approved by shareholders at AGM on 28 November 2016. The total discount expense of $720,000 was recorded as
shares issue expense in 2017 financial year period.
Transactions with Parent Entity Directors and other Key Management Personnel:
Disclosures relating to other transactions and balances between the consolidated entity and parent entity directors and other key
management personnel are set out in Note 25.
NOTE 8:
AUDITOR’S REMUNERATION
Audit and review services
Grant Thornton Audit Pty Ltd - Audit and review of financial reports
Other audit firms (non Grant Thornton) – Audit and review of other entities in the Group
Total remuneration for audit services
54,609
-
54,609
48,319
5,534
53,853
Consolidated Entity
2017
$
2016
$
31
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 9: EARNINGS PER SHARE
Consolidated Entity
2017
$
2016
$
a. Reconciliation of earnings used to calculate earnings per share
Profit/(Loss) from continuing operation attributable to the ordinary equity holders used in the
calculation of basic and dilutive earnings per share
427,903
1,684,565
b. Weighted average number of ordinary shares outstanding during the year used in
calculation of basic earnings per share
1,366,900,602
1,335,140,602
Adjustments for calculations of diluted earnings per share:
Options
21,881,096
21,640,000
Weighted average number of ordinary shares and potential ordinary shares used as the
denominator in calculating diluted earnings per share
1,388,781,698
1,356,780,602
NOTE 10:
CASH AND CASH EQUIVALENTS
Cash at bank
Reconciliation of Cash
Consolidated Entity
2017
$
2016
$
2,628,269
2,628,269
1,635,415
1,635,415
Cash and cash equivalents at the end of the financial year as shown in the statement of cash
flows is reconciled to items in the statement of financial position as follows:
Cash
2,628,269
1,635,415
NOTE 11:
TRADE AND OTHER RECEIVABLES
CURRENT
Trade debtors (a)
Other debtors
R&D tax incentives
Prepayments
Consolidated Entity
2017
$
2016
$
734,248
734,248
50,127
500,000
179,754
1,464,129
1,117,167
1,117,167
35,287
557,000
86,134
1,795,588
a. Included in debtors of $734,248 (2016: $1,117,167) are debts which have been assigned to financing companies in Australia. The
company had received advances of $2,358 (2016: $15,936) against these debts which are included within the debtor financing facility
disclosed in note 15 to the financial statements.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 12:
INVENTORIES
Raw materials
Work in progress
Finished goods at cost
Consolidated Entity
2017
$
912,671
828,797
327,408
2016
$
905,027
819,829
255,193
2,068,876
1,980,049
Inventories are recognised net of a provision for obsolescence of $177,386 (2016: $280,887).
Inventory expense
Change in inventories recognised as expense during the year ended 30 June 2017 amounted to $81,183 (2016: $4,666). The expense/
income has been included in ‘changes in inventories of finished goods and work in progress’ in the profit and loss.
NOTE 13:
SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following entities in accordance with the
accounting policy described in note 2(b):
Name
Ultimate Parent Entity:
Rectifier Technologies Ltd
Subsidiaries of Rectifier Technologies Ltd:
Protran Technologies Pty Ltd
Rectifier Technologies Pacific Pty Ltd
ICERT Inc.
Rectifier Technologies (M) Sdn Bhd
ICERT (HK) Co. Ltd
ICERT (HK) Co. Ltd was incorporated on 24 February 2017.
Country of
Incorporation
Class of share Percentage Owned
2017
(%)
Australia
Ordinary
-
Australia
Australia
USA
Malaysia
Ordinary
Ordinary
Ordinary
Ordinary
Hong Kong
Ordinary
100
100
100
100
100
2016
(%)
-
100
100
100
100
-
34
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 14:
PROPERTY, PLANT AND EQUIPMENT
Consolidated Entity
Land
At cost
Building
At cost - Capital work-in-progress
Plant and equipment
At cost
Accumulated depreciation
Leasehold improvements
At cost
Accumulated depreciation
Motor Vehicle
At Cost
Accumulated depreciation
Total Property, Plant and Equipment
Movements in Carrying Amounts
2017
$
1,384,663
1,384,663
529,175
529,175
270,787
(48,255)
222,532
148
(15)
133
27,986
(10,758)
17,228
2,153,731
2016
$
-
-
-
-
214,553
(34,369)
180,184
165
(17)
148
41,160
(11,547)
29,613
209,945
Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current
financial year.
