Intec Ltd
ANNUAL REPORT 2015
Intec Ltd 2015 Annual Report
Intec Ltd 2015 Annual Report
Contents
Letter from the Chairman and the Managing Director
Review of Operations
Director’s Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Director’s Declaration
Independent Auditor’s Report
Schedule of Tenements
Shareholder Information
Corporate Directory
Page
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Intec Ltd 2015 Annual Report
Letter from the Chairman and Managing Director
Dear Intec Shareholder, 30 September 2015
This is Intec Ltd’s (Intec) or the Company(’s), fourteenth Annual Report since listing on the Australian
Securities Exchange (ASX) and includes the audited financial statements for the financial year ending 30
June 2015.
For the 2014/15 financial year the Company recorded a loss after tax of $0.856 million compared to a
loss after tax of $1.261 million for the previous financial year. The current year loss after tax included the
payout of an employment contract ($0.110 million) and expenses related to the Burnie Research Facility
($0.101 million), which was de-commissioned during the year. Net cash outflows from operating
activities increased to $1.081 million compared with $0.634 million for the prior year. Net cash outflows
increased principally due to the two items previously noted, lower interest receipts and no receipt, as
occurred in the prior year, of an R & D tax offset.
Following the successful de-commissioning of the Burnie Research Facility, which was completed at no
net cost to the Company, the Company’s remaining assets in Tasmania comprise:
A 2.5% net smelter royalty over certain mining and exploration leases at and nearby to the
former Hellyer Mine; and
The Zeehan slag dump.
The Company’s principal activity is its 50% ownership in Science Developments Pty Ltd (SciDev). SciDev
is a Sydney-based company that develops, manufactures and supplies organic coagulants and flocculants
for wastewater treatment and sludge dewatering.
During the 2014/15 financial year, SciDev recorded a loss after tax of $0.058 million. Notwithstanding
the loss, SciDev achieved a number of important objectives during the year and subsequent to year-end,
which position it well for strong growth during the current financial year. These include:
Diversification of its customer base, for example, into quarrying, water treatment associated with
coal-seam gas extraction, metalliferous mining and sales to a major participant in industrial
waste treatment;
Execution of an exclusive distribution agreement for New Zealand with Apex Environmental Ltd
and first sales under the agreement subsequent to year-end;
The lodgement of a provisional patent, and subsequent full patent application, after year-end, for
the OptiFlox® system; and
The fabrication and delivery to site at a large NSW thermal coal mine of the first OptiFlox®
system after year-end
The Company expects improved financial performance from SciDev during 2015/16 from further
OptiFlox® installations, increased sales into New Zealand and further customer acquisition in Australia.
Yours sincerely
Trevor A Jones
Chairman
Kieran G Rodgers
Managing Director
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Intec Ltd 2015 Annual Report
Review of Operations
Science Developments Pty Ltd (SciDev)
On 26 November 2013, the Company acquired a 50% interest in SciDev for a cash consideration of $1.300
million. The purchase consideration was based on a multiple of SciDev’s average earnings before interest and
tax over the prior three years. In addition, the Company holds an option to acquire the remaining 50% of
SciDev prior to 31 August 2016, based on an agreed formula related to future profitability.
Sydney-based SciDev was established in 2001 to commercialise technologies developed in the area of organic
wastewater treatment chemicals that are applicable across a broad range of industry sectors. Since
establishment SciDev has continued to research, develop, manufacture and import a range of coagulants and
flocculants for use in wastewater treatment and sludge dewatering principally in the agribusiness and mining
industries.
SciDev’s products can be categorised into the following three broad groups:
1. Aqueous cationic coagulants;
2. Aqueous flocculent concentrates; and
3. Polyacrylamide powders and emulsions.
These products are supplied to the market through a combination of both local manufacture and imports.
SciDev is best known within specific industry sectors by its registered brand names; DairyFlox® and
MaxiFlox®.
DairyFlox®
For dairy processing businesses, DairyFlox® coagulant / flocculent range delivers optimum performance in the
treatment of wastewater streams at a treatment cost unmatched in the market. DairyFlox® provides cost
savings through its unique efficacy across a broad pH range and dewatering capabilities to minimise sludge
volumes.
MaxiFlox®
For all businesses other than dairy processors, MaxiFlox® coagulant / flocculent range delivers optimum
performance in the treatment of wastewater streams at a treatment cost generally unsustainable by market
competitors. MaxiFlox® provides significantly better treatment cost savings to end-users compared with
competitor products.
SciDev’s coagulants are proprietary formulations developed in-house over an extensive 12 year research and
development program. The products are manufactured in SciDev’s Sydney plant utilising the company’s unique
“co-polymerisation” technology. This unique manufacturing process, coupled with low overheads, delivers
optimum performance at a treatment cost that is significantly more cost effective than competitor coagulants.
OptiFlox® System
During the year, SciDev completed the development of the OptiFlox® system, including the lodgement of a
provisional patent in September 2014 and a full patent application after year-end. The OptiFlox® system was
specifically designed to address the issue of very turbid water flowing from a coal tailings’ thickener. The
system addresses the problem known as ‘blackwater’ where the clarity of the water from the coal tailings’
thickener deteriorates to an unacceptable level resulting in the coal washing plant shutting down and at times,
coal production ceasing. The OptiFlox® system continuously measures particle characteristics of the coal
tailings slurry in order to maintain optimal flocculation conditions through automatic, real-time control of
coagulant dosing. Hence, application of the system acts to minimise losses in production that can result due to
stoppages of the coal washing plant, caused by ‘blackwater’ and enables consistent and reliable clarified water
to be produced, for return to the washing plant.
During the year the commercial terms for a six-month trial of the Optiflox® system were agreed with a
customer, which include the receipt of licensing fees and revenue from associated coagulant product sales.
Subsequent to year-end the first commercial version of the OptiFlox® system was delivered to a large thermal
coal mine in NSW, following extensive off-site testing. The initial test site is one of a number of Australian coal
mines under the same ownership and it is expected that following a successful trial further roll-outs of the
OptiFlox® system will occur at other sites under common ownership.
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Intec Ltd 2015 Annual Report
Dependent upon successful trial results, additional roll-outs of the OptiFlox® system should be expected to take
place during the current financial year, both in the coal industry and other industries such as the sewage
industry, where the application of the OptiFlox® system is also expected to provide productivity benefits and
cost savings.
New Zealand Distributorship
During the year SciDev negotiated a New Zealand distribution agreement for its products with Apex
Environmental Ltd (Apex). Apex is a supplier of equipment, project management and engineering solutions for
industrial wastewater treatment plants. Apex services participants in the dairy, food, wine and textile
industries.
The distribution agreement was executed in August 2015 and first orders have subsequently been received.
SciDev’s product is currently being used in the commissioning of an upgraded waste water treatment plant at a
dairy manufacturing facility in the South Island of New Zealand. It is considered that increasing constraints in
New Zealand on the disposal and treatment of waste products from the dairy industry are positive for an
expansion of DairyFlox® sales into New Zealand.
Intec International Projects Pty Ltd (IIP)
On 30 September 2014 Intec divested its 50% shareholding in IIP for a consideration of $50,000. Previously,
Intec and IIP had agreed to an extensive cross-licensing and technology transfer in relation to Intec’s patent
portfolio, for which Intec also received a payment of $50,000. IIP, under its new ownership, will be a provider
of technical and associated services in relation to Intec Process applications. Intec will receive a 5% royalty on
fees generated by IIP in relation to Intec Process applications. In addition, Intec retains its rights to its portion
of unpaid fees relating to the IRC Project.
In February 2015, Monument Mining Limited (Monument), a company listed on the Toronto Stock Exchange
announced that it had been granted certain licence rights by IIP in relation to the Intec Process. The terms of a
grant of licence rights to Monument by IIP is subject to conformance with the terms of existing licences in
relation to the Intec Technology.
In consideration for being granted these rights, Monument will issue to IIP 14 million Monument shares at a
deemed price of $0.25 cents per share for an aggregate issue price of $C3.5 million. These shares will be held
in an escrow account (the “Escrow Shares”). The Escrow Shares will not be released to IIP until the completion
and commissioning of the trial commercial plant which demonstrates that the plant is working successfully, and
certain other conditions are satisfied. The 5% royalty agreement between the Company and IIP will apply to the
Escrow Shares.
Burnie Research Facility
During the year the Burnie Research Facility (the Facility) was de-commissioned following the closure of
Automotive Components Limited (ACL) (Receivers and Managers Appointed) (In Liquidation) in June 2014.
Over prior years the Facility had profitably treated industrial waste from ACL on a campaign basis.
The costs of the de-commissioning program, including an employee redundancy payment and a ‘make good’
payment to the buildings landlord were offset by the sale of plant and equipment and the receipt of final ACL
treatment fees.
Subsequently, the Company was advised by EPA Tasmania that the decommissioning and remediation of the
site of the Facility was completed to a suitable standard. Consequently the Company’s site Operating Permit
was relinquished and the Company has no contingent liabilities in relation to the former Facility site.
Zeehan Slag Dump
The Company maintains ownership of a Mining Lease (ML) and Retention Licence (RL) over the Zeehan Slag
Dump, located 3 kilometres south of Zeehan on the Tasmanian West Coast. The slag dump comprises zinc-
bearing residues from an historic lead smelter previously operated at the site. The annual holding costs of the
ML and RL are less than $15,000 and the financial assurance lodged with the Tasmanian Government amounts
to $11,000.
During the year, the Company has received a number of inquiries regarding possible sale of treatment of the
Zeehan Slag Dump and continues to consider its options for realising value from the dump, which are
dependent upon movements in the zinc price.
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Intec Ltd 2015 Annual Report
Corporate Governance
The Company’s Corporate Governance Statement and ASX Appendix 4G will be released to ASX on the same
day as the Annual Report is released. The Company’s Corporate Governance Statement and the Company’s
Corporate Governance Manual can both be found on the Company’s website at www.intec.com.au.
Directors’ Report
Your Directors present their report on the Intec Group of Companies (referred to hereafter as the Group)
consisting of Intec Ltd (Intec or the Company) and the entities it controlled at the end of, or during, the year
ended 30 June 2015.
Directors
The following persons were Directors of the Company during the year ended 30 June 2015. No Intec Director is
either currently a director of another ASX listed company or has been a director of any other ASX-listed
company in the last 3 years.
Trevor A Jones B.Comm. (Melb)
Chairman
Mr Jones has spent over 30 years working in the finance industry in Australia, United Kingdom and the USA.
During this time he has held senior executive positions in investment funds management, stockbroking and
corporate finance, and gained a broad experience of capital structuring and capital raising, particularly in the
mining sector. Mr Jones was manager of equity portfolios for Shell Australia and National Employers Mutual in
the United Kingdom. He was a Director of County NatWest Securities Australia Limited in London and then
Director of Corporate Finance with Westpac Institutional Bank in Sydney. More recently Mr Jones was the
Sydney Chief Executive for Melbourne-based Austock Group and was Chairman of both its Corporate Finance
and Investment Management divisions. He was appointed as a Non-executive Director of Intec on 28 February
2007. Mr Jones is the Chairman of the Corporate Governance Committee and a member of the Audit Committee
and the Nomination and Remuneration Committee.
Kieran G Rodgers B.E. (Hons.) Min. (UNSW), M.B.A. (IMD)
Managing Director
Mr Rodgers joined Intec in March 2001 after 13 years of experience in merchant banking and financial
consulting, principally at Resource Finance Corporation Ltd, which specifically focused on the Australian and
international resources industry. He was appointed as an Executive Director of Intec on 28 February 2007. Mr
Rodgers was appointed Managing Director on 6 February 2012. Mr Rodgers is a member of the Corporate
Governance Committee.
