ENERGY TECHNOLOGIES LIMITED
ABN 38 002 679 469
Annual Financial Report
for the year ended 30 June 2020
Energy Technologies Limited – 2020 Annual Report
Corporate Information
ABN 38 002 679 469
Directors
Alfred J. Chown (Chairman/Managing Director)
Gary A. Ferguson (Non-Executive Director)
Philip W. Dulhunty (Non-Executive Director)
Yulin Hu (Non-Executive Director)
Matthew Driscoll (Non-Executive Director)
Meiping Hu (Alternate Director to Yulin Hu)
Company Secretary
Gregory R. Knoke
Registered Office
Unit J, 134-140 Old Pittwater Road
BROOKVALE NSW 2100
Bankers
National Australia Bank Limited
NAB House, 255 George Street
SYDNEY NSW 2000
Share Register
Computershare Investor Services Pty Ltd
60 Carrington Street
Sydney NSW 2000
Telephone:- (02) 8234 5000
Facsimile:- (02) 8235 8150
Auditors
Grant Thornton Audit Pty Ltd
Level 17
383 Kent Street
SYDNEY NSW 2000
Telephone:- (02) 8297 2400
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Energy Technologies Limited – 2020 Annual Report
Contents
Chairman’s Report
Directors’ Report
Remuneration Report (audited)
Corporate Governance Statement
Auditor’s Independence Declaration
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
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Energy Technologies Limited – 2020 Annual Report
Chairman’s Report
With Energy Technologies Limited (EGY) wholly owned subsidiary Bambach Wires and Cables Pty Ltd
(Bambach’s) move to its Rosedale facility nearing completion and the company in a much better position
generally, the company will undertake a Board refresh. In line with corporate governance guidelines, I will also
step down as Chairman of EGY to focus on the Managing Director role.
FY 2020, which started out with such promise, was derailed by Covid-19 for most companies globally. EGY
together with subsidiary Bambach was no exception. Travel restrictions brought on by the first wave of Covid-19
and then intensified during the second wave in Victoria heavily impacted the already delayed move of equipment
from Bambach’s Sydney factory to its new Rosedale site. This interrupted installation programmes and caused
production delays with a resultant slump in sales in the last quarter of the financial year. The company ended up
generating sales revenues of $10m which was significantly down on last year’s sales revenue of $12.6m and on
forecast sales for the FY.
Strategically EGY and BWC are well positioned with a regional base, vastly increased manufacturing capacity
coming on stream, and local manufacture at a time of increased geopolitical instability. These factors were
instrumental in enabling the company to raise significant capital during the period to offset losses brought on by
the disruption caused by Covid-19 and to support continued planned investment.
At the time of writing significant progress has been made with cost reduction. The Sydney factory has been
closed and most Sydney staff who determined not to relocate have been made redundant. As a result, significant
month to month cost savings in the region of $1m per annum has been realised.
Production at the new facility in Rosedale has improved and is now achieving some 1.5 times Sydney volumes
but with only one shift compared to Sydney’s two. Further production gains are expected as a second shift and
later a third is implemented on the back of newly appointed operators building experience and confidence.
Some equipment, materially four machines, remain to be fully installed but all are in place, and are substantially
fitted and wired. These will come on stream over the next quarter. In all over 65 machines both large and small
have been installed and commissioned and are now in production.
The Bambach business currently enjoys a strong order book to end October /early November 2020. It lacks stock
and is currently working to build stock back to required levels. This will greatly increase day to day sales and
reduce dependence on the project side of the business.
New products are ready to be launched and will be brought to market over the coming year adding further
revenue streams to the business.
Buy “local” sentiment accelerated by the Covid-19 pandemic, a push by the Federal and State Governments to
drive regionalism, increased infrastructure spending and massive Defence spending in response to the uncertain
geopolitical situation all auger well for EGY and Bambach given Bambach’s enhanced capacity and capability.
Alfred J Chown
Chairman
Sydney, 30 September 2020
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Energy Technologies Limited – 2020 Annual Report
Directors’ Report
The directors present their report, together with the financial statements, on the consolidated entity (referred to
hereafter as the ‘Group’) consisting of Energy Technologies Limited (referred to hereafter as the ‘Company’) and
the entities it controlled at the end of, or during, the year ended 30 June 2020.
DIRECTORS
The names and details of the Company's Directors in office during the year and until the date of this report are
as follows. Directors were in office for this entire period unless otherwise stated.
Names, qualifications, experience and special responsibilities
Alfred J. Chown, B.Econ, (Age 59) (Chairman/Managing Director) Appointed 4 July 1997.
Born in 1960, in Sale, Victoria, Mr Chown returned in 2012 from residing in Hong Kong. In 1987 he co-founded
E.L. Consult Ltd an executive search provider that prior to being sold to the Clarius group (ASX:CND) and
renamed Lloyd Morgan in March 2007, had an extensive network of offices throughout Hong Kong, China,
Singapore and Malaysia. Mr Chown continues to provide his services to Lloyd Morgan in a regional role. In the
early 1990’s Mr Chown also co-founded Dulhunty Engineering Ltd and in 1997 this company established
Dulhunty Yangzhou Line Fittings Co Ltd, a manufacturer of line fittings for the electric power transmission and
distribution industry. In 2003 Mr Chown was the driving force to merge these businesses together with Dulhunty
Industries Pty Limited of Australia to form Energy Technologies Limited. Mr Chown is a former Chairman of the
Australian Chamber of Commerce in Hong Kong and has extensive commercial experience in both Australia and
Asia. Mr Chown is also a member of the Remuneration and Nomination Committees of the company.