2017
Land
$
Building
$
Plant and
Equipment
$
Leasehold
Improvements
$
Motor Vehicle
$
Total
$
Consolidated Entity:
Balance at the beginning of year
Additions - Land
Additions - Capital work-in-progress
Additions - Other plant and equipment
Disposals
Depreciation/amortisation expense
Net exchange differences on translation of foreign
subsidiaries
-
1,384,663
-
-
- 529,175
-
-
-
-
-
-
180,184
-
-
49,160
(304)
(48,255)
-
-
41,747
Carrying amount at the end of year
1,384,663 529,175
222,532
148
-
-
-
-
(15)
-
133
29,613
-
-
-
-
(10,758)
209,945
1,384,663
529,175
49,160
(304)
(59,028)
(1,627)
40,120
17,228
2,153,731
2016
$
$
$
$
Land
Building
Plant and
Equipment
Leasehold
Improvements
Motor Vehicle
$
Total
$
Consolidated Entity:
Balance at the beginning of year
Additions
Disposals
Depreciation/amortisation expense
Net exchange differences on translation of foreign
subsidiaries
Carrying amount at the end of year
-
-
-
-
-
-
-
-
155,850
66,299
-
(34,369)
165
-
-
(17)
44,006
-
-
(11,547)
200,021
66,299
-
(45,933)
-
-
-
-
(7,596)
180,184
-
148
(2,846)
(10,442)
29,613
209,945
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 15:
TRADE AND OTHER PAYABLES
CURRENT
Unsecured liabilities:
Trade creditors
Sundry creditors and accrued expenses
Consolidated Entity
2017
$
2016
$
1,101,895
285,788
995,943
459,490
Loans – director related (current and former directors) (a)
81,721
-
Secured liabilities:
Debtor financing facility
1,469,404
1,455,433
2,358
2,358
15,936
15,936
1,471,762
1,471,369
a. On 26 April 2017, the current director of Rectifier Technologies Ltd, Mr. Yanbin Wang has lent MYR$300,000(AUD$89,286) to Rectifier
Technologies (M) Sdn Bhd for working capital. The first repayment to the loan was MYR$40,946(AUD$12,917) conducted on 15 June
2017. The remaining balance of loan was MYR$259,054(AUD$81,721) at the end of the current reporting period. The loan is non-interest
bearing.
NOTE 16:
INTEREST-BEARING LIABILITIES
CURRENT
Lease liability (secured)
Borrowings - Rectifier Technologies (M) Sdn Bhd (secured)
NON-CURRENT
Lease liability (secured)
Borrowings - Rectifier Technologies (M) Sdn Bhd (secured)
Consolidated Entity
2017
$
2016
$
10,528
54,391
64,919
6,874
1,666,152
1,673,026
1,737,945
10,482
-
10,482
18,326
-
18,326
28,808
Lease liabilities and borrowings are secured over the assets to which they relate.
On 6 Feb 2017, Rectifier Technologies (M) Sdn Bhd obtained a loan of MYR$5,460,000(AUD$1,629,851) from Public Bank Berhad to
acquire two blocks of a semi-detached factory. The monthly repayment includes the payment of loan principle and interest. The first monthly
instalment commenced on 1 May 2017, subsequent instalments are to be paid on or before the 1st of each calendar month and total
repayments are 240 instalments in 240 months. The term of loan is 20 years and loan interest is Base Lending Rate (Variable Rate) less a
discount of 2.20% at banks’ discretion from time to time.
The terms and condition of loans are secured against the following:
(a) Fixed charge over a freehold land and factory buildings of the company; and
(b) Jointly and severally guaranteed by a Director of the Company.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 17:
MATURITY ANALYSIS
2017
Contractual
Amount
< 6 mths
6 – 12 mths
1 – 3 years
> 3 years
Financial Liabilities
Consolidated Entity:
Trade creditors
Other creditors
Loans - directors
Borrowings - Rectifier Technologies (M)
Sdn Bhd
Debtor financing facility
Lease liability
Total
2016
Financial Liabilities
Consolidated Entity:
Trade creditors
Other creditors
Loans - directors
Debtor financing facility
Lease liability
Total
NOTE 18:
PROVISIONS
CURRENT
Employee entitlements
NON-CURRENT
Employee entitlements
1,101,895
285,788
81,721
2,596,976
2,358
17,401
4,086,139
1,101,895
285,788
-
65,527
2,358
4,976
1,460,544
-
-
81,721
65,527
-
4,976
152,224
-
-
-
262,107
-
7,449
269,556
-
-
-
2,203,815
-
-
2,203,815
Contractual
Amount
< 6 mths
6 – 12 mths
1 – 3 years
> 3 years
995,943
459,490
-
15,936
28,808
995,943
459,490
-
15,936
5,241
1,500,177
1,476,610
-
-
-
-
5,241
5,241
-
-
-
-
18,326
18,326
-
-
-
-
-
-
Consolidated Entity
2017
$
2016
$
392,170
322,743
57,018
45,107
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 19:
CONTRIBUTED EQUITY AND RESERVES
a. Ordinary shares
At the beginning of the reporting period
Share based payment
At reporting date
At the beginning of reporting period
Issue of shares
At reporting date
Consolidated Entity
2017
$
2016
$
38,941,375
38,088,583
875,200
852,792
39,816,575
38,941,375
Number
Number
1,335,140,602
1,213,313,254
31,760,000
121,827,348
1,366,900,602
1,335,140,602
There were total of 31,760,000 ($875,200) shares issued during 2016/2017, which was included 1,760,000 ($35,200) shares option
exercised at $0.02 and 30,000,000 ($120,000) shares issued to the current director/CEO Mr. Yanbin Wang at shares price of $0.004
which was $0.024 below to market price of $0.028 as approved by shareholders at AGM on 28 November 2016. The total discount
expense of $720,000 was recorded as shares issue expense in 2017 financial year period.