Daniel Joseph Cronin B.E. (Uni. College, Cork) M.Sc. (Southampton), MBA (LBS)
Non-executive Director
Mr. Cronin was appointed to the Board of Intec on 26 November 2013. Mr. Cronin began his career as an
Engineer with the British consulting firm Halcrow, working for 6 years in the UK and South America. This was
followed by 5 years working in project management with the construction company Gammon in Hong Kong and
Singapore. Following completion of an MBA degree, he was employed in the chemical industry for 23 years,
initially with Sandoz and later with Degussa and BASF. He has worked in senior general management roles in
Zurich, Sydney and Singapore. His most recent position was Senior Vice President – Construction Chemicals for
BASF with responsibility for Europe, Middle East and Africa. Mr Cronin is the Chairman of the Audit Committee
and a member of the Corporate Governance Committee and the Nomination and Remuneration Committee.
Company Secretary
Robert J Waring B.Ec. (Syd), C.A., F.C.I.S., F.Fin., F.A.I.C.D, MAusIMM
Company Secretary
Mr Waring was appointed to the position of Company Secretary of Intec in December 1998 and has over 40
years experience in financial and corporate roles including over 20 years in company secretarial roles for ASX-
listed companies and 18 years as a director of ASX-listed companies. He is a director of Oakhill Hamilton Pty
Ltd, which provides secretarial and corporate advisory services to a range of listed and unlisted companies.
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Intec Ltd 2015 Annual Report
Meetings of Directors
The number of meetings of the Company’s Board of Directors and of each board committee held during the
year ended 30 June 2015, and the number of meetings attended by each director were:
T A Jones
K G Rodgers
D J Cronin
Full
meetings of
Directors
A
6
6
6
B
6
6
6
Meetings of committees
Audit
A
2
*
2
B
2
*
2
Corporate
Governance
A
1
1
1
B
1
1
1
Nomination
and
Remuneration
A
1
*
1
B
1
*
1
A = Number of meetings attended.
B = Number of meetings held during the time the Director held office or was a member of the committee during
the year.
* Not a member of the relevant committee during the period.
Principal Activities
The principal activity of the Group is its 50% interest in Science Developments Pty Ltd a manufacturer and
supplier of organic chemicals for wastewater treatment. During the year the Burnie Research Facility was de-
commissioned. There were no other significant changes in the nature of the activities of the Group during the
year.
Review of Operations
The Review of Operations are disclosed and discussed on pages 1 and 2 of the Annual Report.
Dividends
No dividends have been paid to members during the financial year and no recommendation is made as to the
payment of dividends.
Significant Changes in the State of Affairs
There has been no significant change in the state of affairs of the company in the financial year or since year
end.
Events Subsequent to the End of the Reporting Period
Since 30 June 2015, Science Developments Pty Ltd has commenced export sales to New Zealand under a
distribution agreement with Apex Environmental Ltd and the first Optiflox® system is currently being installed
at a large thermal coal mine in NSW. In addition, the Group has sold a significant portion of its shareholding in
Bass Metals Ltd for receipts of approximately $165,000.
There are no other matters or circumstances that have arisen since 30 June 2015 that have significantly
affected or may significantly affect the consolidated entities operations, the results of these operations, or the
consolidated entities state of affairs in future financial years.
Likely Developments and Expected Results of Operations
Information on likely developments in the operations of the consolidated entity and the expected results of
operations have not been included in this report because the directors believe it would be likely to result in
unreasonable prejudice to the consolidated entity.
Environmental Regulation
The Group’s operations are presently subject to environmental regulation under the laws of the Commonwealth
of Australia and the State of Tasmania. The Group is at all times in full environmental compliance with the
conditions of its licences.
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Intec Ltd 2015 Annual Report
Remuneration Report
The remuneration report is set out under the following main headings:
A
B
C
D
E
F
Principles used to determine the nature and amount of remuneration;
Details of remuneration;
Service agreements and letters of employment;
Share based compensation;
Shareholdings of directors and key management personnel; and
Additional information.
The information provided in this remuneration report has been audited as required by Section 308 (3C) of the
Corporations Act 2001.
Principles Used To Determine the Nature and Amount of Remuneration
A
The objective of the Group’s executive reward framework is to ensure that the reward for performance is
competitive and appropriate for the results delivered. The framework aligns executive reward with the
achievement of financial objectives and the creation of value for shareholders, and conforms to market best
practice for delivery of reward. The Board ensures that executive reward satisfies the following key criteria for
good reward governance practices:
competitiveness and reasonableness;
acceptability to shareholders;
performance linkage / alignment of executive compensation;
transparency; and
capital management.
The Group has structured an executive remuneration framework that is market competitive. The framework provides
for a mix of fixed pay and also variable pay and includes long term incentives, when appropriate. There is no
defined relationship between company performance and remuneration at this point in time. However, the
matter is under continual review. The fixed proportion of remuneration is currently 100%. The Board has
established a nomination and remuneration committee which provides advice on remuneration and incentive
policies and practices and makes specific recommendations on remuneration packages and other terms of
employment for the Managing Director, other senior executives and Non-executive Directors. The Corporate
Governance Statement provides further information on the role of this committee.
Non-executive Directors
Fees and payments to Non-executive Directors reflect the demands which are made on, and the responsibilities
of, the Non–executive Directors. The Board reviews Non-executive Directors’ fees and payments annually.
Non-executive Directors’ fees are determined within an aggregate Non-executive Directors’ cash remuneration limit,
which is periodically recommended for approval by shareholders. The current limit of $400,000 was approved by
shareholders at the 2007 Annual General Meeting held on 14 November 2007. In addition, Non-executive Directors
are able to participate in issues of options pursuant to the Intec Employee Share Scheme. The values of any options
granted to Non-executive Directors are not included in the aggregate cash remuneration limit as they are not cash
based payments.
Executive pay
The executive pay and reward framework has two components, which together comprise the executive’s total
remuneration
base pay, superannuation and non-monetary benefits; and
long term incentives through participation in the Intec Employee Share Scheme.
Base pay
Base pay is structured as a total employment cost package, which may be delivered as a combination of cash
and prescribed non-financial benefits at the executive’s discretion. Executives are offered a competitive base
pay that comprises a fixed component of cash salary and superannuation. Base pay for each senior executive is
reviewed annually to ensure the executive’s pay is competitive with the market. There is no guaranteed base
pay increase included in any executive’s contract.
Intec Employee Share Scheme
Information on the Intec Employee Share Scheme is set out in note 31. Participation in the Intec Employee Share
Scheme is at the discretion of the Board and there is no guarantee of annual participation by any executive.
Details of Remuneration
B
Amounts of remuneration
Details of the remuneration of the Directors and the key management personnel (as defined in AASB 124
Related Party Disclosures) of Intec and the Group are set out in the tables below. The key management
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Intec Ltd 2015 Annual Report
personnel during the year ended 30 June 2015 of Intec and the Group include the Directors and the following
key management (KMP) person: A J Randall – General Manager
2015
Short-term benefits
Termination
benefits
Post-
employment
benefits
Share-
based
payment
Salary &
fees
$
Consulting
Fees
$
Non-
monetary
benefits
$
69,444
45,000
114,444
-
27,032
27,032
-
-
-
-
16,329
16,329
Name
Non-executive
Directors
T A Jones Chairman
D J Cronin
Sub-total
Executive Director
K G Rodgers
Sub-total
KMP
A J Randall*
Sub-total
Total
215,000
215,000
29,474
29,474
358,918
Super-
annuation
$
Options
$
Total
$
-
-
-
-
-
6,597
4,275
10,872
5,374
10,748
16,122
81,415
87,055
168,470
20,425
20,425
10,748
10,748
262,502
262,502
-
-
27,032
-
-
16,329
110,292
110,292
110,292
3,254
3,254
34,551
-
-
26,870
143,020
143,020
573,992
*Ceased employment during year ended 30 June 2015.
2014
Short-term benefits
Name
Non-executive
Directors
T A Jones Chairman
J R G Bell 1
D J Cronin 2
Sub-total
Executive Directors
K G Rodgers
Sub-total
KMP
A J Randall
Sub-total
Total
Salary &
fees
$
Consulting
Fees
$
Non-
monetary
benefits
$
69,444
24,038
25,000
118,482
215,000
215,000
117,900
117,900
451,382
-
-
16,750
16,750
-
-
-
-
16,750
-
-
-
-
5,443
-
-
-
5,443
1. Ceased to be a Non-Executive Director on 27 November 2013.
2. Represents from 26 November 2013.
Termination
benefits
Post-
employment
benefits
Share-
based
payment
Super-
annuation
$
Options
$
Total
$
-
-
-
-
-
-
-
-
6,424
2,224
2,312
10,960
19,887
19,887
10,906
10,906
41,753
-
-
-
-
-
-
-
-
-
75,868
26,262
44,062
146,192
240,330
240,330
128,806
128,806
515,328
Service Agreements and Letters of Employment
C
Remuneration and other terms of employment for the Managing Director and other specified executives are
formalised in service agreements. Each of these service agreements and letters of employment provides for
the provision of long service leave to accrue at a rate of 0.87 weeks per year up to 10 years’ service and 2
weeks per year for each additional year of service, and participation in the Intec Employee Share Scheme. Each
service agreement provides the remuneration rate to be paid to the employee. All salaries are paid monthly by
direct bank deposit. Full details of remuneration paid are included in the table in part B of this note. Other
major provisions relating to executive remuneration are set out below.
Start Date
Term of
Agreement
Base Salary at 1
July 2016
$
Notice
period for
employee
(months)
Termination
compensation
Executive Director
K G Rodgers
1 March 2015
3 years
215,000
6
6 months salary
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Intec Ltd 2015 Annual Report
Share Based Compensation
D
At the 2014 Annual General Meeting, shareholders approved the Intec Employee Share Scheme (the Scheme).
The Scheme replaced the previous Intec Option Plan, which had been approved at the 2001 Annual General
Meeting. All directors, employees and consultants are eligible to participate in the Scheme. Options granted
under the Scheme to eligible participants are for no additional consideration. Options are granted for a five year
period, and vest and are exercisable immediately, unless otherwise stated. Options granted under the Scheme
carry no dividend or voting rights. The granting of options is at the Board’s discretion and no individual has a
contractual right to receive options.
The terms and conditions of each grant of options affecting remuneration in the previous, this or future
reporting periods are as follows:
Issue
Date
Expiry
Date
Exercise
Price
Balance
at
1 July 2014
Granted
during
year
Lapsed
during
year
Exercised
during
year
09-12-20111 21-11-2016
10-12-2014 28-11-2019
Total Options on issue
$0.0300
$0.0250
3,300,000
-
3,300,000
-
5,500,000
5,500,000
-
-
-
-
-
-
1. Granted under previous Intec Option Plan.
Vested &
exercisable as
at
30 June 2015
3,300,000
5,500,000
8,800,000
Details of options over ordinary shares in the Company provided as remuneration to each Director of Intec and
each of the key management personnel of the Group are set out below. When exercisable, each option is
convertible into one ordinary share of Intec. Further information on the options is set out in notes 21 and 31.
2015
Balance at
the start of
the year
Granted
during the
year as
compensation
Name
Directors of Intec Ltd
T A Jones
K G Rodgers
D J Cronin
Other key management personnel of the Group
A J Randall1
400,000
1,200,000
-
400,000
-
1. Ceased employment during year ended 30 June 2015.
1,000,000
2,000,000
2,000,000
Exercised
during the
year
Lapsed
during the
year
Balance at
the end of
the year
Vested and
exercisable
at the end
of the year
-
-
-
-
- 1,400,000
3,200,000
-
2,000,000
-
1,400,000
3,200,000
2,000,000
-
400,000
400,000
2014
Name
Balance at
the start of
the year
Granted
during the
year as
compensation
Exercised
during the
year
Lapsed
during
the year
Balance
at the
end of
the year
Vested and
exercisable
at the end
of the year
Directors of Intec Ltd
T A Jones
K G Rodgers
J R G Bell 2
Other key management personnel of the Group
A J Randall
400,000
1,200,000
300,000
400,000
2. Ceased to be a Non-executive Director on 27 November 2013.
-
-
-
-
-
-
-
-
400,000
-
- 1,200,000
-
300,000
400,000
1,200,000
-
-
400,000
400,000
The assessed fair value at grant date of options granted to individuals is included in the remuneration tables
above, if a grant of options has taken place during the period. Fair values at grant date are determined using
share option valuation models that take into account the exercise price, the term of the option, the share price
at grant date, the expected price volatility of the underlying share, the expected dividend yield and the risk free
interest rate for the term of the option.