Philip W. Dulhunty OAM (Age 96) (Non-Executive Director) Appointed 3 December 2014
Founder of Dulhunty Power (Aust) Pty Limited, importers, exporters and distributors of electrical power
transmission equipment. Honorary Life Member and distinguished member of the international electrical
transmission industry body, CIGRE and Honorary Life Senior member of IEEE. Holder of Centenary Medal for
Contribution to Australian Industry. Mr Dulhunty was also the recipient of the Institute of Engineering and
Technology (IET) James N Kirby Medal in 2007. Mr Dulhunty was previously a Director of the company from 31
March 2003 to 1 October 2012. Mr Dulhunty is also a member of the Audit and Nomination Committees of the
company.
Gary A Ferguson CA (Age 77) (Non-Executive Director). Appointed 1 October 2012
Mr Ferguson is a qualified accountant. During his career, he has worked for manufacturing companies as a cost
accountant, lectured in accounting (post-certificate Cost Accounting) with the then Department of Technical
Education, developed the methodology associated with risk analysis profiles for capital expenditure projects in
both the cable and abrasive sectors and providing consultant services to these companies. Mr Ferguson
relocated to Mid-North Coast NSW in 1975 and gained a very broad level of experience, owning and operating
businesses in the construction, hospitality, heavy transport and earthmoving and quarry industries. In 1992 he
acquired a public practice in Kempsey, specializing in providing commercial clients with advice in corporate
structure, taxation, reporting and financial management areas, including providing associated legal services from
in house partners. Mr Ferguson is a Member of both Chartered Accountants Australia and New Zealand (CA)
and Certified Practising Accountants in Australia (CPA). Mr. Ferguson is also Chairman of the Audit Committee
and a member of the Nomination and Remuneration Committees of the company.
Yulin Hu (Age 52) (Non-Executive Director) Appointed 25 November 2015
Mr Yulin Hu is an Australian resident and leading businessman whose roles include the President of China City
Construction Holdings Limited, which owns a construction business in China with approximately 6bn RMB
(A$1.1bn) turnover.
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Energy Technologies Limited – 2020 Annual Report
Directors’ Report (Cont’d)
Meiping Hu (Age 31) (Alternate Director to Yulin Hu) Appointed 25 November 2015
Ms Meiping Hu has a Bachelor degree in Commerce at the University of South Australia and a Master of
Advanced Professional Accounting at Macquarie University. Ms Hu is currently a practising accountant and a
member of CPA Australia. Ms Hu works in Fujian HongSheng Construction Group Co., Ltd a subsidiary of China
City Construction Holdings Ltd, and had an accounting practice in Hong Kong. Ms Hu has been assisting Mr Hu
in various matters in Australia such as property investment and imports and exports.
Matthew Driscoll, BA, Dip Ed, Grad. Dip. App Fin. SF Fin., MSAA, GAICD (Age 56) (Non- Executive Director)
Appointed 20 December 2016
Mr Driscoll has significant experience across several industries, including online technologies, financial services,
fintech, property and resources. He has more than 30 years’ experience in capital markets and the financial
services industry and is an accomplished company director in roles across listed and private companies. He has
significant experience in international business growth, mergers and acquisitions, equity and debt raisings and
building strategic alliances, and remains committed to ethical, commercial and consumer-based outcomes.
Other Current Directorships: Chair Carbonxt Group (CGI), NED Blina Minerals (BDI), NED Eco Systems Limited
(ESL), NED Smoke Alarms Holdings.
Former Directorships (last 3 years): Chair Powerwrap Limited (PWL), Chair Killara Resources Limited (KRA),
Chair Buymyplace.com.au (BMP).
COMPANY SECRETARY
Gregory R. Knoke, B. Com, CA (Age 67) (Company Secretary and Chief Financial Officer) Appointed 30 April
2003.
Director of Cogenic Pty Limited. Mr Knoke was a director of Energy Technologies Limited from May 2000 until 30
April 2003, resigned upon acceptance of the position of CFO. Born in 1952, educated at University of NSW and
graduated in 1973 with major in accountancy, he holds a Bachelor of Commerce degree with merit. Mr Knoke is
a Chartered Accountant and Associate member of Chartered Accountants Australia and New Zealand since
1979, and an affiliate member of Chartered Secretaries of Australia. Business consultant and advisor, with
extensive work experience throughout Asia and Europe, Mr Knoke spent 13 years in Hong Kong as Asian Group
Financial Controller and Director for BIL Asia Holdings Limited and subsidiaries of the Brierley Investments
Limited Group.
PRINCIPAL ACTIVITIES
EGY’s principal activities during the year were:
• The manufacture and sale of specialist industrial cables through wholly owned subsidiary Bambach Wires
and Cables Pty Limited (BWC):
• Driving organic growth and organisational change in BWC;
• Seeking other products, businesses and opportunities for the Group.
REVIEW AND RESULTS OF OPERATIONS
Energy Technologies Limited (ASX: EGY) has reported a consolidated loss after tax and minorities for FY2020 of
$4,402,220 (FY2019 profit after tax and minorities $1,403,557). Wholly owned subsidiary Bambach Wires and
Cables Pty Ltd (BWC) reported a loss after tax of $3,374,589 (FY2019 loss $2,650,579). The FY 2020
consolidated result includes in Other Income $513,000 job keeper assistance received under federal government
legislation in support of business. The FY2019 consolidated result included a $5,357,429 profit on the conversion
of debt to equity.