All shares issued at reporting date have been fully paid.
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one vote
on a show of hands.
b. Nature and purpose of reserves
The foreign currency translation reserve is used to record exchange differences on translation of foreign controlled subsidiaries. The
reserve is recognised in profit or loss when the investment is disposed of.
c. Options
At 30 June 2017, there were 21,640,000 (2016: 23,400,000) options outstanding.
d. Capital risk management
The Group's and the Parent Entity's objectives when managing capital are to safeguard their ability to continue as a going concern, so
that they can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure
to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets to reduce debt.
Consistently with others in the industry, the Group and the parent entity monitor capital on the basis of the gearing ratio. This ratio is
calculated as net debt divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital is
calculated as ‘equity’ as shown in the statement of financial position plus net debt.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 19:
CONTRIBUTED EQUITY AND RESERVES (Cont’d)
The gearing ratios at 30 June 2017 were as follows:
Consolidated
Notes
2017
$
2016
$
Total borrowings
Less: cash and cash equivalents
15 & 16
1,822,024
44,744
10
(2,628,269)
(1,635,415)
Net debt
Total Equity
Total Capital
Gearing Ratio
NOTE 20:
CAPITAL AND LEASING COMMITMENTS
Operating Lease Commitments
Non-cancellable operating leases contracted for but not capitalised in the financial statements
Payable
-
-
-
not later than 1 year
later than 1 year but not later than 5 years
over 5 years
(806,245)
5,379,723
4,573,478
(1,590,671)
4,107,683
2,517,012
-18%
-63%
125,009
98,190
-
223,199
166,733
110,067
-
276,800
Operating leases relate to business and manufacturing facilities in Australia and Malaysia, with negotiable options to extend. The
consolidated entity does not have options to purchase the leased assets at the expiry of the lease agreements.
The lease on the Australian premises at Burwood expires on 4 March 2019. There is an option at the end of lease for extension from one
to four years. For the years commencing after 30 June 2017 the following are the rental charges:
2018
2019
$95,300
$98,190
NOTE 21:
CONTINGENT LIABILITIES
There are no contingent liabilities at the end of the year.
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 22:
SEGMENT INFORMATION
Description of segments
The Group has adopted AASB 8 Operating Segments from 1 July 2009 whereby segment information is presented using a 'management
approach', i.e. segment information is provided on the same basis as information used for internal reporting purposes by the chief
operating decision maker (executive management committee that makes strategic decisions).
Operating segments have been determined on the basis of reports reviewed by the executive management committee. The executive
management committee ("committee") is considered to be the chief operating decision maker of the Group. The committee considers the
business from both a product and geographic perspective and assesses performance and allocates resources on this basis. The
reportable segments are as follows:
Electronic Components
Under this segment, Rectifier Technologies Pacific Pty Ltd and Rectifier Technologies Malaysia Sdn Bhd which is based in Malaysia
(operations transferred from Protran Technologies Pty Ltd during the year of 2014/2015) manufacture electronic components for a number
of industries.
Industrial Power Supplies (Electricity generation/distribution and Defence)
Under this segment, Rectifier Technologies Pacific Pty Ltd and Rectifier Technologies Malaysia Sdn Bhd manufacture and distribute
rectifiers, controllers, accessories and complete systems for the power generation, distribution industries and defence.
Industrial Power Supplies (Transport and Telecommunication)
Under this segment, Rectifier Technologies Pacific Pty Ltd and Rectifier Technologies Malaysia Sdn Bhd manufacture and distribute
power supplies for the transport industries and telecommunications.
Industrial Power Supplies (Electric vehicles)
Under this segment, Rectifier Technologies Pacific Pty Ltd and Rectifier Technologies Malaysia Sdn Bhd manufacture and distribute electric
vehicle charges, battery charges and power supplies for a number of industries.
Information provided to the executive management committee
Segment information provided to the executive management committee for the year ended 30 June 2017 is as follows:
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 22:
SEGMENT INFORMATION (Cont’d)
2017
Electronic
Components
Industrial
Power Supplies
(E&D)
Industrial
Power Supplies
(T&T)
Industrial
Power
Supplies (EV)
Total
$
$
$
$
$
Total segment revenue
Inter-segment revenue
349,241
(61,154)
6,003,275
2,354,215
217,761
8,924,492
(1,711,755)
(195,058)
(51,020)
(2,018,987)
Segment revenue from external customers
288,087
4,291,520
2,159,157
166,741
6,905,505
EBITDA
71,185
1,060,414
533,518
41,201
1,706,318
Interest revenue
Interest expense
Depreciation and amortisation
92
(1,489)
(2,935)
1,265
(16,071)
(51,705)
94
(1,185)
(3,830)
Income tax expense
(12,099)
(146,766)
(10,836)
7
-
(521)
(422)
1,458
(18,745)
(58,991)
(170,123)
!
!
!
!
!
!