There were 5,500,000 options granted in the twelve (12) months to 30 June 2015 (2014: Nil).
Shares provided on exercise of remuneration options
No ordinary shares in the Company were provided as a result of the exercise of remuneration options by a Director
of Intec (2014 - Nil). No options were exercised by any key management personnel of the Group (2014 - Nil).
Shares under option
Unissued ordinary shares of Intec under option at the date of this report are shown in note 21.
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Intec Ltd 2015 Annual Report
Shares issued on the exercise of options
No ordinary shares of Intec were issued during the year ended 30 June 2015 on the exercise of options granted
under the Intec Employee Share Scheme. No further shares have been issued on the exercise of options since
that date.
E
Shareholdings of Directors and Key Management Personnel
The number of shares in the company held at the end of the financial year by each Director of the Company
and other key management personnel of the Group, including their personally related parties, are set out in the
following table.
Balance at the
start of the year
Received during
the year on the
exercise of options
Other
changes
during the
Year
Balance at
the end of
the
Year
2015
Name
Ordinary shares
Directors of Intec Ltd
T A Jones
K G Rodgers
D J Cronin
Other key management personnel of the Group
A J Randall1
268,954
18,904,624
2,000,000
-
1. Ceased employment during year ended 30 June 2015.
2014
Balance at the
start of the year
Name
Ordinary shares
Directors of Intec Ltd
T A Jones
K G Rodgers
J R G Bell 1
D J Cronin
Other key management personnel of the Group
A J Randall
268,954
17,904,623
112,892
-
-
-
-
-
-
2,563,823
1,099,999
1,000,000
2,832,777
20,004,623
3,000,000
-
-
Received during
the year on the
exercise of options
Other
changes
during the
Year
Balance at
the end of
the
Year
-
-
-
-
-
-
1,000,001
-
2,000,000
268,954
18,904,624
1
2,000,000
-
-
1. Ceased to be a Non-executive Director on 27 November 2013
F
Additional Information
In the five years since 1 July 2010, Directors’ total remuneration has decreased by an average of 14.15% per
annum principally due to a reduction in the number of executive and non-executive Directors.
This concludes the Remuneration Report, which has been audited.
Insurance of officers
The Company has, by Deed of Access, Indemnity and Insurance, paid a premium to insure the Directors and
Officers of the Group in respect of certain legal liabilities, including costs and expenses in successfully defending
legal proceedings, whilst they remain as Directors and Officers and for seven years thereafter. The insurance
contract prohibits the disclosure of the total amount of the premiums and a summary of the nature of the
liabilities covered.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for
the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under
section 237 of the Corporations Act 2001.
Non audit services
The Group may decide to employ the auditor on assignments additional to their statutory audit duties where
the auditor's expertise and experience with the Company and/or the Group are important.
8
Intec Ltd 2015 Annual Report
Details of the amounts paid or payable to the auditor for audit and non-audit services provided during the year
are set out below.
Consolidated
2015
$
2014
$
Assurance Services
1.
Audit services
Audit and review of financial reports and other audit work under the
Corporations Act 2001
Rothsay Chartered Accountants
Crowe Horwath Sydney
28,500
-
-
71,000
Total remuneration for audit services
28,500
71,000
2.
Non audit services
Tax compliance services, including review of company income tax
returns
Total remuneration for non audit services
Auditor’s Independence Declaration
-
-
-
-
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001
is set out on page 10.
Authorisation
This report is made in accordance with a resolution of Directors. The financial report was authorised for issue by
the Directors on 30 September 2015. The Company has the power to amend and revise the financial report.
Kieran Rodgers
Managing Director
Sydney
30 September 2015
9
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001
As lead auditor of Intec Limited for the year ended 30 June 2015, I declare that, to the best of my knowledge
and belief, there have been:
• no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation
to the audit; and
• no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Intec Limited and the entities it controlled during the year.
Frank Vrachas
Partner
Rothsay Chartered Accountants
Sydney, 30 September 2015
10
Intec Ltd 2015 Annual Report
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
For the year ended 30 June 2015
Revenue from continuing operations
7
1,536,962
1,281,439
Note
30 June 2015
30 June 2014
$
$
Administration expense
Burnie Research Facility expenses
Depreciation and amortisation expense
Engineering and other consultants expenses
Employment costs
Finance costs
Impairment expense
Occupancy expense
Treatment expense
Other expenses
Profit/(loss) before income tax from continuing operations
Income tax benefit/(expense)
Profit/(loss) after tax for the year from continuing
operations
Profit/(loss) after tax for the year from discontinuing
operations
Profit/(loss) after tax for the year
Other comprehensive income/(loss)
Items that will be reclassified subsequently to profit or loss:
Gain on revaluation of other financial assets
Income tax relating to components of other comprehensive income
Other comprehensive income/(loss) for the year, net of
income tax
8
8
8
8
9
5
(435,765)
(100,592)
(64,071)
(166,032)
(848,614)
(23,616)
(13,100)
(117,981)
(669,031)
(11,680)
(437,929)
(52,363)
(380,168)
(93,969)
(781,809)
(8,716)
(162,900)
(135,471)
(557,207)
(2,316)
(913,520)
(1,331,409)
8,883
70,401
(904,637)
(1,261,008)
48,191
(126)
(856,446)
(1,261,134)
18,100
-
18,100
-
-
-
Total comprehensive income/(loss) for the year
(838,346)
(1,261,134)
Profit/(loss) for the year is attributable to:
Owners of Intec Ltd
Non-controlling interests
(816,121)
(40,325)
(856,446)
(1,177,945)
(83,189)
(1,261,134)
11
Intec Ltd 2015 Annual Report
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
For the year ended 30 June 2015
Total comprehensive income/(loss) is attributable to:
Continuing operations
Discontinuing operation
Owners of Intec Ltd
Note
Continuing operations
Discontinuing operation
Non-controlling interest
(847,112)
49,091
(798,021)
(39,425)
(900)
(40,325)
(838,346)
(1,177,882)
(63)
(1,177,945)
(83,126)
(63)
(83,189)
(1,261,134)
Earnings per shares for loss from continuing operations
attributable to the owners
Basic Earnings per share (cents per share)
Diluted Earnings per share (cents per share)
30
30
(0.30)
(0.30)
Earnings per shares for loss from discontinuing operations
attributable to the owners
Basic Earnings per share (cents per share)
Diluted Earnings per share (cents per share)
Earnings per shares for loss attributable to the owners
Basic Earnings per share (cents per share)
Diluted Earnings per share (cents per share)
0.02
0.02
(0.27)
(0.27)
(0.42)
(0.42)
0.00
0.00
(0.42)
(0.42)
The consolidated statement of profit or loss and other comprehensive income should be read in conjunction
with the accompanying notes.
12
Intec Ltd 2015 Annual Report
Consolidated Statement of Financial Position
As at 30 June 2015
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
Non current assets
Other financial assets
Plant and equipment
Intangible assets
Total non current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Loans and borrowings
Provisions
Total current liabilities
Non current liabilities
Loans and borrowings
Deferred tax liability
Total non current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total equity attributable to equity holders of the Company
Outside equity interest
Notes
Consolidated
2015
$
2014
$
10
11
12
13
14
15
16
17
18
19
9
20
22
23
23
926,394
326,531
255,777
1,747,861
189,518
194,520
1,508,702
2,131,899
57,200
221,323
1,288,905
42,200
294,587
1,318,845
1,567,428
1,655,632
3,076,130
3,787,531
311,646
255,466
77,406
336,867
137,593
112,732
644,518
587,192
113,718
74,765
64,774
83,647
188,483
148,421
833,001
735,613
2,243,129
3,051,918
71,641,977
2,671,694
71,641,977
2,624,037
(72,218,074) (71,401,953)
2,864,061
187,857
2,095,597
147,532
Total equity
2,243,129
3,051,918
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
13
Intec Ltd 2015 Annual Report
Consolidated Statement of Changes in Equity
For the year ended 30 June 2015
Consolidated
Balance at 1 July 2013
Comprehensive income
Loss after income tax expense for the year
Other comprehensive income for the year
Total comprehensive income for the
year
Changes in ownership interests
Acquisition of subsidiary with non-
controlling interest
Share
Capital
Reserves Accumulated
Losses
Non
Controlling
Interest
Total
$
$
$
$
$
71,641,977
2,624,037
(70,224,008)
962
4,042,968
-
-
-
-
-
-
-
-
(1,177,945)
(83,189)
(1,261,134)
-
-
-
(1,177,945)
(83,189)
(1,261,134)
-
270,084
270,084
Balance at 30 June 2014
71,641,977
2,624,037
(71,401,953)
187,857
3,051,918
Balance at 1 July 2014
Comprehensive income
71,641,977 2,624,037 (71,401,953)
187,857
3,051,918
Loss after income tax expense for the year
Other comprehensive income for the year
Asset revaluation reserve
-
-
-
-
-
18,100
(816,121)
(40,325)
(856,446)
-
-
-
-
-
18,100
Total comprehensive income for the
year
Transactions with owners in their
capacity as owners
-
18,100
(816,121)
(40, 325)
(838,346)
Share based payments – options reserve
-
29,557
-
-
29,557
Balance at 30 June 2015
71,641,977 2,671,694 (72,218,074)
147,532
2,243,129
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
14
Intec Ltd 2015 Annual Report
Consolidated Statement of Cash Flows
For the year ended 30 June 2015
Notes
Consolidated
2015
$
2014
$
Cash flows from operating activities
Receipts from customers (Inclusive of GST)
Payments to suppliers and employees (Inclusive of GST)
Interest paid
Interest received
R&D tax offset received
Other receipts
Income tax refund
Net cash (outflows)/inflows from operating activities
Cash flows from investing activities
Payment for acquisition of business
Payments for plant and equipment
Proceeds from security deposits refunded
Proceeds from sale or disposal of property, plant & equipment
Proceeds from disposal of investments
Payment for intangibles
Net cash (outflows)/inflows from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowing
Net cash inflows from financing activities
32
1,208,566
913,875
(2,330,079) (1,813,794)
(8,716)
84,042
129,478
60,505
-
(634,610)
(23,616)
43,900
-
-
20,144
(1,081,085)
- (1,300,100)
(83,324)
(115,343)
79,539
-
138,520
207,586
-
50,000
(11,834)
-
130,409 (1,165,365)
164,438
(35,229)
129,209
183,325
(41,494)
141,831
Net (decrease)/increase in cash and cash equivalents
Net cash acquired
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at end of year
(821,467) (1,658,144)
3,184
3,402,821
1,747,861
-
1,747,861
926,394
10
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
15
Intec Ltd 2015 Annual Report
Notes to the Financial Statements 30 June 2015
1
Summary of significant accounting policies
These consolidated financial statements and notes represent those of Intec Ltd and controlled entities
(‘Consolidated Group’ or ‘Group’). The separate financial statements of the parent entity, Intec Ltd, have not
been presented within this financial report as permitted by amendments made to the Corporations Act 2001
effective from 28 June 2010.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the
Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply
with International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards
Board ('IASB').
Historical cost convention
The financial statements have been prepared on an accruals basis and are based on historical costs, modified,
where applicable, by the measurement at fair value of selected non-current assets, financial assets and
financial liabilities.
Critical accounting estimates
The preparation of financial statements in conformity with IFRS 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 areas involving either a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements are disclosed below and in note 3.
Going concern statements
The financial report has been prepared on a going concern basis notwithstanding the operating loss. The
Directors consider the Group has adequate funding and therefore, no adjustments have been made to the
financial report that might be necessary should the Group not continue as a going concern. Accordingly, the
Directors have prepared the financial report on a going concern basis.
Significant accounting policies
Accounting policies are selected and applied in a manner which ensures that the resultant financial information
satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying
transactions and other events is reported. The Company has adopted relevant new and revised accounting
standards and pronouncements with no material impact to the financial statements.