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Energy Technologies Limited – 2020 Annual Report
Directors’ Report (Cont’d)
The Bambach business was substantially impacted in the last quarter FY2020 by continuing Covid-19 issues
which caused delays in transitioning production from the Sydney facility to the new Rosedale facility. This caused
production delays and necessitated carrying higher overheads longer than planned, substantially exacerbating
the loss.
The Sydney factory was fully re-located in June and handed back to the landlord in the first week of July. Rental
savings of more than $600,000 p.a. will now be realised. In addition, a significant number of Sydney factory staff
have now been made redundant and whilst Rosedale employee numbers have grown the net saving of not
having two factory workforces will deliver a substantial HR saving per annum. Equipment from Sydney has now
been re-installed in Rosedale except for one machine that is currently being installed. Since beginning the
project in March 2019 some 45 major pieces of equipment have been decommissioned, transported, re- installed
and are now fully commissioned and operating. Approximately 200 B-Double truckloads of equipment were
delivered to the Rosedale site from April 2019 to June 2020. This of course pales in comparison to the work
required to build the infrastructure required to support the machines - foundations, electric power, compressed
air, gas, water and building refurbishment, which overall was undertaken in house by locally employed Bambach
staff.
Production in Rosedale has improved dramatically since July 2020, and as production was ramped up, teething
issues were resolved and Operators became more experienced. A second shift initiated in May was retracted in
July to bring second shift operators back to day shift to receive extra training.
The current order book is strong and as production lead times improve it is expected that sales will grow.
Traditionally orders are strong through September/October/November, which should fit well with clearing order
backlogs and Bambach being able to offer short lead times for project orders particularly within the road and rail
infrastructure sector.
STATE OF AFFAIRS
During the financial year, the Group repaid $965,862 (2019: $411,389) of both long and short term interest
bearing debt.
In relation to the Going Concern position of the Group, please refer to the details set out in Note 1(c) to the
Financial Statements and the Subsequent Events Note.
DIVIDENDS
No dividends were paid or recommended by the parent company EGY this financial year.
NON-AUDIT SERVICES
During the year, Grant Thornton Audit Pty Ltd, the Company’s auditor, performed no other services in addition to
their statutory duties.
Details of the amounts paid to the auditor and their associates for audit services provided during the year are set
out in note 6 to the financial statements. In addition, amounts paid to other auditors for other statutory audit
services have been disclosed in that note.
EVENTS SUBSEQUENT TO REPORTING DATE
Energy Technologies Limited announced on 24 June 2020 a capital raising of up to $5 million, comprising a $1.6
million Placement and a non- renounceable Rights Issue for up to $3.4 million. Subsequent to 30 June 2020 the
completion of the Placement and the Rights Issue successfully raised $5 million through the allocation of
20,000,0000 ordinary shares in the placement, raising $1.6 million, and a further 42,500,000 ordinary shares
under the rights issue, raising a further $3.4 million.
There has not arisen since the end of the financial period any other matter of circumstance which, in the opinion
of the directors of the Company, significantly affects the operation of the Company, the results of those
operations, or the state of affairs of the Company in subsequent financial years.
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Energy Technologies Limited – 2020 Annual Report
Directors’ Report (Cont’d)
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Refer Subsequent Events note above.
Future Developments and Risks
Opportunities
Energy Technologies Ltd (EGY) 100% owned subsidiary, Bambach Wires and Cables Pty Ltd (Bambach) is now
producing all its products at its new Rosedale VIC facility. The transition from the Sydney factory to the new
Rosedale factory was some two to three months behind schedule. It was being then further significantly delayed
due the Covid-19 pandemic and resultant second wave in Victoria that restricted travel of technicians required to
install equipment.
All Bambach equipment but one machine (nearing completion), transferred from the former Sydney factory, has
now been installed and is operating, allowing the full range of Bambach products to be produced. To date
production capacity has been improving month on month and output with only one shift has now surpassed
Sydney’s two shifts by a factor of approximately 1.5 times. The addition of a second shift at the new facility over
the next few weeks, which is possible as operators gain experience and confidence, will further increase
capacity. The growth in capacity and output is in line with expectations with further improvement realisable not
only from extra shift time but also as production planning, operator skill and efficiency and better understanding
of equipment combinations (combining the Bambach equipment with the equipment from the Advance Cables
asset acquisition) in the production process is gained.
The recent capital raising and prospect of a further placement means that the business is adequately capitalised
ensuring adequate raw material supply to sustain growth which has been a failing of the company over recent
years.
Bambach has a series of new products to launch over the coming twelve months and is also well placed with
appropriate approvals to take full advantage of the expected fast tracking of infrastructure projects throughout
Australia that both the Federal and State Governments state they will undertake as a way out of the economic
chaos caused by Covid-19.
The fact that Bambach manufactures in Australia using Australian mined and processed copper places it at the
forefront of local content suppliers for low voltage cable and indications are that this will benefit the company as it
competes with imported products for Australian projects, especially for infrastructure and defence related
projects. Strategically the company at all levels is well placed to take advantage of renewed interest in Australian
manufacturing and regionalisation.