Segment Assets and Liabilities
Segment assets
Segment liabilities
455,338
6,782,981
3,412,666
263,543
10,914,528
276,667
4,121,400
2,073,566
160,131
6,631,764
Inter-segment revenue comprises sales between segments which are on arm's length terms. Segment revenues from external customers
are measured in accordance with accounting policy 2(o).
Management monitors segment performance based on EBITDA. This measure excludes non-recurring expenditure such as restructuring
costs, impairments and share-based payments as well as interest revenue and interest expense and other items which are considered
part of the corporate treasury function.
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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 22:
SEGMENT INFORMATION (Cont’d)
Segment revenue reconciles to total revenue:
Revenue from external customers
Corporate head office sundry revenue
Total revenue from operations
Reconciliation of EBITDA to profit before income tax from continuing operations:
Total segment EBITDA
- interest expense
- depreciation and amortisation
- corporate head office costs
Profit before income tax from continuing operations
Segment assets reconcile to total assets as follows:
Segment assets
Inter-segment eliminations
Corporate head office - Cash
Corporate head office - PPE
Corporate head office - other receivables
Corporate head office – deferred tax assets
Total assets per statement of financial position
Segment liabilities reconcile to total liabilities as follows:
Segment liabilities
Inter-segment eliminations
Corporate head office - trade & other creditors
Corporate head office - provisions
Corporate head office - borrowings
Total liabilities per statement of financial position
2017
$
6,905,505
(25,057)
6,880,448
1,706,318
(17,232)
(59,028)
(1,372,518)
257,540
10,914,528
(4,136,854)
1,688,617
-
623,041
-
9,089,332
6,631,764
(2,989,339)
67,185
-
-
3,709,610
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 22:
SEGMENT INFORMATION (Cont’d)
2016
Electronic
Components
Industrial
Power Supplies
(E&D)
Industrial Power
Supplies (T&T)
Industrial
Power Supplies
(EV)
Total
$
$
$
$
$
Total segment revenue
Inter-segment revenue
728,751
5,944,069
4,611,509
272,178
11,556,507
(123,527)
(409,529)
(2,896,210)
(10,165)
(3,439,431)
Segment revenue from external customers
605,224
5,534,540
1,715,299
262,013
8,117,076
EBITDA
142,063
1,299,109
402,628
61,502
1,905,302
Interest revenue
Interest expense
Depreciation and amortisation
Income tax expense
98
(286)
(7,335)
(23,307)
117
(409)
(13,753)
(2,820)
328
(955)
(24,271)
(79,755)
3
(13)
(441)
-
546
(1,663)
(45,800)
(105,882)
Segment Assets and Liabilities
!
!
!
!
!
Segment assets
Segment liabilities
637,088
5,825,923
1,805,606
275,807
8,544,424
389,845
3,564,987
1,104,883
168,771
5,228,486
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 22:
SEGMENT INFORMATION (Cont’d)
Segment revenue reconciles to total revenue:
Revenue from external customers
Corporate head office sundry revenue
Total revenue from operations
Reconciliation of EBITDA to profit before income tax from continuing operations:
Total segment EBITDA
- interest expense
- depreciation and amortisation
- corporate head office expenses
Profit before income tax from continuing operations
Segment assets reconcile to total assets as follows:
Segment assets
Inter-segment eliminations
Corporate head office - Cash
Corporate head office - PPE
Corporate head office - other receivables
Corporate head office – deferred tax assets
Total assets per statement of financial position
Segment liabilities reconcile to total liabilities as follows:
Segment liabilities
Inter-segment eliminations
Corporate head office - trade & other creditors
Corporate head office - provisions
Corporate head office - borrowings
Total liabilities per statement of financial position
2016
$
8,117,076
341,910
8,458,986
1,905,302
(612)
(45,934)
(525,201)
1,333,555
8,544,424
(3,467,647)
525,978
342
17,900
456,892
6,077,889
5,228,486
(3,369,384)
111,104
-
-
1,970,206
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 22:
SEGMENT INFORMATION (Cont’d)
Geographical Information
Revenues and non-current assets by geographical location is as follows:
Geographic location
Australia
Asia
North America
South America
Middle East
Europe
Oceania
Oceania
Revenues from external customers of
continuing operations
2017
$
2016
$
Non-current assets*
2017
$
2016
$
2,661,613
1,855,163
2,166,703
156,349
-
57,702
7,975
2,975,864
2,190,958
2,218,347
438,796
4,495
288,616
-
84,635
2,069,096
76,297
133,648
-
-
-
-
-
-
-
-
-
-
6,905,505
8,117,076
2,153,731
209,945
* Excludes financial instruments, deferred tax assets, post-employment benefit assets and rights arising under insurance contracts.
Major customers - Revenue of $1,719,707 (2016: $1,785,584) was derived from a single Australia customer and revenue of $1,107,536
(2016: $1,260,409) was derived from a single Singapore customer, both of which are allocated to the “RTP & RTM - Industrial Power
Supplies (E&D)” segment. These revenues each amount to more than 10% of the Group's revenues from external customers.