The following significant accounting policies have been adopted in the preparation and presentation of the
financial statements:
Principles of consolidation
(a)
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (Intec
Ltd) and all of the subsidiaries (including any structured entities). Subsidiaries are entities the parent controls.
The parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its power over the entity.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the
Group from the date on which control is obtained by the Group. The consolidation of a subsidiary is
discontinued from the date that control ceases. Intercompany transactions, balances and unrealised gains or
losses on transactions between Group entities are fully eliminated on consolidation. Accounting policies of
subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the accounting
policies adopted by the Group.
Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non-
controlling interests”. The Group initially recognises non-controlling interests that are present ownership
interests in subsidiaries and are entitled to a proportionate share of the subsidiary’s net assets on liquidation at
either fair value or at the non-controlling interests’ proportionate share of the subsidiary’s net assets.
Subsequent to initial recognition, non-controlling interests are attributed their share of profit or loss and each
component of other comprehensive income. Non-controlling interests are shown separately within the equity
section of the statement of financial position and statement of profit or loss and other comprehensive income.
16
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
(b)
Business combinations occur where an acquirer obtains control over one or more businesses.
Business combinations
A business combination is accounted for by applying the acquisition method, unless it is a combination involving
entities or businesses under common control. The business combination will be accounted for from the date that
control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent
liabilities) assumed is recognised (subject to certain limited exemptions).
When measuring the consideration transferred in the business combination, any asset or liability resulting from
a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent
consideration classified as equity is not remeasured and its subsequent settlement is accounted for within
equity. Contingent consideration classified as an asset or liability is remeasured each reporting period to fair
value, recognising any change to fair value in profit or loss, unless the change in value can be identified as
existing at acquisition date.
All transaction costs incurred in relation to the business combination are expensed to the statement of
comprehensive income.
The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.
Segment reporting
(c)
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision makers. The chief operating decision maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the Board of Directors.
Revenue and other income recognition
(d)
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as
revenue are net of treatment charges, trade allowances, rebates and amounts collected on behalf of third
parties.
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future
economic benefits will flow to the Group and specific criteria have been met for each of the Group’s activities
described below. The amount of revenue is not considered to be reliably measurable until all contingencies
relating to the sale have been resolved. The Group bases its estimates on historical results, taking into
consideration the type of customer, the type of transaction and specifics of each arrangement.
Revenue is recognised for the major business activities as follows:
(i)
Income from sales of goods and disposal of other assets is recognised when the Group has passed control of
the goods or other assets to the buyer.
Sales of goods and disposal of assets
Interest revenue
(ii)
Interest revenue is recognised on an accrual basis, taking into account the interest rates applicable to financial
assets.
Consulting services and treatment fees
(iii)
Revenue from consulting services and treatment fees are recognised using the percentage-of-completion method
for fixed-fee arrangements or as the services are provided for time-and-materials arrangements.
Other income
(iv)
Other income, which includes government grants and any other forms of government assistance, is recognised
on receipt or when reasonable assurance that income will be earned is established.
(v)
All revenue is stated net of goods and services tax (GST).
General
Income tax
(e)
The income tax expense or revenue for the period is the tax payable in the current period’s taxable income
based on the Australian income tax rate adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences between the tax bases 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 temporary differences at the tax rates expected to apply
when the assets are recovered or liabilities are settled. The relevant tax rates are applied to the cumulative
amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An
17
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
exception is made for certain temporary differences arising from the initial recognition of an asset or a liability.
No deferred tax asset or liability is recognised in relation to these temporary differences 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 or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses or to
the extent that they will be offset by deferred income tax liabilities which will reverse in the same periods.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount
and tax bases of investments in subsidiaries 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.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised
directly in equity.
Tax consolidation legislation
Intec Ltd and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under tax
consolidation legislation. Each entity in the Group recognises its own current and deferred tax assets and
liabilities. Such taxes are measured using the ‘stand-alone taxpayer’ approach to allocation. Current tax
liabilities (assets) and deferred tax assets arising from unused tax losses and tax credits in the subsidiaries are
immediately transferred to the head entity. The Group notified the Australian Taxation Office that it had formed
an income tax consolidated group to apply from 1 July 2008. The tax consolidated group has entered a tax
funding arrangement whereby each company in the Group contributes to the income tax payable by the Group
in proportion to their contribution to the Group’s taxable income. Differences between the amounts of net tax
assets and liabilities derecognised and the net amounts recognised pursuant to the funding arrangement are
recognised as either a contribution by, or distribution to the head entity.
Cash and cash equivalents
(f)
For statement of cash flow presentation purposes, cash and cash equivalents includes cash on hand and
deposits held at call with financial institutions and term deposits held with financial institutions with original
maturities of three months or less that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.
Trade receivables
(g)
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment. Trade receivables are generally due for settlement
within 30 days.
Inventories
(h)
Inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling
price in the ordinary course of business, less the estimated costs of completion and selling expenses. The
methods used to assign costs to inventories are actual invoiced costs.
Fair value measurement
(i)
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement
and for disclosure purposes.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate
their fair values. 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.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure
purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date; and assumes that the
transaction will take place either: in the principle market; or in the absence of a principal market, in the most
advantageous market.
18
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
Fair value is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming they act in their economic best interest. For non-financial assets, the fair value measurement
is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for
which sufficient data are available to measure fair value, are used, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that
reflects the significance of the inputs used in making the measurements. Classifications are reviewed each
reporting date and transfers between levels are determined based on a reassessment of the lowest level input
that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise
is either not available or when the valuation is deemed to be significant. External valuers are selected based on
market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from
one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the
latest valuation and a comparison, where applicable, with external sources of data.
(j)
Financial instruments
Recognition and initial measurement
(i)
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions
to the instrument. For financial assets, this is equivalent to the date that the company commits itself to either the
purchase or sale of the asset (i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is
classified “at fair value through profit or loss”, in which case transaction costs are expensed to profit or loss
immediately.
Classification and subsequent measurement
(ii)
Finance instruments are subsequently measured at fair value, amortised cost using the effective interest rate
method, or cost.
Amortised cost is the amount at which the financial asset or financial liability is measured at initial recognition
less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of
the difference between that initial amount and the maturity amount calculated using the effective interest
method.
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are
applied to determine the fair value for all unlisted securities, including recent arm’s length transactions,
reference to similar instruments and option pricing models.
The effective interest method is used to allocate interest income or interest expense over the relevant period
and is equivalent to the rate that discounts estimated future cash payments or receipts (including fees,
transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably
predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or
financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying
value with a consequential recognition of an income or expense item in profit or loss.
Loans and receivables
(iii)
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active
market and are subsequently measured at amortised cost.
Loans and receivables are included in current assets, where they are expected to mature within 12 months
after the end of the reporting period.
(iv)
Financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost.
Financial liabilities
Available-for-sale financial assets
(v)
Available-for-sale financial assets are non-derivative financial assets, principally equity securities that are either
designated as available-for-sale or not classified as any other category. After initial recognition, fair value
movements are recognised in other comprehensive income through the available-for-sale reserve in equity.
Cumulative gain or loss previously reported in the available-for-sale reserve is recognised in profit or loss when
the asset is derecognised or impaired.
19
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
Impairment
(vi)
At the end of each reporting period, the Group assesses whether there is objective evidence that a financial
instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the
value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are
recognised in profit or loss. Also, any cumulative decline in fair value previously recognised in other
comprehensive income is reclassified to profit or loss at this point.
Financial guarantees
(vii)
Where material, financial guarantees issued that require the issuer to make specified payments to reimburse
the holder for a loss it incurs because a specified debtor fails to make payment when due are recognised as a
financial liability at fair value on initial recognition.
The guarantee is subsequently measured at the higher of the best estimate of the obligation and the amount
initially recognised less, when appropriate, cumulative amortisation in accordance with AASB 118: Revenue.
Where the entity gives guarantees in exchange for a fee, revenue is recognised under AASB 118.
The fair value of financial guarantee contracts has been assessed using a probability-weighted discounted cash
flow approach. The probability has been based on:
–
–
the likelihood of the guaranteed party defaulting in a year period;
the proportion of the exposure that is not expected to be recovered due to the guaranteed party
defaulting; and
the maximum loss exposed if the guaranteed party were to default.
–
(viii) De-recognition
Financial assets are de-recognised where the contractual rights to receipt of cash flows expire or the asset is
transferred to another party whereby the entity no longer has any significant continuing involvement in the
risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations
are discharged, cancelled or expired. The difference between the carrying value of the financial liability
extinguished or transferred to another party and the fair value of consideration paid, including the transfer of
non-cash assets or liabilities assumed, is recognised in profit or loss.
Plant and equipment
(k)
All plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
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 the statement of
profit or loss and other comprehensive income during the financial period in which they are incurred.
Depreciation on assets is calculated using the straight line method to allocate their cost or re-valued amounts,
net of their residual values, over their estimated useful lives, as follows:
Office equipment
Plant and equipment
2-8 years
4-7 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.
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 (note 1(n)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included
in the statement of comprehensive income.
Goodwill
(l)
Goodwill is carried at cost less any accumulated impairment losses. Goodwill is calculated as the excess of the
sum of:
i.
ii.
iii.
the consideration transferred;
any non-controlling interest; and
the acquisition date fair value of any previously held equity interest;
over the acquisition date fair value of net identifiable assets acquired.
The amount of goodwill recognised on acquisition of each subsidiary in which the Group holds less than a 100%
interest will depend on the method adopted in measuring the non-controlling interest. The Group can elect in
most circumstances to measure the non-controlling interest in the acquiree either at fair value (full goodwill
20
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
method) or at the non-controlling interest’s proportionate share of the subsidiary’s identifiable net assets
(proportionate interest method). In such circumstances, the Group determines which method to adopt for each
acquisition and this is stated in the respective notes to these financial statements disclosing the business
combination.
Under the full goodwill method, the fair value of the non-controlling interests is determined using valuation
techniques which make the maximum use of market information where available. Under this method, goodwill
attributable to the non-controlling interests is recognised in the consolidated financial statements.
Refer to Note 4 for information on the goodwill policy adopted by the Group for acquisitions.
Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill is tested for impairment
annually. Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the
entity disposed of.
Intangible assets other than Goodwill
(m)
Trademarks and IP are recognised at cost of acquisition. They have a finite life and are carried at cost less any
accumulated amortisation and any impairment losses. Trademarks are amortised over their useful lives of 10
years.
Impairment of assets
(n)
In respect of non-current assets, each asset or cash generating unit is evaluated every reporting period to
determine whether there are any indications of impairment. If any such indication exists, a formal estimate of
recoverable amount is performed and an impairment loss is recognised to the extent that carrying amounts
exceed recoverable amount. The recoverable amount of an asset or cash-generating group of assets is
measured at the higher of fair value less costs to sell and value in use.
Intangible Assets
(i)
Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment or more frequently if events or changes in circumstances indicate that they might be impaired.
Other Assets
(ii)
Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value
less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows
from other assets or groups of assets (cash generating units). Non-financial assets other than goodwill that
suffer impairment are reviewed for possible reversal of the impairment at each reporting date.
Trade and other payables
(o)
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial
year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
Employee benefits
Wages and salaries and annual leave
(p)
(i)
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled
within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to
the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.
Long service leave
(ii)
The liability for long service leave is recognised in 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 up to the
reporting date. Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields at the
reporting date on national government bonds with terms to maturity and currency that match, as closely as
possible, the estimated future cash outflows.
Share based payments
(iii)
Share based compensation benefits are provided to employees via the Intec Employee Share Scheme.
Information relating to the plan is set out in note 31.
The fair value of options granted under the Intec Employee Share Scheme 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.
21
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
The fair value at grant date is determined using share option valuation models that take into account the
exercise price, the term of the option, the impact of dilution, the share price at grant date, the 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.
At each reporting date, the entity revises its estimate of the number of options that are expected to become
exercisable. The employee benefit expense recognised each period takes into account the most recent estimate.