Risks
Subsidiary Bambach must continue to develop and upgrade its manufacturing facilities to enable it to meet
efficiency and productivity requirements and produce locally a continually expanding range and size of cables.
Failure to do so will substantially limit growth and will not allow anticipated margin improvement.
A rise in the AUD against the USD will impact negatively on the competitiveness of the business. At AUD/USD
0.80 the business may be less competitive with imports of like quality. A fall from this level is favourable to the
business whilst a rise is unfavourable.
Bambach is a small player in a market where there are several very large competitors and management are very
aware that to compete Bambach must maintain a point of difference. To this end it must continue with a very
active research and development agenda, developing new cables and continuously upgrading existing cables. It
must also continue to develop its manufacturing processes and adopt a continuous upgrade program. It must
also continue to excel in the level of service that it provides. Any failure in any of these areas will bring significant
risk to the business.
8
Energy Technologies Limited – 2020 Annual Report
Directors’ Report (Cont’d)
Bambach continues to report a loss and has not been profitable for an extended period. This weakness has been
supported financially by significant fund raising and investment, which has been successfully undertaken over
the past three years and continued in FY2020. The company must deliver to maintain the support of its
shareholders and financiers, and in this respect, it must deliver on the small objectives as well as the larger
objective of returning to profitability. Thus, it must continue to deliver on bringing new products to market and on
increasing productivity to build a robust sustainable business. Failure to meet accepted milestones on this path
will pose a risk to continued financial support.
The Group has based its business plan on the belief that both Federal and State governments will proceed with
planned infrastructure and defence spending. Now significant projects are proceeding. Any cancellation of these
plans or continued delay will impact negatively on the opportunities that lie ahead for the company.
The Group has developed products some of which still require final testing and approval. Any failure to pass
testing in a timely manner or not obtain approval will impact negatively on the company’s performance.
Like all businesses globally the threat of second and third waves of the Covid-19 pandemic pose significant risk
to the economy and to the group. Rising geopolitical tensions for the first time in many years also pose a
significant risk.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The group operates a factory in Rosedale, Victoria which is required to comply with local planning laws, and with
State and Commonwealth Environmental laws. The company considers that the factory operations are currently
compliant, and is not expecting any adverse impact as a result of the environmental regulation.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
Indemnification
The Company has entered into Deeds of Indemnity and Access with persons who are an Officer or Director of
the Company or a related body corporate, indemnifying such persons against a liability incurred by them in their
capacity as an Officer or Director, including costs and expenses of defending legal proceedings and providing
them with access to company records where a claim is made or threatened against such Officer or Director.
Insurance Premiums
The Company has not, during or since the end of the financial year, in respect of any person who is or has been
an auditor of the Company or a related body corporate paid or agreed to pay a premium in respect of a contract
insuring against a liability for costs or expenses of defending legal proceedings.
The Company has paid insurance premiums in respect of Directors' and Officers' liability and legal expense
insurance for Directors and Officers of the Company. In accordance with subsection 300(9) of the Corporations
Act 2001, further details have not been disclosed due to confidentiality provisions contained in the insurance
contract.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the company or 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 any part of those proceedings.
The company was not a party to any such proceedings during the year.
EMPLOYEES
The consolidated entity employed 73 employees as at 30 June 2020 (2019: 79 employees).
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Energy Technologies Limited – 2020 Annual Report
Directors’ Report (Cont’d)
REMUNERATION REPORT
The remuneration report is set out on page 12 and forms part of the Directors’ Report for the financial year
ended 30 June 2020.
DIRECTORS' MEETINGS
The numbers of meetings of Directors (including meetings of Committees of Directors) held during the year and
the number of meetings attended by each director were as follows:
Board of
Directors
Remuneration
Committee
Audit
Committee
Nomination
Committee
Number of meetings held:
Number of meetings attended:
Alfred J. Chown
Gary A. Ferguson
Philip W. Dulhunty
Matthew Driscoll
Yulin Hu
Meiping Hu (Alternate Director to Yulin Hu)
Committee Membership
7
7
7
5
7
6
1
1
1
1
-
1
-
-
4
-
4
1
4
-
-
1
1
1
-
-
-
-
At the date of this report, the company’s committees were comprised as follows:
Audit Committee:
Matthew Driscoll
Gary A. Ferguson
Philip W. Dulhunty
Nomination Committee:
Alfred J. Chown
Gary A. Ferguson
Philip W. Dulhunty
Remuneration Committee:
Matthew Driscoll
Alfred J. Chown
Gary A. Ferguson
INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY AND RELATED BODIES CORPORATE
The relevant interest of each director in the shares, and options over such instruments, issued by the companies
within the consolidated entity and other related bodies corporate, as notified by the directors to the Australian
Securities Exchange in accordance with S205G(1) of the Corporations Act 2001, at the date of this report is as
follows:
Energy Technologies Limited
Dulhunty
Engineering
Limited
Ordinary Shares
Options
Ordinary Shares
Alfred J. Chown
Gary A. Ferguson
Philip W. Dulhunty
Yulin Hu
Matthew Driscoll
-
-
-
-
-
59,724
-
-
-
-
8,243,575
1,154,044
1,417,195
3,476,058
1,534,339
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Energy Technologies Limited – 2020 Annual Report
Directors’ Report (Cont’d)
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the Auditor’s Independence Declaration as required under s307C of the Corporations Act 2001 is
included on page 25 of this financial report and forms part of this Directors’ Report.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of the
Company support and have adhered to the principles of corporate governance. The Company's corporate
governance principles are contained in the Corporate Governance Statement.