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 23:
CASH FLOW INFORMATION
a. Reconciliation of Cash Flow from Operations with Profit after Income Tax
Profit after income tax
Non-cash flows in loss from ordinary activities
Depreciation
Provision for stock obsolescence
Capitalised interest
Tax benefit
Share based payment expense
Fair Value loss on extinguishment of debt
License cancellation fee
Unrealised currency (gain)/loss
Net loss/(gain) on sale/acquisition of assets
Changes in assets & liabilities:
Decrease/(increase) in trade debtors
Decrease/(increase) in other debtors & prepayments
Decrease/(increase) in inventories
Increase/(decrease) in trade creditors/accruals
Increase/(decrease) in income taxes payable
Increase/(decrease) in provisions
Cash flows from operations
Consolidated Entity
2017
$
2016
$
427,903
1,684,565
59,028
(91,418)
-
-
720,000
-
-
49,566
304
132,391
(524,945)
13,009
614,869
(264,729)
81,339
1,217,317
45,933
113,027
-
(456,892)
270,000
63,655
-
41,438
-
(640,853)
56,733
(199,565)
(322,596)
(22,995)
90,851
723,301
b. Credit Standby Arrangements
The Group has no credit standby arrangements with banks other than debtor finance facility.
NOTE 24:
FAIR VALUE LOSS ON EXTINGUISHMENT OF DEBT
In the prior year, total expenses of $63,655 arose from total of 31,827,348 shares issued to director Mr Valentino Vescovi and Pudu
Investments (Australia) Pty Ltd, a company associated with Mr Ying Ming Wang at discount of 0.2 cents below market value as
consideration for director loan repayment as approved by shareholders at AGM on 30 November 2015.
46
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 25:
RELATED PARTY TRANSACTIONS
a.
Subsidiaries
Interests in subsidiaries are set out in Note 13.
b.
Key management personnel
Disclosures relating to key management personnel are set out in Note 7.
On 26 April 2017, the current director of Rectifier Technologies Ltd, Mr. Yanbin Wang has lent MYR$300,000 to Rectifier Technologies (M)
Sdn Bhd for the purpose of working capital. The first repayment was MYR$40,946 conducted on 15 June 2017. The remaining balance of
loan was MYR$259,054, which was AUD$81,721 equivalent at the end of the current reporting period. The loan is non-interest bearing and
the term of the loan is 12 months.
Transactions between related parties are on normal commercial terms and conditions no more favourable to other parties unless
otherwise stated. There is no requirement for transactions and balances between the entities within the consolidated Group to
be disclosed.
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 26:
FINANCIAL INSTRUMENTS RISK EXPOSURE AND MANAGEMENT
Categories of Financial Instruments
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Amortised cost
Consolidated Entity
2017
$
2016
$
2,628,269
784,375
3,412,644
3,209,706
3,209,706
1,635,415
1,152,454
2,787,869
1,500,177
1,500,177
In common with all other businesses, the Group and the Parent Entity are exposed to risks that arise from its use of financial instruments.
This note describes the Group and the parent entity’s objectives, policies and processes from managing those risks and the methods
used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the Group and the Parent Entity’s exposure to financial instrument risks, its objectives,
policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in
this note.
a.
Principal financial instruments
The principal financial instruments used by the Group and the parent entity, from which financial instrument risk arises, are as follows:
•
•
•
•
•
trade and other receivables
cash and cash equivalents
lease liabilities
trade and other payables
loans from related parties
b.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group and the parent entity’s risk management objectives and policies
and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the Group and the parent entity’s finance function. The Board receives monthly
reports from the Chief Financial Officer through which it reviews the effectiveness of the processes put in place and the appropriateness
of the objectives and policies it sets.
The overall objective of the Board is to set polices that seek to reduce risk as far as possible without unduly affecting the Group and the
parent entity’s competitiveness and flexibility. Further details regarding these policies are set out below:
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 26:
FINANCIAL INSTRUMENTS RISK EXPOSURE AND MANAGEMENT (Cont’d)
i.
Credit risk
Credit risk arises principally from the Group and the Parent Entity’s trade receivables. It is the risk that the counterparty fails to discharge
its obligation in respect of the instrument.
Prior to accepting new customers, a credit check is obtained from a reputable external source. Based on this information, credit limits and
payment terms are established. Customers who subsequently fail to meet their credit terms are required to make purchases on a
prepayments basis until creditworthiness can be re-established.
The nature of the Group and the parent entity’s operations means that approximately 88% (2016: 85%) of its sales are made to 9 (2016:
11) key customers in Australia, Malaysia and America. Whilst credit risk is mainly influenced by factors specific to these individual
customers, the concentration of sales geographically is a contributory factor. Refer to note 11 for further information regarding the Group’s
credit risk.
ii.
Liquidity risk
Liquidity risk arises from the Group and the Parent Entity’s management of working capital and the finance charges and principal
repayments on its debt instruments. It is the risk that the Group and the parent entity will encounter difficulty in meeting its financial
obligations as they fall due. The Group and the parent entity aim to have sufficient cash to allow it to meet its liabilities when they become
due. The Group and the parent entity do not have any undrawn standby credit arrangements available. Refer to note 23(b).