Upon the exercise of options, the balance of the share based payments reserve relating to those options is
transferred to share capital and the proceeds received, net of any directly attributable transaction costs, are
credited to share capital.
(q)
(i)
Provisions for legal claims are recognised when:
Provisions
General
the Group has a present legal or constructive obligation as a result of past events;
it is more likely than not that an outflow of resources will be required to settle the obligation; and
the amount has been reliably estimated.
Provisions are not recognised for future operating losses.
Provisions for close down and restoration and for environmental cleanup costs
(ii)
Close down and restoration costs include the dismantling and demolition of infrastructure and the removal of
residual materials and remediation of disturbed areas. Estimated close down and restoration costs are provided
for in the accounting period when the obligation arising from the related disturbances occurs. Provisions for close
down and restoration costs do not include any additional obligations which are expected to arise on the basis of a
closure plan.
As noted above, the ultimate cost of environmental remediation is uncertain and cost estimates can vary in
response to many factors including changes to the relevant legal requirements, the emergence of new
restoration techniques or experience. As a result there could be significant adjustments to the provision for
close down and restoration and environmental cleanup, which would affect future financial results.
Contributed equity
(r)
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
Earnings per share
Basic earnings per share
(s)
(i)
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the
year.
Diluted earnings per share
(ii)
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential
ordinary shares and the weighted average number of shares assumed to have been issued for no consideration
in relation to dilutive potential ordinary shares.
Goods and Services Tax (GST)
(t)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is
not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the
asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of
GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the
statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows
arising from investing or financing activities which are recoverable from, or payable to the taxation authority,
are presented as operating cash flows.
22
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
Foreign currency translation
Functional and presentation currency
(u)
(i)
Items included in the financial statements of each of the Group’s entities are measured in Australian dollars and
the consolidated financial statements are presented in Australian dollars, which is the Group’s functional and
presentation currency.
Transactions and balances
(ii)
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the statement of profit or loss and other comprehensive
income.
Leases
(v)
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as finance leases (Note 25b). Payments made under finance leases (net of any incentives received
from the lessor) are charged to the statement of profit or loss and other comprehensive income on a straight
line basis over the period of the lease.
Investments
(w)
Non-current investments in subsidiaries are measured on the cost basis. The carrying amount of non current
investments is reviewed annually by Directors to ensure it is not in excess of the recoverable amount of these
investments.
New Accounting Standards and interpretations
(x)
The Group has reviewed all Australian Accounting Standards and Interpretations that have recently been either
issued or amended but are not yet mandatory and confirms that none have a material effect on the financial
statements of the Group.
2
Financial risk management
The Group's activities expose it to a variety of financial risks: market risk (including currency risk, cash flow
and interest rate risk and price risk), credit risk and liquidity risk. The Group's overall risk management
programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects
on the financial performance of the Group. Risk management is carried out by company management and the
Board of Directors. Financial risks are identified and evaluated and, where considered necessary, strategies are
put in place to investigate and/or minimise such risks.
Foreign exchange risk
(a)
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are
denominated in a currency that is not the entity’s functional currency. The Group has not entered into any
foreign currency hedging contracts during the year. The Group has a trade finance facility utilised for the
purchase of US$ denominated invoices. Purchases through the facility are transacted at the prevailing spot
A$/US$ exchange rate and the outstanding amount under the facility is always denominated in A$.
Credit risk
(b)
Credit risk arises from the potential failure of counterparties to meet their obligations under the respective
contracts at maturity. The Group has policies in place to ensure that sales of product are made to customers
with an appropriate credit history. There is limited credit risk on financial assets of the Group since there is
limited exposure to individual customers and the Group’s exposure is limited to the amount of cash, short term
deposits and receivables which have been recognised in the statement of financial position. Deposits and
financial arrangements are held in high rated financial institutions.
Liquidity risk
(c)
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an
adequate amount of committed finance facilities.
The Group's financing activities are managed centrally by maintaining an adequate level of cash and cash
equivalents to finance the Group's operations. The Group’s surplus funds are also managed centrally by placing
them with reputable financial institutions.
The risk implied from the values shown in the following table, reflects a balanced view of cash inflows and
outflows. Trade payables and other financial liabilities originate from the financing of assets used in the Group’s
ongoing operations such as property, plant and equipment and investments in working capital, inventories and
trade receivables.
23
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
Cash flow and fair value interest rate risk
(d)
The Group's interest rate risk arises from borrowings. Borrowings issued at variable rates expose the Group to cash
flow interest rate risk.
Interest rate exposure and maturity analysis of financial assets
Consolidated
Interest rate exposure
Weighted
average
effective
interest
rate
%
Carrying
amount
Fixed
interest
rate
Variable
interest
rate
Non-
interest
bearing
Nominal
amount
Less than
12
months
1-5
years
2.69
-
926,394
320,569
-
-
6.00
57,200
1,304,163
277,754
369,184
646,938
-
-
-
-
-
-
-
926,394
-
-
320,569
-
57,200
926,394 377,769
-
277,754
369,184
-
369,184 277,754
-
-
-
-
-
-
-
926,394
-
304,036
16,533
57,200
-
1,287,630 16,533
277,754
-
255,466
113,718
533,220
113,718
2015
Cash and cash
equivalents
Receivables
Available for sale
financial assets at
cost, unlisted
investments
Payables:
Trade creditors &
accruals
Loans and
borrowings
Consolidated
Interest rate exposure
Weighted
average
effective
interest
rate
%
Carrying
amount
Fixed
interest
rate
Variable
interest
rate
Non-
interest
bearing
Nominal
amount
Less
than 12
months
1-5
years
3.26
-
1,747,861
152,316
-
-
1,747,861
-
- 152,316
42,200
-
-
42,200
1,942,377
1,747,861 194,516
-
-
-
-
1,747,861
-
129,365
22,951
42,200
-
1,919,426
22,951
301,249
-
- 301,249
-
301,249
-
6.00
202,367
503,616
-
202,367
-
202,367 301,249
-
-
137,593
64,774
438,842
64,774
2014
Cash and cash
equivalents
Receivables
Available for sale
financial assets at
cost, listed and
unlisted investments
Payables:
Trade creditors &
accruals
Loans and
borrowings
-
-
(e)
The fair values of financial assets and financial liabilities are determined as follows:
Fair value
the fair value of financial assets and financial liabilities with standard terms and conditions and traded in
active liquid markets are determined with reference to quoted market prices; and
the fair value of other financial assets and financial liabilities are determined in accordance with generally
accepted pricing models based on discounted cash flow analysis.
The Group considers that the carrying amount of financial assets and financial liabilities recorded in the financial
statements to be a fair approximation of their fair values, because of the short-term nature of the financial
instruments and the expectation that they will be paid in full.
24
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
Financial Instruments Measured at Fair Value
The financial instruments recognised at fair value in the statement of financial position have been analysed and
classified using a fair value hierarchy reflecting the significance of the inputs used in making the measurements.
The fair value hierarchy consists of the following levels:
quoted prices in active markets for identical assets or liabilities (Level 1);
inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (as prices) or indirectly (derived from prices) (Level 2); and
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
2015
Consolidated
Financial assets
Available for sale financial assets
- listed investments
- unlisted investments
2014
Financial assets
Available for sale financial assets
- listed investments
- unlisted investments
Level 1
$
Level 2
$
Level 3
$
Total
$
54,300
-
54,300
39,300
-
39,300
-
2,900
2,900
-
2,900
2,900
-
-
-
-
-
-
54,300
2,900
57,200
39,300
2,900
42,200
Assets available for sale are measured at fair value on a recurring basis. There were no transfers between levels
during the year ended 30 June 2015.
(f)
The impact of changes to interest rate and foreign currency does not have a significant impact on the Group.
Sensitivity Analysis
3
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that may have a financial impact on the entity and that are believed to be
reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The
resulting accounting estimates will, by definition, seldom equal the related actual results. The Group has
identified the following critical accounting policies under which significant judgements, estimates and assumptions
are made and where actual results may differ from these estimates under different assumptions and conditions and
may materially affect financial results or the financial position reported in future periods.
Goodwill and other indefinite life intangible assets
The consolidated entity tests annually, or more frequently if events or changes in circumstances indicate
impairment, whether goodwill and other indefinite life intangible assets have suffered any impairment, in
accordance with the accounting policy stated in note 1. The recoverable amounts of cash-generating units have
been determined based on value-in-use calculations. These calculations require the use of assumptions,
including estimated discount rates based on the current cost of capital and growth rates of the estimated future
cash flows as set out in note 15.
Income taxes
The Group is subject to income taxes in Australia. Significant judgement is required in determining the
provision for income taxes. There are many transactions and calculations for which the ultimate tax
determination is uncertain during the ordinary course of business. The Group recognises liabilities for
anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax
outcome of these matters is different from the amounts that were initially recorded, such differences will impact
the current and deferred tax provisions in the period in which such determination is made. Deferred tax assets
are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses or to the extent that they
will be offset by deferred income tax liabilities which will reverse in the same periods.
25
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
4
Business combination
On 26 November 2013, the Group acquired 50% of the issued capital of Science Developments Pty Ltd
(‘SciDev’), a company that manufacturers chemicals for use in waste water treatment, for a purchase
consideration of $1,300,100. The acquisition is part of the Group’s overall strategy to expand its interests in
the treatment of industrial waste. The purchase was satisfied by the payment of $1,300,100.
Cash
Receivables
Inventories
Property, plant and equipment
Trademarks (ii)
Trade Payables
Deferred tax liability
Total
Net assets acquired at 50%
Goodwill (i)
Acquisition date: fair value of total consideration
Representing:
Cash Paid
Cash used to acquire business, net of cash received
Cash Paid
Less: cash and cash equivalents
Fair Value
$
3,185
231,077
302,361
117,176
296,100
(277,403)
(132,330)
540,166
270,083
1,030,017
1,300,100
1,300,100
1,300,100
(3,185)
1,296,915
(i)
(ii)
The goodwill is attributed to the competitive position of SciDev’s product portfolio in wastewater
treatment. No amount of goodwill is deductible for tax purposes.
Trademarks valued at $296,100 are being amortised over ten years and amortisation of $29,610
(2014:17,272) has been recognised for the year-ended 30 June 2015 and $46,882 recognised from the
date of acquisition.
5
Discontinued operations
On 30 September 2014 the consolidated entity sold its 50% shareholding in Intec International Projects Pty
Limited (‘IIP’) for consideration of $50,000 resulting in a gain on sale before income tax of $48,221. Previously,
Intec and IIP had agreed to an extensive cross-licensing and technology transfer in relation to Intec’s patent
portfolio, for which Intec also received a payment of $50,000. IIP was not trading up to the date of sale and
future losses were projected.
Financial performance information
Administration expense
Loss before income tax expense
Income tax expense
Loss after income tax expense
Gain on disposal before income tax expense
Income tax expense
Gain on disposal after income tax expense
Profit (loss) after income tax from discontinued operations
Cash flow information
Net cash from (used in) operating activities
Net increase (decrease) in cash from discontinued operations
30 June 2015
$
30 June 2014
$
(30)
(30)
-
(30)
48,221
-
48,221
48,191
(30)
(30)
(126)
(126)
-
(126)
-
-
-
(126)
(120)
(120)
26
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
The proceeds from disposal of $50,000 were deposited into the parent
company.
Carrying amount of assets and liabilities disposed
Cash and cash equivalents
Trade and other payables
Net assets
Details of the disposal
Total sale consideration
Carrying amount of net assets disposed
Gain on disposal before tax income
Income tax expense
Gain on disposal after income tax
6
Segment information
1,785
(6)
1,779
50,000
(1,779)
48,221
-
48,221
(a) Geographical segments
The Group operates in primarily one geographical segment, namely Australia.
Business segments
(b)
The Group’s primary business segment is the treatment of industrial waste including the manufacture and
supply of chemicals for the treatment of waste water.