Signed in accordance with a resolution of the Directors.
Alfred J. Chown
Chairman/Managing Director
Sydney, 30 September 2020
11
Energy Technologies Limited – 2020 Annual Report
Remuneration Report (audited)
The Remuneration Committee of the Board of Directors is responsible for determining and reviewing
compensation arrangements for the directors, the managing director and the executive team. Remuneration
levels are set to attract and retain appropriately qualified and experienced Directors and senior executives. The
Remuneration Committee obtains independent advice on the appropriateness of remuneration packages,
given trends in comparative companies both locally and internationally. The Remuneration Committee also
assesses the appropriateness of the nature and amount of emolument of such officers on a periodic basis by
reference to relevant employment market conditions with the overall objective of ensuring maximum
stakeholder benefit from the retention of a high-quality Board and executive team. Such officers are given the
opportunity to receive their base emolument in a variety of forms including cash and fringe benefits such as
motor vehicles. It is intended that the manner of payment chosen will be optimal for the recipient without
creating undue cost for the company.
Executive remuneration packages include a mix of fixed remuneration and performance based remuneration.
Fixed Remuneration
Fixed remuneration consists of base remuneration as well as employer contributions to superannuation funds.
Remuneration levels are reviewed annually by the Remuneration Committee through a process that considers
individual, segment and overall performance of the consolidated and operating entity. A senior executive’s
remuneration is also reviewed on promotion.
Performance – linked Remuneration
The Remuneration Committee links the nature and amount of directors’ and executives’ emoluments to the
company’s financial and operational performance. All senior executives have the opportunity to qualify for
participation in the Employee Bonus Plan, which currently provides incentives where specified criteria are met
including criteria relating to profitability.
Performance linked remuneration includes both short term and long term incentives and is designed to reward
executive directors and senior executives for meeting or exceeding financial and personal objectives. The
short-term incentive is an at-risk bonus provided in the form of cash, and is based on the relevant operating
subsidiaries’ results and on achieving a preset target. The long-term incentive is provided as ordinary shares of
Energy Technologies Limited or options over ordinary shares of Energy Technologies Limited under the rules
of the Energy Technologies Limited Share Option Plan.
The remuneration structures result in and take into account:
• The overall level of remuneration for each director and executive
• The executive’s ability to control performance
• The amount of incentives within each executive’s remuneration.
Short term incentive
Each year the remuneration committee sets the key performance indicators, which generally include measures
relating to the operating group, the relevant segment and the individual, and are based on financial, customer
and strategy measures. The measures directly align the reward to the key performance indicators and the
operating group performance. The financial performance objectives are operating group turnover and EBIT to
working capital ratio analyses compared to budgeted amounts on a regional and consolidated basis. The non-
financial objectives vary with position and responsibility and include measures such as achieving strategic
outcomes, safety and business development.
The remuneration committee approves the cash incentive to be paid to the individuals.
Long term incentive
Options are available to be issued under the Energy Technologies Limited Share Option Plan (made in
accordance with thresholds set in plans approved by shareholders at the 2017 AGM), and it provides for
directors, executives and employees to receive options in total limited to 15% of the issued ordinary capital and
exercisable strictly under the terms of the Plan.
12
Energy Technologies Limited – 2020 Annual Report
Remuneration Report (audited)
The Board considers that the above remuneration structure is adequate given the major restructuring of the
operations required under the Business Plan, and secondly, the performance linked element appears to be
appropriate because the executives strive to achieve a level of performance which qualifies them for bonuses.
The remuneration for all non-executive directors, last voted upon by shareholders at the 2007 AGM, is not to
exceed $500,000 per annum. Director’s fees are presently $50,000 per annum for Mr Gary Ferguson, Mr Philip
Dulhunty and Mr Yulin Hu, and $80,000 for Mr Matthew Driscoll.
Names and positions held of consolidated entity key management personnel in office at any time during the
financial year are:
Key Management Person
Position (s) Held during the Year
Alfred J. Chown
Gary A. Ferguson
Philip W. Dulhunty
Yulin Hu
Matthew Driscoll
Gregory. R. Knoke
Nicholas Cousins
Chairman/Managing Director of EGY and Managing
Director of BWC
Director – Non-Executive of EGY and Director of BWC
Director – Non-Executive of EGY
Director – Non-Executive of EGY
Director – Non-Executive of EGY
CFO/Company Secretary of EGY and BWC
General Manager BWC
Options and Rights Holdings
Gregory R. Knoke and Nicholas Cousins currently hold Nil Options issued under the Share Option Plan.
Shareholdings
Number of Shares held by
Key Management Personnel
Balance
30 June 2019
Received as
Remuneration
Purchases
Disposals
Balance
30 June 2020
Specified directors
Alfred J Chown
Gary A. Ferguson
Philip W. Dulhunty
Yulin Hu
Matthew Driscoll
Specified executives
Gregory R. Knoke
Nicholas Cousins
8,243,575
1,154,044
1,417,195
3,476,058
1,025,774
74,425
-
15,391,071
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,243,575
1,154,044
1,417,195
3,476,058
1,025,774
74,425
-
15,391,071
13
Energy Technologies Limited – 2020 Annual Report
Remuneration Report (audited)
Voting and comments made at the Company’s last Annual General Meeting
Energy Technologies Limited received 100% of ‘yes’ votes on its Remuneration Report for the financial year
ending 30 June 2019. The Company received no specific feedback on its Remuneration Report at the Annual
General Meeting.