The Board receives cash flow projections monthly as well as information regarding cash balances. Refer to maturity analysis in note 17.
iii.
Market risk
Market risk arises from the Group and the parent entity’s use of interest bearing and foreign currency financial instruments. It is the risk
that the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest rate risk),
foreign exchange rates (currency risk) or other market factors (other price risk).
iv.
Interest rate risk
The consolidated entity's exposure to interest rate risk, which is the risk that a financial instrument's value will fluctuate as a result of
changes in market interest rates and the effective weighted average interest rates on classes of financial assets and financial liabilities, is
as follows:
Fixed Interest Rate Maturing
Floating Interest
Rate
$
Within Year
1 to 5 Years
Over 5 Years
Non-interest-Bearing
$
$
$
$
Total
$
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Financial Assets:
Cash
Receivables
2,628,269 1,635,415
-
-
Total Financial Assets
2,628,269 1,635,415
Financial Liabilities:
Other current loans
Trade and sundry creditors
Director related loan
-
-
-
--Borrowings - RTM
1,720,543
-
-
-
-
Debtor Financing Facility
2,358
15,936
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Lease liabilities
-
-
9,952
10,482
7,449
18,326
Total Financial Liabilities 1,722,901 15,936
9,952
10,482
7,449
18,326
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,628,269 1,635,415
784,375
1,152,454
784,375 1,152,454
784,375
1,152,454 3,412,644 2,787,869
-
-
-
-
1,387,683 1,455,433 1,387,683 1,455,433
81,721
-
-
-
-
-
-
-
81,721
1,720,543
-
-
2,358
15,936
17,401
28,808
1,469,404 1,455,433 3,209,706 1,500,177
49
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 26:
FINANCIAL INSTRUMENTS RISK EXPOSURE AND MANAGEMENT (Cont’d)
The Group and the parent entity’s exposure to interest rate risk is limited to cash balances and the debtor financing facility, as these are at
a floating rate. Interest rates on loan and lease liabilities are fixed.
The Group’s profit and loss sensitivity and movement in the interest rates are as follows:
Cash
Debtor finance
Amounts
$2,628,269
($2358)
v.
Foreign currency risk
+1%
$26,283
($24)
-1%
($26,283)
$24
The only currency where receivables are not denominated in their functional currency is US dollars (USD). Cash balances in USD are
kept at levels only sufficient to pay the amounts owing. Since the local sales in Malaysia are made by foreign operations in their individual
functional currencies, there is no direct foreign currency risk exposure involved. The Group and the parent entity’s exposure to foreign
currency risk is primarily its exposure to trade receivables denominated in USD. The total exposure to foreign currency risk at 30 June
2017 was as follows: Receivables in USD totalled USD$435,045 and payables totalled USD$84,821.
The Group and the parent entity’s profit and loss sensitivity and movement in the USD: AUD and GBP: AUD exchange rates are as follows:
Consolidated
+10%
-10%
+10%
-10%
USD
USD/AUD
USD/AUD
GBP
GBP/AUD
GBP/AUD
2017
Trade Receivables
Trade Payables
Loans
435,045
84,821
-
51,363
10,014
-
(62,777)
(12,240)
-
-
-
-
-
-
-
-
-
-
Consolidated
+10%
-10%
+10%
-10%
USD
USD/AUD
USD/AUD
GBP
GBP/AUD
GBP/AUD
2016
Trade Receivables
579,451
71,186
(87,005)
Trade Payables
56,219
6,907
(8,441)
Loans
-
-
-
-
-
-
-
-
-
-
-
-
50
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 26:
FINANCIAL INSTRUMENTS RISK EXPOSURE AND MANAGEMENT (Cont’d)
vi.
Fair Values
An analysis of financial assets and financial liabilities for the consolidated entity is shown below:
Financial assets
Cash
Receivables
Financial Liabilities
Other loans
2017
2016
Carrying
Amount
Fair Value
$
$
Carrying
Amount
$
Fair Value
$
2,628,269
2,628,269
1,635,415
1,635,415
784,375
784,375
1,152,454
1,152,454
3,412,644
3,412,644
2,787,869
2,787,869
81,721
81,721
-
-
Trade and sundry creditors
1,387,683
1,387,683
1,455,433
1,455,433
Borrowings - Rectifier Technologies (M) Sdn Bhd
1,720,543
1,720,543
Debtor financing facility
Lease liabilities
2,358
17,401
2,358
17,401
-
15,936
28,808
-
15,936
28,808
3,209,706
3,209,706
1,500,177
1,500,177
The fair value of the other loans has been calculated by adding the accrued interest to the original principal adjusted for relevant
exchange rate movements where applicable.
The fair value for the remaining financial liabilities and financial assets approximates their carrying value as they are short-term.