(c) Major customers
Lion Diary & Drinks Limited
7
Revenue from continuing operations
Sales revenue
Treatment fees & product sales
Other revenue
Interest received
Government subsidies
Net gain on disposal of non-current assets
Sundry income
Total revenue
8
Profit/(loss) before income tax includes the following specific expenses
Expenses
Depreciation
Plant and equipment
Office furniture and equipment
Burnie Research Facility
Amortisation
Total depreciation recognised in statement of comprehensive income
Finance costs
Interest and finance charges paid/payable – others
Rental expense relating to operating leases
Impairment expense – financial assets
Impairment expense - patents
Consolidated
2015
$
2014
$
1,316,493
1,316,493
911,740
911,740
39,705
3,021
114,643
63,100
220,469
1,536,962
80,204
129,478
89,561
70,456
369,699
1,281,439
Consolidated
2015
$
29,453
2,844
-
31,774
2014
$
66,802
2,146
293,948
17,272
64,071
380,168
23,616
8,716
117,981
135,471
3,100
162,900
10,000
-
27
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
9
Income tax (benefit)/expense
The components of income tax (benefit)/expense comprise
(a)
Current tax
Deferred tax
Deferred tax not recognised
Income tax (benefit)/expense
Consolidated
2015
$
2014
$
(242,826)
7,415
226,528
(8,883)
(322,340)
(72,434)
324,373
(70,401)
Reconciliation of income tax (benefit)/expense to prima facie tax payable
(b)
Profit/(loss) from operations before income tax (benefit)/expense
Tax at the Australian tax rate of 30% (2014 - 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable
income:
Non-deductible expense
Tax losses not recognised/(recouped)
Temporary differences (previously not recognised)/recognised
Under/over provision of income tax
Income tax (benefit)/expense
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 30% (2014 – 30%)
All unused tax losses were incurred by Australian entities.
(865,329)
(259,599)
(1,331,535)
(399,461)
24,188
242,826
(16,298)
-
4,686
300,621
23,753
-
(8,883)
64,080,927
19,224,278
(70,401)
63,359,787
19,007,936
The benefit for tax losses will only be obtained if:
(i)
(ii)
(iii)
the Group derives future assessable income of a nature and an amount sufficient to enable the benefit
from the deductions for the losses and temporary difference to be realised;
the Group complies with the conditions for deductibility imposed by the tax legislation; and
no changes in tax legislation adversely affect the Group in realising the benefit from deductions for the
losses and temporary differences.
In addition, the availability of certain tax losses is subject to the Group successfully establishing deductibility,
and in particular, satisfying the continuity of ownership test and the same business test.
Deferred Tax Liability
(c)
The deferred tax liability of $74,765 (2014: $83,647) relates to the brand name acquired on acquisition of
Science Developments Pty Ltd net of amortisation expense.
Tax consolidation legislation
(d)
The Company and its wholly-owned Australian subsidiaries have implemented the tax consolidation legislation
with effect from 1 July 2008.
10
Current assets - cash and cash equivalents
Cash at bank and on hand
Consolidated
2015
$
926,394
926,394
2014
$
1,747,861
1,747,861
The accounts are interest bearing at interest rates between 1.9% and 2.90% (2014 – 2.45% and 3.50%).
11
Current assets - trade and other receivables
Trade debtors
Other receivables
Financial assets classified as trade & other receivables
Prepayments
Income tax receivable
Total trade & other receivables
Consolidated
2015
$
301,833
18,736
320,569
537
5,425
326,531
2014
$
129,563
22,753
152,316
11,634
25,568
189,518
28
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
Provision for impairment of receivables
(a)
Current trade and other receivables are generally on 30-day terms. A provision for impairment is recognised
when there is objective evidence that an individual trade or other receivable is impaired. These amounts have
been included in the other expenses item.
Credit Risk — trade and other receivables
(b)
The Group has no significant concentration of credit risk with respect to any single entity or any geographical
region other than those receivables specifically provided for and mentioned within this note.
The class of assets described as trade and other receivables is considered to be the main source of credit risk
related to the Group. The Group does not hold any financial assets with terms that have been renegotiated,
which would otherwise be past due or impaired.
The following table details the Group’s trade receivables exposed to credit risk with ageing analysis and
impairment provided for thereon. Amounts are considered as ‘past due’ when the debt has not been settled,
with the terms and conditions agreed between the Group and the customer or counterparty to the transaction.
Receivables that are past due are assessed for impairment by ascertaining solvency of the debtors and are
provided for where there are specific circumstances indicating that the debt may not be fully repaid to the
Group.
The balances of trade receivables that remain within initial trade terms (as detailed in the table) are considered
to be of high credit quality. All other receivables are within trade terms for the years 2015 and 2014.
2015
Gross
amount
Past due
and
impaired
Past due but
not impaired
Within initial
trade terms
$
Trade debtors 301,833
Total
301,833
$
-
-
< 30
$
151,048
151,048
31-60
$
94,255
94,255
61-90
$
> 90
$
$
-
-
56,530
301,833
56,530
301,833
2014
Gross
amount
Past due
and
impaired
Past due but
not impaired
Within initial
trade terms
$
Trade debtors 129,563
Total
129,563
$
-
-
< 30
$
106,612
106,612
31-60
$
17,589
17,589
61-90
$
5,362
5,362
> 90
$
-
-
$
129,563
129,563
There is no trade debtor or other receivable amounts where collateral has been received as security or pledged.
12
Current assets - Inventories at cost
Stock on hand – Chemicals at cost
Spares and reagents – finished goods
13
Non current assets - other financial assets
Financial assets available for sale
Shares in listed companies, at market value
Shares in unlisted companies, at cost
Consolidated
2015
$
-
255,777
255,777
2014
$
9,110
185,410
194,520
Consolidated
2015
$
54,300
2,900
57,200
2014
$
39,300
2,900
42,200
29
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
The Group holds an investment in Bass Metals Ltd (BSM) of 18,100,000 shares. The closing market price at 30
June 2015 was 0.3 cents (2014:0.2 cents), which represented an increase in value of the BSM shares to
$54,300. A revaluation of $18,100 was recorded against the asset revaluation reserve.
The Group also held an investment in Bass Metals Ltd options which expired on 30 September 2014. The value
of the options at the time was $3,100. A loss was therefore recorded in the consolidated statement of profit or
loss and other comprehensive income.
14
Non current assets - Plant and equipment
Consolidated
Year ended 30 June 2013
Movement in carrying amounts
Opening net book amount
Additions through business combinations (note 4)
Additions
Disposals
Office
equipment
$
Plant and
equipment
$
Burnie
Research
Facility
$
Total
$
3,278
6,997
-
-
197,835
110,179
85,245
299,987
501,100
-
-
117,176
85,245
(39,999)
(6,039)
(46,038)
Depreciation charge
(2,146)
(66,802)
(293,948)
(362,896)
Closing net book amount at 30 June 2014
8,129
286,458
-
294,587
Cost or fair value
Accumulated Depreciation
32,796
584,392
5,928,365
6,545,553
(24,667)
(297,934)
(5,928,365)
(6,250,966)
Net book amount at 30 June 2014
8,129
286,458
-
294,587
Office
equipment
Plant and
equipment
Burnie
Research
Facility
Total
Consolidated
Year ended 30 June 2014
Movement in carrying amounts
Opening net book amount
Additions
Disposals
Depreciation charge
8,129
286,458
-
-
115,343
(156,310)
(2,844)
(29,453)
Closing net book amount at 30 June 2015
5,285
216,038
Cost or fair value
Accumulated Depreciation
31,028
319,312
(25,743)
(103,274)
Net book amount at 30 June 2015
5,285
216,038
15
Non current assets - Intangible assets
Intellectual property – Patents
Opening net book amount
Disposals
Closing net book amount at 30 June
Identified intangibles – Trademarks and IP
Opening net book amount
Acquired during the year
Amortisation of trademarks
Closing net book amount at 30 June
-
-
-
-
-
-
-
-
294,587
115,343
(156,310)
(32,297)
221,323
350,340
(129,017)
221,323
Consolidated
2015
$
10,000
(10,000)
-
2014
$
10,000
-
10,000
278,827
11,834
-
296,100
(31,774)
(17,273)
258,887
278,827
30
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
Goodwill on consolidation
Opening net book amount
Acquired during the year
Closing net book amount at 30 June
Total closing net book amount at 30 June
Consolidated
2015
$
1,030,018
-
2014
$
-
1,030,018
1,030,018
1,030,018
1,288,905
1,318,845
The recoverable amount of goodwill has been determined by a value-in-use calculation using a discounted
cashflow model based on a 5 year projection based on the group’s financial budget, and a terminal value
multiple. The final 4 of those years are based on an extrapolation of the prepared budget for year 1. Key
assumptions in the discounted cashflow model include:
a. Post-tax discount rate of 8% per annum;
b. Revenue growth of 97% in 2016, 25% in 2017 reducing to 13% in 2018;
c. Growth in gross margin of 76% in 2016, 27% in 2017 reducing to 13% in 2018; and
d. Average per annum increase in operating expenses of 13%.
The recoverable amount of goodwill calculated as described above exceeded the amount detailed in this note.
Sensitivity to change of assumptions
If the next year’s financial budget used in the value in use calculation had been 10% lower than management’s
estimates at 30 June 2015, the Group would have a recoverable amount in excess of $140,000 against the
carrying amount of intangible assets and property, plant and equipment.
If the post-tax discount rate applied to the cash flow projections of this CGU had been 2% higher than
management’s estimates (10% instead of 8%), the Group would have a recoverable amount in excess of
$195,000 against the carrying amount of intangible assets and property, plant and equipment. In 2013, there
were no reasonably possible changes in any of the key assumptions that would have caused the carrying
amount of the CGU to exceed its recoverable amount.
16
Current liabilities – Trade and other payables
Unsecured liabilities
Trade payables
Payables – related parties, refer to note 27
Employee entitlements
Less employee entitlements
Total financial liabilities
Current liabilities - Loans and Borrowings
17
Loans and borrowings current
Lease – Liability
Trade finance facility
Hire Purchase liability
Consolidated
2015
$
2014
$
177,754
100,000
33,892
311,646
(33,892)
201,249
100,000
35,618
336,867
(35,618)
277,754
301,249
38,830
216,636
-
255,466
8,565
115,662
13,366
137,593
The trade finance facility limit is $250,000 of which $33,364 was unused at 30 June 2015 (2014 - $134,338).
The facility is secured by way of a guarantee by a director related company of a director of Science
Developments Pty Ltd.
18
Current liabilities – Provisions
(a)
Long Service Leave
Balances
Consolidated
2015
$
77,406
2014
$
112,732
The provision for long service leave represents the present value of expected future payments to be made in
respect of services provided by employees up to the reporting date. Consideration is given to expected future
31
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
wage and salary levels, experience of employee departures and periods of service. Expected future payments
are discounted using market yields at the reporting date on corporate bonds with terms to maturity and
currency that match, as closely as possible, the estimated future cash outflows.
19
Loans and borrowings current
Non-current liabilities - Loans and Borrowings
Consolidated
Lease – Liability
2014
$
64,774
64,774
The lease liability relates to a finance lease for a motor vehicle provided to the Managing Director, the principal
use of which is business and a finance lease for plant and equipment owned by Science Developments Pty Ltd.
The motor vehicle lease liability is effectively secured over the motor vehicle. The shareholders of Science
Developments Pty Ltd have provided guarantees for the finance lease relating to plant and equipment.
2015
$
113,718
113,718
20
Contributed equity
(a)
Share capital
Ordinary shares
(b) Movements in ordinary share capital
2015
Details
Notes
(b)(c)
2015
Shares
299,818,669
2014
Shares
299,818,669
Number of
shares
Issue
price
(cents)
$
01-07-2014
Balance at beginning of year
299,818,669
71,641,977
Shares issued during the year
30-06-2015
Balance at end of year
2014
01-07-2013
30-06-2014
Balance at beginning of year
Shares issued during the year
Balance at end of year
-
299,818,669
299,818,669
-
299,818,669
-
-
-
71,641,977
71,641,977
-
71,641,977
Ordinary shares
(c)
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of shares held. On a show of hands every holder of ordinary shares present at a
meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
Options
(d)
Information relating to the Intec Employee Share Scheme (the Scheme), including details of options issued,
exercised and lapsed during the financial year and options outstanding at the end of the financial year, is set
out in Notes 21 and 31.