Use of remuneration consultants
Energy Technologies Limited did not employ the services of any remuneration consultants in 2020.
Employment agreements
Remuneration and other terms of employment for the Executive Directors and other Key Management
Personnel are formalised in an employment agreement. The major provisions of the agreements relating to
remuneration as set out below:
Employee
Alfred J Chown
Gregory R Knoke
Nicholas Cousins
Base Salary (per annum)
$287,671
$192,876
$157,500
Term of Agreement
Notice Period
Unspecified
Unspecified
Unspecified
3 months
1 month
1 month
Other transactions with key management personnel
During the current financial year, loans previously made by Director Alfred J Chown of $50,000 to the Company
and a further $39,561 to subsidiary Bambach Wires and Cables Pty Ltd as at 30 June 2019 were repaid. Also
during the current financial year Director Alfred J. Chown made a further loan of $10,981 to Bambach Wires and
Cables Pty Ltd. This loan is unsecured and repayable on demand.
During the current financial year Director Matthew Driscoll, made a loan to the company of principal $500,000.
This loan holds second ranking security over the assets of the group. The loan incurred an establishment fee
of $75,000 and interest is paid or accrued at the rate of 15% per annum.
Included in Sundry payables and accrued expenses are unpaid Directors fees.
Two key management personnel made short term loans of $190,000 (2019: Nil) to subsidiary Bambach Wires
and Cables Pty Ltd. These loans were unsecured and incurred an establishment fee of 10%. The loans have
since been repaid. The above loan transactions are on normal commercial terms and conditions.
Directors Guarantee
Subsidiary Bambach Wires and Cables Pty Ltd has varied existing business accounts with Moneytech to
increase the limit on the Trade Finance Facility to $1.5m and to increase the limit on the IF Facility to $5m. The
Asset Finance Facility limit remains at $500,000. To facilitate this Director Alfred Chown and Donna Chown
(guarantors) have provided in favour of Moneytech a guarantee for the performance of the obligations of
Bambach under the facility. Donna Chown has granted a mortgage in favour of Moneytech to secure her
guarantee obligations. Energy Technologies Limited has provided a guarantee and indemnity to the guarantors
for any liability of Bambach under the provisions of the Deed as tabled.
In consideration for providing the guarantee and security to Moneytech the fees payable to the guarantors are
an establishment fee of 3% of the amount guaranteed ($210,000), and a monthly service fee based on 2% per
annum of the amount guaranteed ($11,667 per month). Fees will be paid in cash but with the right to accept
shares if acceptable to both parties.
Details of the nature and amount of each element of the remuneration of key management personnel including
each director of the company and each of the specified executive officers of the company and the consolidated
entity for the financial year are disclosed in the table on next page.
14
Energy Technologies Limited – 2020 Annual Report
Remuneration Report (audited)
Remuneration of key management personnel (audited)
The following table provides the details of all directors of the Company ("specified directors") and the executives of the consolidated entity with the greatest authority ("specified
executives"), and the nature and amount of the elements of their remuneration for the year ended 30 June 2020. No remuneration for the financial year is performance related or
equity related.
2020
Cash, salary, fees &
commissions
Cash
Bonus
Other
Superannuation
Equity
Specified Directors
Position (s) Held
$
$
$
$
$
$
Short-term benefits
Post
Employment
Benefits
Share-based
payment
Total
Alfred J. Chown
Chairman/Managing Director of EGY
and Managing Director of BWC
Gary A. Ferguson
Non-Executive Director of EGY and
Director of BWC
Philip W. Dulhunty
Non-Executive Director of EGY
Yulin Hu
Non-Executive Director of EGY
Matthew Driscoll
Non-Executive Director of EGY
Specified executives
Gregory R. Knoke
CFO/Company Secretary of EGY and
BWC
Nicholas Cousins
General Manager BWC
-
-
-
-
-
-
-
-
28,318
-
-
-
-
-
-
-
-
8,670
18,000
17,517
15,033
26,670
60,868
-
-
-
-
-
-
-
-
338,400
50,000
50,000
50,000
80,000
215,221
192,441
976,062
310,082
50,000
50,000
50,000
80,000
189,034
159,408
888,524
15
Energy Technologies Limited – 2020 Annual Report
Remuneration Report (audited)
Remuneration of key management personnel (audited)
The following table provides the details of all directors of the Company ("specified directors") and the executives of the consolidated entity with the greatest authority ("specified
executives"), and the nature and amount of the elements of their remuneration for the year ended 30 June 2019. No remuneration for the financial year is performance related or
equity related.
2019
Cash, salary, fees &
commissions
Cash
Bonus
Other
Superannuation
Equity
Specified Directors Position (s) Held
$
$
$
$
$
$
Short-term benefits
Post
Employment
Benefits
Share-based
payment
Total
Alfred J. Chown
Chairman/Managing Director of EGY
and Managing Director of BWC
Gary A. Ferguson
Non-Executive Director of EGY and
Director of BWC
Philip W. Dulhunty
Non-Executive Director of EGY
Yulin Hu
Non-Executive Director of EGY
Matthew Driscoll
Non-Executive Director of EGY
Specified executives
Gregory R. Knoke
CFO/Company Secretary of EGY and
BWC
Nicholas Cousins
General Manager BWC
.