NOTE 27:
PARENT ENTITY FINANCIAL INFORMATION
a. Summary Financial Information
The individual financial statements for the parent entity show as follow:
Statement of Financial Position
Current Assets
Total Assets
Current Liabilities
Total Liabilities
Net Assets
Shareholders’ Equity
Accumulated Losses
Total Equity
Profit/(Loss) for the year
Total Comprehensive Income
2017
$
2016
$
2,204,782
2,294,173
55,227
762,585
486,241
1,000,556
107,407
107,407
1,531,588
893,149
39,816,575
38,941,375
(38,284,987)
(38,048,226)
1,531,588
893,149
(236,761)
(236,761)
272,937
272,937
51
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RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
NOTE 27:
PARENT ENTITY FINANCIAL INFORMATION (Cont’d)
b.
Guarantees entered into by the parent entity
The parent entity has not provided any financial guarantees except as disclosed in the notes to the financial statements.
c.
Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30 June 2017.
d.
Contractual commitments
There were not contractual commitments for the parent entity as at 30 June 2017.
NOTE 28:
EVENTS SUBSEQUENT TO REPORTING DATE
There have been no events subsequent to the end of reporting period that require additional disclosure.
NOTE 29:
COMPANY DETAILS
The registered office is:
Rectifier Technologies Ltd
24 Harker Street, Burwood, VIC 3125
The principal places of business are:
Rectifier Technologies Ltd
24 Harker Street,
Burwood, VIC 3125
Rectifier Technologies (M) SDN. BHD
No. 5 & 7, Jalan Laman Setia 7/8
Taman Laman Setia
81550 GELANG PATAH, JOHOR
MALAYSIA
52
For personal use only
RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
RECTIFIER TECHNOLOGIES
RECTIFIER TECHNOLOGIES LTD
Tel: +61 3 9896 7550
ACN 058 010 692
Fax: +61 3 9896 7566
24 Harker Street, Burwood
Email: mail@rectifiertechnologies.com
Vic 3125 AUSTRALIA
Internet: www.rectifiertechnologies.com
DECLARATION OF BY DIRECTORS
The directors of the company declare that:
1.
The financial statements, comprising the statement of profit or loss and other comprehensive income, statement of financial
position, statement of cash flows, statement of changes in equity and accompanying notes, are in accordance with the
Corporations Act 2001 and:
a)
Comply with Accounting Standards and the Corporations Regulations 2001; and
b) Give a true and fair view of the financial position as at 30 June 2017 and of the performance for the year ended on that date
of the consolidated entity.
2.
The company has included in the notes to the financial statements an explicit and unreserved statement of compliance with
International Financial Reporting Standards.
3.
In the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable.
4.
The remuneration disclosures included on pages 4 to 10 of the directors’ report (as part of the audited Remuneration Report) for
the year ended 30 June 2017, comply with Section 300 A of the Corporations Act 2001.
5.
The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of
the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the directors by:
Wang, Yanbin
Director
Rectifier Technologies Ltd
24 Harker Street
Burwood
VIC 3130
Dated the 28th day of September 2017
53
For personal use only
The Rialto, Level 30
525 Collins St
Melbourne Victoria 3000
Correspondence to:
GPO Box 4736
Melbourne Victoria 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF RECTIFIER TECHNOLOGIES LIMITED
Report on the audit of the financial report
Opinion
We have audited the financial report of Rectifier Technologies Limited (the Company) and its
subsidiaries (the Group), which comprises the consolidated statement of financial position as at
30 June 2017, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the
period then ended, and notes to the consolidated financial statements, including a summary of
significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group, is in accordance with the
Corporations Act 2001, including:
a Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
performance for the period ended on that date; and
b Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
For personal use only
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Recognition of R&D tax incentive (Note 3 and 11)
Under the research and development (R&D) Tax
incentive scheme, the Group receives a 43.5%
refundable tax offset of eligible expenditure if its
turnover is less than $20 million per annum provided
it is not controlled by income tax exempt entities.
An R&D plan is filed with AusIndustry in the following
financial year, and based on this filing; the Group
receives the incentive in cash. Management
engaged an expert to perform a detailed review of the
Group’s total research and development expenditure
to determine the potential claim under the R&D tax
incentive legislation.
The estimated amount receivable at year end for the
incentive was $500,000 which has been recognised
in other debtors.
We determined the R&D tax incentive to be a Key
Audit Matter due to the size of the receivable and the
degree of judgement and interpretation of the R&D
tax legislation required by management to assess the
eligibility of the R&D expenditure under the scheme.
Inventory Valuation (Note 12)
Due to the nature of the electronic componentry
required for manufacture and parts, the Group has a
number of slow moving inventory lines. There is a
risk that some inventory lines are obsolete and
therefore that the Company may not value inventory
at the lower of cost or net realisable value in
accordance with AASB 102 Inventories.
This area is a key audit matter due to the level of
management judgement required in determining the
provision for inventory obsolescence.
Our procedures included, amongst others:
(cid:120) obtaining the completed R&D tax estimate from
management’s experts;
(cid:120) assessing the competence, capabilities and
objectivity of experts used by management to
assist in determining the quantum of the R&D
receivable at 30 June 2017;
comparing the estimates made in the previous
year to the amount of cash actually received after
lodgement of the R&D tax claim;
comparing the methodology and nature of the
R&D expenditure included in the current year
estimate to the prior year estimate;
comparing the eligible expenditure used in the
estimate to the expenditure recorded in the
general ledger;
inspecting copies of relevant correspondence
with AusIndustry and the ATO related to the
claims history; and
reviewing relevant disclosures in the financial
statements.