Capital Management
(e)
Management controls the capital of the Group in order to maintain a good debt to equity ratio and ensure that
the Group can fund its operations and continue as a going concern. The Group’s debt and capital includes
ordinary share capital and financial liabilities supported by financial assets. There are no externally imposed
capital requirements.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its
capital structure in response to changes in these risks and in the market. These responses include the
management of debt levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Group since
the prior year. The quantitative data the Group assesses as capital is $2,243,129 which is consistent with the
net assets of the Group (2014: $3,051,918).
32
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
21
Options
The terms and conditions of each grant of options affecting remuneration in the previous, this or future
reporting periods are as follows:
Issue
Date
Expiry
Date
Exercise
Price
Balance
at
1 July 2014
Granted
during
year
Lapsed
during
year
Exercised
during
year
09-12-20111 21-11-2016
10-12-20142 28-11-2019
Total Options on issue
$0.030
$0.025
3,300,000
-
3,300,000
-
5,500,000
5,500,000
1. Granted under previous Intec Option Plan.
2. Granted under Intec Employee Share Scheme (Refer Note 31)
-
-
-
-
-
-
Vested &
exercisable as
at
30 June 2015
3,300,000
5,500,000
8,800,000
22 Reserves
Reserves
(a)
Balance 1 July, 2013
Option expense
Balance 30 June 2014
Balance 1 July 2014
Option expense
Revaluation
Balance 30 June 2015
Asset
revaluation
reserve
-
-
-
Consolidated
Share based
payments
reserve
Total
2,624,037 2,624,037
-
2,624,037 2,624,037
-
-
-
18,100
18,100
2,624,037 2,624,037
29,557
18,100
2,653,594 2,671,694
29,557
-
(b)
Nature and purpose of reserves
Share based payments reserve
The share based payments reserve records the value of options issued by the Company.
Asset revaluation reserve
The reserve is used to recognise increments and decrements in the fair value of financial assets available for
sale. Refer to Note 13.
23
Non-controlling interest
Issued capital
Reserves
Retained earnings
Balance 30 June 2015
Consolidated
2015
$
9,005
101,575
36,952
147,532
2014
$
9,005
101,575
77,277
187,857
The non-controlling interest at 30 June 2015 is a 50% equity holding in Science Developments Pty Ltd.
The non-controlling interest at 30 June 2014 was a 50% equity holding in Intec International Projects Pty Ltd
and a 50% equity holding in Science Developments Pty Ltd.
Refer to Note 29 for further details of subsidiaries with non-controlling interests that are material to the
consolidated entity.
33
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
24
Contingencies
Contingent assets
(a)
The Group holds a 2.5% net smelter royalty in relation to future base metals extracted from certain tenements
in the Hellyer/Que River region of Tasmania. The Group also holds a mining lease and retention licence covering
a stockpile of zinc-bearing residue near Zeehan, Tasmania.
As a result of a transaction entered into by Intec International Projects Pty Ltd (“IIP”) with Monument Mining
Limited, a company listed on the Toronto Stock Exchange, Intec is entitled to receive a 5% royalty on fees
generated by IIP in relation to Intec Process applications. In addition, Intec retains its rights to its portion of
unpaid fees relating to the IRC Project. This transaction occurred after Intec divested its 50% shareholding in
IIP.
(b)
The parent entity and Group had no contingent liabilities at 30 June 2015 (2014- nil).
Contingent liabilities
25
Commitments
(a)
There are no commitments for capital expenditure at the reporting date.
Capital commitments
(b)
The Group leases a motor vehicle under a five year non-cancellable finance lease.
Lease commitments
Commitments for minimum lease payments in relation to a non-cancellable
finance lease is payable are as follows:
Within one year
Later than one year but not later than five years
Total commitment
Deduct future finance charges
Lease liability
Consolidated
2015
$
2014
$
49,100
133,112
182,212
(29,664)
152,548
16,329
83,900
100,229
(26,890)
73,339
The motor vehicle related finance lease has a written down value of $63,598 and the lease expires within five
years. The terms of the lease provide for the Group to acquire the motor vehicle for an agreed residual value at
the end of the lease period.
Lease commitments include a contracted amount for plant and equipment with a written down value of $89,150
(2014: $Nil) secured under Chattel mortgage expiring within three years and secured by the shareholders of
Science Developments Pty Limited.
Tenement commitments
(c)
There are no minimum annual expenditure requirements attached to the tenements held by the Group. Details
of tenements held are shown in the Schedule of Tenements on page 43.
26
Financial instruments
Significant accounting policies
(a)
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the
basis of measurement, and the basis on which income and expenses are recognised, with respect to each class
of financial asset, financial liability and equity instrument are disclosed in Note 1 and Note 2 to the financial
statements.
(b)
The Group and the parent entity hold the following financial instruments:
Categorisation of financial instruments
Financial assets
Cash and cash equivalents (Note 10)
Receivables (Note 11)
Consolidated
Carrying amount
2015
2014
$
$
926,394
1,747,861
320,569
152,316
34
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
Other financial assets (Note 13)
Financial liabilities
Trade and Other Payables (Note 16)
Loans and borrowings (Notes 17 & 19)
27
Related party transactions
(a)
The parent entity within the Group is Intec Ltd.
Parent entities
(b)
Interests in subsidiaries are set out in Note 29.
Subsidiaries
2015
$
2014
$
57,200
42,200
1,304,163
1,942,377
277,754
369,184
646,938
301,249
202,367
503,616
Key management personnel
(c)
Disclosures relating to key management personnel are set out in the Remuneration Report on pages 5 to 8.
There were no outstanding loans with key management personnel.
Short-term employee benefits
Termination benefits
Post-employment benefits
Share-based payments
(d)
The following transactions occurred with related parties:
Transactions with related parties
Transaction with subsidiary
(i)
The parent company, Intec Ltd, provided an unsecured loan, on commercial
terms, to its 50% owned subsidiary Science Developments Pty Ltd.
2015
$
402,279
110,292
34,551
26,870
573,992
2014
$
473,575
-
41,753
-
515,328
2015
$
2014
$
100,000
50,000
(ii) Mr Reza Maghzian
At 30 June 2014, Mr Reza Maghzian, a director and 50% shareholder of Intec International Projects Pty Ltd paid
Intec Ltd $63,195 for the transfer of certain patents to Intec International Projects Pty Ltd and associated cross
licensing of intellectual property between the two companies. On 30 September 2014, Mr Reza Maghzian also
entered into an agreement to acquire Intec Ltd’s 50% shareholding in Intec International Projects Pty Ltd for
$50,000 and the granting of certain rights to Intec Ltd.
(iii) Mr Paul Pembroke and Mr Mark Wells
Mr Paul Pembroke and Mr Mark Wells, directors and shareholders of Science Developments Pty Ltd, both
provided unsecured loans of $50,000 (2014: $25,000) on commercial terms to Science Developments Pty Ltd.
The balance outstanding at year end was $100,000 (2014: $50,000).
(e)
Loans to subsidiaries
Beginning of the year
Loans advanced/(received)
End of year
Consolidated
2015
$
57,226,332
(61,841)
2014
$
57,498,439
(272,107)
57,164,491
57,226,332
Less provision for doubtful debts
(57,064,491) (57,176,332)
Carrying value at end of year
100,000
50,000
35
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
Provisions for doubtful debts have been raised in relation to outstanding balances, and an expense has been
recognised in respect of debts due from subsidiaries, which may be considered doubtful based on the net assets
of each subsidiary. The movement in the provision mirrors to the movement in loan balances detailed above.
Terms and conditions
(f)
All transactions were made on normal commercial terms and conditions, except that there are no fixed terms
for the repayment of loans between the parties. However, the Directors determined the loans to be interest free
from 1 July 2010, with the exception of the loan to Science Developments Pty Ltd, which bears an interest rate
of 6.0%pa. All outstanding balances are unsecured and are repayable in cash.
28
Parent entity disclosures
(a)
Financial position
Assets
Current assets
Non current assets
Total assets
Liabilities
Current liabilities
Non current liabilities
Total liabilities
Equity
Issued capital
Accumulated losses
Reserves
Option expense reserve
Asset revaluation reserve
Total equity
(b)
Financial performance
Profit/(Loss) for the year
Other comprehensive income
Total comprehensive loss
Consolidated
2015
$
2014
$
940,055
1,523,751
2,463,806
1,703,365
1,517,639
3,221,004
120,733
132,608
253,341
247,063
64,774
311,837
71,948,494
71,948,494
(72,317,715) (71,621,354)
2,561,586
18,100
2,210,465
2,532,029
49,998
2,909,167
(696,360)
18,100
(678,260)
(605,312)
-
(605,312)
(c)
subsidiaries.
There have been no guarantees entered into by the parent entity in relation to the debts of its
There were no contingent liabilities of the parent entity at 30 June 2015.
There were no commitments for the acquisition of property, plant and equipment by the parent entity at 30
June 2015.
Subsidiaries
29
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries
in accordance with the accounting policy described in Note 1.
Name of entity
Country of
incorporation
Class of shares
Investments held by Intec Ltd
Intec Copper Pty Ltd
Intec Envirometals Pty Ltd
Science Developments Pty Ltd
Intec International Projects Pty Ltd (sold 30/9/2014)
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Various
Ordinary
Equity holding
2014
%
2015
%
100
100
50
-
100
100
50
50
Investments held by Intec Envirometals Pty Ltd
Intec Zeehan Residues Pty Ltd (formerly Encore
Metals NL)
Australia
Ordinary
100
100
36
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
Intec Ltd has the power to govern the financial and operating policies of Science Developments Pty Ltd so as to
obtain benefits from its activities. The investment in Intec International Projects Pty Ltd was sold on 30
September 2014 for $50,000. Refer to Note 5.
Summarised financial information of the subsidiary with non-controlling interests that are material to the
consolidated entity are set out below:
Assets
Current assets
Non current assets
Total assets
Liabilities
Current liabilities
Non current liabilities
Total liabilities
Net Assets
Summarised statement of profit or loss and other comprehensive income
(Loss) /Profit before income tax expense
Income tax benefit
(Loss )/Profit after income tax expense
Other comprehensive income
Total comprehensive income
Statement of cashflows
Net cash from operating activities
Net cash used in investing activities
Net cash from financing activities
Net increase/decrease in cash and cash equivalents
Other financial information
(Loss)/Profit attributable to non-controlling interests
Accumulated non-controlling interests at end of reporting period
30
Profit/(loss) per share
Basic profit/(loss) per share
(a)
Profit/(Loss) per share from continuing operations
attributable to the ordinary equity holders of the company
Diluted profit/(loss) per share
(b)
Diluted profit/(loss) per share from continuing operations
attributable to the ordinary equity holders of the company
2015
$
559,414
164,550
723,964
544,839
58,516
603,355
120,609
2014
$
396,378
105,661
502,039
323,302
-
323,302
178,737
(58,126)
-
(58,126)
-
(58,126)
(74,379)
21,719
(52,660)
-
(52,660)
(51,899)
(100,982)
129,209
(23,672)
1,532
-
61,863
63,395
(29,063)
147,532
(26,330)
186, 957
Consolidated
2015
Cents
2014
Cents
(0.30)
(0.42)
(0.30)
(0.42)
Reconciliations of profit/(loss) used in calculating earnings per share
(c)
Basic profit/(loss) per share
Profit/(Loss) attributable to the ordinary equity holders of the company used
in calculating basic profit/(loss) per share
from continuing operations
Diluted profit/(loss) per share
Diluted profit/(loss) attributable to the ordinary equity holders of the company
used in calculating basic profit/(loss) per share
from continuing operations
(904,637)
(1,261,134)
(904,637)
(1,261,134)
(904,637)
(1,261,134)
(904,637)
(1,261,134)
37
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
(d) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in
calculating basic profit/(loss) per share
Weighted average number of dilutive options outstanding
Weighted average number of ordinary shares used as the denominator in
calculating diluted profit/(loss) per share
(e)
Information concerning the classification of securities
2015
Number
2014
Number
299,818,669
6,050,000
299,818,669
3,300,000
305,868,669
303,118,669
Diluted profit/(loss) per share
In the 2014 and 2015 comparative financial year, potential ordinary shares being the balance of options
granted at balance date are not considered dilutive as the conversion of these components to equity would
result in a decrease in the net loss per share.