447,341
25,000
20,000
20,000
25,000
197,948
147,798
883,087
-
-
-
-
-
-
-
-
-
-
-
-
-
23,090
-
-
-
-
7,934
18,000
18,545
13,894
25,934
55,529
-
-
-
-
-
-
-
-
470,431
25,000
20,000
20,000
25,000
224,427
179,692
964,550
End of the audited Remuneration Report.
16
Energy Technologies Limited – 2020 Annual Report
Corporate Governance Statement
The Company’s corporate governance practices are discussed below. The Company and the Board of
Directors are committed to achieving and demonstrating the highest standards of corporate governance and
aim to comply with the Corporate Governance Principles and Recommendations set by the ASX Corporate
Governance Council.
The Board of Directors guides and monitors the business and affairs of Energy Technologies Limited and its
subsidiaries (“the Group”) on behalf of the shareholders, by whom they are elected and to whom they are
accountable. The Board is responsible for the overall corporate governance of the Group. To assist the Board
in discharging its responsibilities the Board has adopted principles of corporate governance that are considered
appropriate for the present size of the Group. Where it is not appropriate, cost effective or practical to comply
fully with the Corporate Governance Principles and Recommendations, this fact has been disclosed together
with reasons for the departure.
Consistent with the ASX recommendations, the Company’s corporate governance practices are regularly
reviewed. The information in this statement is current as at 30 September 2020.
Principle 1: Lay solid foundations for management and oversight
1.1: Board and Management Responsibilities
The Board is responsible for, and has the authority to determine, all matters relating to the running of the
Company including the policies, operational practices, management and objectives of the Company. In
carrying out its responsibilities, the Board undertakes to serve the interest of shareholders diligently and fairly.
It is the role of management to manage the Company in accordance with the directives of the Board.
Accordingly, certain functions and roles are reserved to the Board, and certain others are delegated to the
senior executives of the Group.
The responsibilities of the Board include:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
formulating the vision and strategic direction and monitoring performance objectives of the Group
overseeing and fostering an appropriate culture for the Group that is aligned to its values
developing and monitoring adoption of the most appropriate principles of corporate governance
ensuring adequate risk management processes are in place and are complied with
reviewing internal controls, external audit reports and ensuring codes of conduct and regulatory
compliance
approving and monitoring the progress of major capital expenditure projects, funding programmes,
acquisitions and divestments
reviewing and approving annual business plans and budgets
ensuring appropriate resources are available to senior executives
reviewing and ratifying systems for health, safety and environmental management and controls
appointing and evaluating the performance of senior executives
appointing and creating succession policies for directors
appointing, removing and creating succession policies for senior executives
approving and monitoring financial and other reporting to shareholders and to the market.
ensuring corporate accountability to the shareholders primarily through an effective communications
strategy and through the Chairman adopting the key interface role between the Company and its
shareholders.
A schedule of directors’ meetings and attendances is detailed in the directors’ report.
17
Energy Technologies Limited – 2020 Annual Report
Corporate Governance Statement (Cont’d)
The Board has delegated responsibility for operation and day to day administration of the company to the
Managing Director, the Chief Financial Officer and executive management.
The Managing Director is responsible for the achievement of the Company’s goals, in accordance with the
strategies and policies approved by the Board and with support from executive management. The specific
duties of the Managing Director include:
•
•
•
•
•
•
•
•
•
•
assisting the Board to develop the Company’s Business Plan and goals
responsibility for the achievement of these goals
development in conjunction with senior management of short, medium and long term strategies to
enable the Company to achieve its objectives
preparation and update of business plans and relevant reports with senior management and
implementation of those plans
assessment of business opportunities including acquisitions
proposing and controlling with Board approval items of material capital expenditure
maintaining positive relationships with Board members, shareholders, trading partners and the
investment community, including accepting the role of key spokesperson
recommending and seeking appropriate approval for delegations of authority, key performance
incentives and organizational changes, including key staff appointments, in conjunction with
established board committees
ensuring legal and regulatory compliance, in conjunction with senior management
overall control of the staff appraisal process
1.2 and 1.3: Appointment of Directors
The experience, qualification and background of each Director is thoroughly assessed before appointment.
This information is provided to shareholders through announcement to the market.
Information on each Director’s background and qualification can be found on pages 5 and 6 of the Annual
Report.
The Company issues written notice of appointment for new Directors or senior executives setting out the terms
and conditions relevant to that appointment and the expectations of the role of the director. The Company also
provides an induction process which provides key information on the nature of the business and its operations.
1.4: Company Secretary
The company secretary is accountable directly to the board, through the chair, on all matters to do with the
proper functioning of the board. On day to day matters the Company Secretary reports to the Managing
Director.
The responsibilities of the Company Secretary include:
• advising the board and committee on governance issues;
• monitoring adherence to company policies;
•
co-ordinating and timing despatching of Board and committee papers; and.
• ensuring that the business at Board and committee meetings are accurately captured in the minutes.
18
Energy Technologies Limited – 2020 Annual Report
Corporate Governance Statement (Cont’d)
1.5: Diversity
The Company has adopted policies in relation to employment and recruitment which require the introduction of
new staff and management of the Group’s employees on a non-discriminatory basis. Hiring policies are backed
by policies in relation to Sexual Harassment and Grievance and Dispute Handling.