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Our procedures included, amongst others;
•
Discussing with management to obtain an
understanding of their process for calculating the
inventory provision and considering for
compliance with AASB 102 requirements;
Selecting a sample of inventory items and:
1)
for inventory sold in the last 12 months or
post year end, tracing to sales invoice and
agreeing that the selling price exceeded
the item’s cost;
for items not sold in the last 12 months,
considering whether these were included
in the provision for inventory
obsolescence;
2)
Analysing any inventory items with no movement
in the last 12 months and considering whether
they should be included in the inventory
provision;
Considering whether any other factors might
indicate that inventory items would require a
provision to write down to net realisable value,
such as any discontinued lines; and
Reviewing related financial statement
disclosures.
•
•
•
•
For personal use only
Information Other than the Financial Report and Auditor’s Report Thereon
The Directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the period ended 30 June 2017, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information; we are required to report that fact. We have nothing to report in this regard
Responsibilities of the Directors’ for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the Directors determine is necessary to enable the
preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor’s report.
For personal use only
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 4 to 10 of the directors’ report for the
period ended 30 June 2017.
In our opinion, the Remuneration Report of Rectifier Technologies Limited, for the period ended 30
June 2017, complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
A R J Nathanielsz
Partner - Audit & Assurance
Melbourne, 28 September 2017
For personal use only
RECTIFIER TECHNOLOGIES LTD & CONTROLLED ENTITIES
The following additional information is required by the Australian Stock Exchange Ltd in respect of listed public companies only.
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
1.
Shareholding
a.
Category (size of Holding)
Distribution of Shareholders Number
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – 9,999,999,999
Ordinary
268
325
149
466
330
1,538
The number of shareholdings held in less than marketable parcels is 957.
The names of the substantial shareholders listed in the holding company’s register as at 30th of June 2017 are:
b.
c.
Shareholder
Number Ordinary
224,643,616
189,975,136
150,000,000
Pudu Investments (Aust) Pty Ltd
Sichuan Yimikang Environmental Technologies Co Ltd
Yung Shing
Voting Rights
d.
The voting rights attached to each class of equity security are as follows:
Ordinary shares
-
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one
vote on a show of hands.
e.
20 Largest Shareholders - Ordinary Shares
Name
Number of Ordinary
Fully Paid Shares
Held
% Held of Issued
Ordinary Capital
1.PUDU INVESTMENT (AUSTRALIA) PTY LTD
2.SICHUAN YIMIKANG ENVIRONMENTAL TECHNOLOGIES CO LTD
3.YUNG SHING
4.WINTER STORMS LTD
5.MR LEI LI
6.JIAN XU < PARAMOUNT INT INVESTMENT A/C>
7.FINLINK LLC
8.MR MAKRAM HANNA + MRS RITA HANNA
9.VALENTINO FRANCESCO VESCOVI + GLENDA JILL VESCOV
10.J P MORGAN NOMINEES AUSTRALIA LIMITED
11.YANBIN WANG
12.BOND STREET CUSTODIANS MT< JL-I53966 A/C>
13.GENISTA COURT PTY LTD
14.NICHOLAS YEOH
15.MR NIGEL MACHIN
16.MR PETER HIONG HUO HII
17.TOPAZ INVESTMENTS PTE LTD
18.MR MAKRAM HANNA
19.MR RAYMOND ROCKMAN + MR ANTHONY ROCKMAN
20.KANGSAV PTY LIMITED
Totals: Top 20 holders of ORDINARY SHARES
224,643,616
189,975,136
150,000,000
125,068,336
68,460,000
44,000,000
40,000,000
37,614,373
36,021,196
30,417,545
30,000,000
25,999,605
23,225,000
21,000,000
20,000,000
17,383,975
13,837,650
11,550,279
9,677,106
8,296,198
1,127,170,015
16.43
13.90
10.97
9.15
5.01
3.22
2.93
2.75
2.64
2.23
2.19
1.90
1.70
1.54
1.46
1.27
1.01
0.84
0.71
0.61
82.46
The following additional information is required by the Australian Stock Exchange Ltd in respect of listed public companies only.
2.
The name of the Company Secretary is Justyn Stedwell.
3.
The address of the principal registered office in Australia is 24 Harker Street, Burwood, Victoria.
Telephone 03 9896 7550
Registers of securities are held at the following address:
4.
Computershare Investor Services Pty Ltd
452 Johnston Street, Abbotsford, VIC 3067
Stock Exchange Listing
5.
Quotation has been granted for all the ordinary shares of the Company on all Member Exchanges of the Australian Stock Exchange Limited
and the Home Exchange is Melbourne.
Unquoted Securities
A total of 21,640,000 (2016: 23,400,000) options over unissued shares are on issue.
7.
Nil
Restricted Securities
8.
On market buy-back
There is no current on market buy back.
58
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