Options
Options granted to employees under the Intec Employee Share Scheme and to other entities have been included in
the determination of diluted profit/(loss) per share. No options have been included in the determination of basic
profit/(loss) per share. Details relating to the options are set out in note 21.
31
Share based payments
Employee Share Scheme
At the 2014 Annual General Meeting, shareholders approved the Intec Employee Share Scheme (the Scheme).
The Scheme replaced the previous Intec Option Plan, which had been approved at the 2001 Annual General
Meeting. All directors, employees and consultants are eligible to participate in the Scheme. Options granted
under the Scheme to eligible participants are for no additional consideration. Options are granted for a five year
period, and vest and are exercisable immediately, unless otherwise stated. Options granted under the Scheme
carry no dividend or voting rights. The granting of options is at the Board’s discretion and no individual has a
contractual right to receive options.
The terms and conditions of each grant of options affecting remuneration in the previous, this or future
reporting periods are as follows:
Issue
Date
Expiry
Date
Exercise
Price
Balance
at
1 July 2014
Granted
during
year
Lapsed
during
year
Exercised
during
year
09-12-20111 21-11-2016
10-12-2014 28-11-2019
Total Options on issue
$0.030
$0.025
3,300,000
-
3,300,000
-
5,500,000
5,500,000
-
-
-
-
-
-
1. Granted under previous Intec Option Plan.
Vested &
exercisable as
at
30 June 2015
3,300,000
5,500,000
8,800,000
The assessed fair value at grant date of options granted under the Scheme is allocated equally over the period
from grant date to vesting date, and the amount is included in remuneration. Fair values at grant date are
independently determined using option valuation models that take into account the exercise price, the term of
the option, the impact of dilution, the share price at grant date, the expected price volatility of the underlying
share, the expected dividend yield and the risk free interest rate for the term of the option. There were
5,500,000 employee options granted during the year (year ending 30 June 2014 – nil). The fair value of the
options at grant date was $29,557.
Shares provided on exercise of remuneration options
No ordinary shares (30 June 2014 - Nil) in the Company were provided as a result of the exercise of
remuneration options to eligible participants in the Scheme. Accordingly, there were no expenses arising from
share based payment transactions recognised in the statement of comprehensive income.
38
Intec Ltd 2015 Annual Report
Notes to the Financial Statements for the year ended 30 June 2015
32
Reconciliation of profit/(loss) after income tax to net cash flows from operating activities
Operating profit/(loss) after income tax
Non cash items and non operating cash flows
included in statement of comprehensive income
Administration expenses
Depreciation and amortisation
(Recouped)/expensed environmental bond
Impairment expense
Share based payments
Gain on sale of non-current assets
Fair value movement on inventory
Deferred tax liability on acquisition
Changes in assets and liabilities
Decrease/(increase) in trade and other receivables
Decrease/(increase) in inventories
Increase/(decrease) in trade creditors
Increase/(decrease) in trade finance facility
Increase/(decrease) in provisions
Increase/(decrease) in deferred tax liability
Net cash (outflows)/inflows from operating activities
33
Auditor’s remuneration
Assurance services
a.
Audit services
Audit and review of financial reports and other audit work under the
Corporations Act 2001
Consolidated
2015
$
2014
$
(856,446)
(1,261,134)
-
64,071
13,100
29,557
(164,643)
-
-
(137,013)
(61,257)
(23,494)
100,974
(37,052)
(8,882)
(1,081,085)
38,119
380,168
-
162,900
-
(89,561)
145,000
(132,330)
66,001
(9,650)
(130,460)
115,662
(2,973)
83,648
(634,610)
Consolidated
2015
$
2014
$
Rothsay Chartered Accountants
Crowe Horwath Sydney
28,500
-
-
71,000
No other services have been provided.
34
Company details
The registered office and principal place of business is Level 3, 100 Mount Street, North Sydney NSW 2060.
35
Events occurring after the reporting date
Since 30 June 2015, Science Developments Pty Ltd has commenced export sales to New Zealand under a
distribution agreement with Apex Environmental Ltd and the first Optiflox® system is currently being installed
at a large thermal coal mine in NSW. In addition, the Group has sold a significant portion of its shareholding in
Bass Metals Ltd for receipts of approximately $165,000.
There are no other matters or circumstances that have arisen since 30 June 2015 that have significantly
affected or may significantly affect the consolidated entities operations, the results of these operations, or the
consolidated entities state of affairs in future financial years.
These financial statements were authorised by the Board of Directors on 30 September 2015.
39
Intec Ltd 2015 Annual Report
Directors’ Declaration
In the directors’ opinion:
(a)
(b)
(c)
(d)
(e)
the financial statements and notes set out on pages 11 to 39 are in accordance with the Corporations Act
2001, including:
(i)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
giving a true and fair view of the consolidated financial position as at 30 June 2015 and of its
performance for the financial year ended on that date; and
(ii)
there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable; and
the remuneration disclosures set out on pages 5 to 8 of the Directors’ Report comply with Accounting
Standard AASB 124 Related Party Disclosures and the Corporations Regulations; and
The financial statements comply with International Financial Reporting Standards as described in Note 1
to the financial statements; and
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 directors.
Kieran Rodgers
Managing Director
Sydney
30 September 2015
40
INDEPENDENT AUDITOR’S REPORT
To the members of Intec Limited
Report on the Financial Report
We have audited the accompanying financial report of Intec Limited, which comprises the consolidated
statement of financial position as at 30 June 2015, the consolidated statement of profit or loss and other
comprehensive income, the consolidated statement of changes in equity and the consolidated statement of
cash flows for the year then ended, notes comprising a summary of significant accounting policies and other
explanatory information, and the directors’ declaration of the consolidated entity comprising the company and
the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the
directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial statements comply with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit
in accordance with Australian Auditing Standards. Those standards require that we comply with relevant
ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable
assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor’s judgement, including the assessment of
the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the company’s preparation of the financial
report that gives a true and fair view in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation
of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act
2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of Intec Limited, would be in the same terms if given to the directors as at the time of
this auditor’s report.
41
Opinion
In our opinion:
(a)
the financial report of Intec Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015 and of
its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in Note
1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 5 to 8 of the directors’ report for the year
ended 30 June 2015. The directors of the company are responsible for the preparation and presentation of
the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is
to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Intec Limited for the year ended 30 June 2015 complies with
section 300A of the Corporations Act 2001.
Rothsay Chartered Accountants
Frank Vrachas
Partner
Sydney, 30 September 2015
42
Intec Ltd 2015 Annual Report
Schedule of Tenements
At 30 June 2015 the Group held the following tenements:
Tenement number Tenement name
Expiry
date
Area
Km2
Security
deposits
held
Annual
expenditure
commitments
$
$
Tenements held by Intec Zeehan Residues Pty Ltd
Mining Lease
6M/2010
Retention Licence
RL 3/1996
Zeehan
Zeehan
5 January 2016
26 March 2016
0.4
1.00
6,000
5,000
Nil
Nil
The Group also holds a 2.5% Net Smelter Return Royalty (NSR Royalty) in relation to base metals extracted
from the following Tasmanian tenements:
RL11/1997: Mt Charter Retention Licence;
EL48/2003: Mt Block Exploration Licence;
EL24/2004: Bulgobac River Exploration Licence;
CML103M/1987: Hellyer Mine Lease; and
ML68M/1984: Que River Mine Lease.
Shareholder Information
The shareholder information set out below was applicable as at 24 September 2015.
A.
Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
1
1,001
5,001
10,001
-
-
-
-
100,001 and over
1,000
5,000
10,000
100,000
Class of equity security
Ordinary shares
Number of shareholders
124
148
85
320
256
933
Number of shares
47,836
427,137
661,134
16,527,208
282,155,354
299,818,669
B.
Substantial holders
Substantial shareholders as at 24 September 2015 are listed below:
Kieran Gregory Rodgers & Patricia Maree Rodgers
Kathleen Frances Watt
Donald Alexander Bell & Lexie Ann Bell
6.67%
6.14%
5.00%
43
Intec Ltd 2015 Annual Report
C.
Equity security holders
The names of the twenty largest holders of quoted equity securities as at 24 September 2015 are listed below:
Name
Kieran Gregory Rodgers & Patricia Maree Rodgers
Kathleen Frances Watt
Donald Alexander Bell & Lexie Ann Bell
Martin Edward Meyer
Longwin Capital Finance Ltd
Stuart Andrew Spiteri
Markham Hanna & Rita Hanna
Paul Michael Butcher
PW Pembroke Pty Ltd
Pembroke Four Pty Ltd
J P Morgan Nominees Australia Ltd
Warinco Services Pty Limited
Orian Holding Corp
Ianaki Semerdziev
Rhett Anthony Morson
Platypus Superannuation Pty Ltd
Corporate Property Services Pty Ltd
UBS Wealth Management Australia Nominees Pty Ltd
Stephen Leslie McMartin
Ronnoc Developments Pty Ltd
Total of Top 20 Shareholdings
Other Shareholders
Total Ordinary Shares on Issue
D.
Voting rights
Ordinary shares
Number held
20,004,624
18,416,667
15,000,000
14,666,667
14,666,667
13,250,000
13,030,000
9,322,828
7,717,821
6,600,000
6,245,827
4,122,500
4,117,484
3,500,000
3,250,000
3,100,000
3,000,000
3,000,000
2,500,000
2,443,000
167,954,085
131,864,584
299,818,669
Percentage of
issued shares
6.67
6.14
5.00
4.89
4.89
4.42
4.35
3.11
2.57
2.20
2.08
1.37
1.37
1.17
1.08
1.03
1.00
1.00
0.83
0.81
56.02
43.98
100.000
The voting rights attaching to each class of equity securities are set out below:
(a) Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and
upon a poll each share shall have one vote.
(b) Options
No voting rights.
E.
Summary of options issued
No. of
options
No. of
Holders
% Options
Issued
Options expiring 21 November 2016 with an exercise price of $0.03
Option holders with more than 20% of above class
K G Rodgers
D L Sammut
These options are unquoted equity securities.
Options expiring 28 November 2019 with an exercise price of $0.025
Option holders with more than 20% of above class
K G Rodgers
D J Cronin
These options are unquoted equity securities.
3,300,000
5
1,200,000
1,000,000
5,500,000
4
2,000,000
2,000,000
36.36%
30.30%
36.36%
36.36%
44
Intec Ltd 2013 Annual Report
Corporate Directory
Directors
Chairman
Trevor A Jones
Managing Director
Kieran G Rodgers
Non-executive Director
Daniel J Cronin
Company Secretary
Robert J Waring
Registered Office
Level 3,100 Mount Street
North Sydney NSW 2060 Australia
PO Box 1507
North Sydney NSW 2059 Australia
Telephone: (+61 2) 9954 7888
Email: mail@intec.com.au
Website: www.intec.com.au
Share Registry
Boardroom Pty Limited
Level 12, 225 George Street
Sydney NSW 2000 Australia
GPO Box 3993
Sydney NSW 2001
Telephone: (+61 2) 9290 9600
Facsimile: (+61 2) 9279 0664
Email: enquiries@boardroomlimited.com.au
Website: www.boardroomlimited.com.au
Rothsay Chartered Accountants Sydney
Auditors
Level 1, 12 O’Connell Street
Sydney NSW 2000 Australia
Patent Attorneys
Griffith Hack
100 Miller Street
North Sydney NSW 2060 Australia
Stock Exchange and Trading Platform Listings
Intec Ltd shares are listed or traded on
the Australian Stock Exchange (Code: INL),
the Deutsche Boerse (Code: INF),
and as American Depository Receipts on:
the OTC Markets (Code: ICLJY)
45
ASX CODE:INL ABN : 25 001 150 849