The Group is quite small. Some new employees have been employed by BWC since its purchase, but only
very few. The small scale of the company’s hiring means that it is difficult to target new employees on a gender
basis.
The Company’s policies are intended to ensure that equal opportunity is given to all potential employees, and
that increasing gender diversity at all levels will not be discouraged. The Board will keep the gender
composition of its workforce under review.
Twelve per cent (12%) of all the Group’s employees are women. There is currently one female on the Board as
Alternate Director to Yulin Hu.
1.6 and 1.7: Board and Management Reviews
The Board undertakes a review of the Managing Director and of senior executive performance at least
annually, together with the Remuneration Committee, including setting targets. The performance evaluation is
carried out in accordance with the policy and procedure set out in the Company’s Corporate Governance
documents, which are available on the Company’s website.
Principle 2: Structure the board to add value
The composition of the Board is structured to efficiently discharge its responsibilities and duties.
2.1 : Nomination Committee
The names and qualifications of those appointed to the nomination committee for the year ended 30 June 2020
and their attendance at meetings of the committee are included in the directors’ report. This committee is
involved in the overseeing of the appointment and induction process for new directors, committee members
and senior management.
The Nomination Committee is not chaired by an independent director, however, the Committee is made up of a
majority of independent directors. Due to the small number of directors and senior executives and the
involvement of the current executive director and chairman in the business strategy of the group it is
considered that the role of chairman of the Nomination Committee remains unchanged at this time.
For Directors retiring by rotation, the Board assesses that director before recommending re-election.
2.2 : Board skills matrix
The Board of Directors is comprised of a Managing Director and Chairman, together with four non-executive
Directors and an Alternate Director. The Board considers that a diversity of skills, knowledge, experience,
backgrounds and gender is required to effectively govern the business. The current Board profile addresses
this with the following experience, skills and qualifications represented on the Board:
•
international business and senior executive experience, including owning and managing businesses in the
energy sector and other;
• experience on listed and unlisted company and association boards as executive and non-executives and
committee members;
• understanding the sectors in which the Company operates in including the energy sector, resources
industry, infrastructure, construction;
•
relevant operational experience in strategic planning, executive management; mergers and acquisitions,
risk management, financial markets, contract negotiation and people management;
•
financial and corporate governance acumen with finance sector and audit committee roles experience;
• an understanding of the health and safety challenges of the business.
19
Energy Technologies Limited – 2020 Annual Report
Corporate Governance Statement (Cont’d)
2.3, 2.4, 2.5 : Board Composition, Independence of Directors and Chairman
The composition of the Board is determined in compliance with the Company’s constitution. The names of the
directors of the company in office at the date of this report, their term of office and their skills, experience and
relevant expertise are detailed in the directors’ report. The position and term in office of each Director at the
date of this report is as follows:
Name of Director
Position
Term in Office
Years
Months
Alfred J. Chown
Chairman/Managing Director
Gary A. Ferguson
Non-Executive
Philip W. Dulhunty
Non-Executive
Yulin Hu
Meiping Hu
Non-Executive
Alternate to Yulin Hu
Matthew Driscoll
Non-Executive
23
7
5
4
4
3
2
11
9
9
9
8
The Company has a majority of independent directors on the board.
The non-executive Directors are materially independent in complying as a director who is not a member of
management and who:
•
•
•
•
•
•
has not within the last three years been employed in an executive capacity by the company or another
group member, or been a director after ceasing to hold any such employment
within the last three years has not been a principal or employee of a material professional advisor or a
material consultant to the company or another group member
is not a material supplier or customer of the company or another group member, or an officer of or
otherwise associated with a material supplier or customer
has no material contractual relationship with the company or another group member other than as a
director of the company
is free from any interest and any business or other relationship which could, or could reasonably be
perceived to, materially interfere with the director’s ability to act in the best interests of the company
is not a substantial shareholder in the Company.
During the 2013 financial year, Mr Alfred J. Chown was appointed as the Managing Director of the Company.
After the resignation of former Board members, Mr Chown also adopted the position of Chairman of the Board.
The company accepts that, as a principle, these roles should be separate. At present, however, there are
factors which have made it desirable that they be exercised by the same person for the time being.
The Company and its subsidiary Bambach Wires and Cables Pty Ltd (BWC) continued to encounter difficult
trading conditions during the year. The Managing Director continues to devote a great deal of time and energy
to the operations of BWC, and its internal processes. The Managing Director and the other directors have been
in frequent and informal contact during the year, in addition to the formal Board meetings. The strategy of the
company, and the execution of the strategy, has been under frequent review, and the results under close
scrutiny.
Directors have worked as an effective team, with close liaison. In the circumstances, directors have not felt it
necessary to address the appointment of a new Chairman.
20
Energy Technologies Limited – 2020 Annual Report
Corporate Governance Statement (Cont’d)
2.6 : Professional Development
Each Director has the right of access to all relevant Company information and to the Company’s executives.
The Directors also have access to external resources as required to fully discharge their obligations as
Directors of the Company. The use of this resource is coordinated through the Chairman of the Board.
The Company has processes in place to review the performance of the Board and its committees and
individual Directors. Each year the Board of Directors gives consideration to corporate governance matters,
including the relevance of existing committees and to reviewing its own and individual Directors’ performance.
The Chairman is responsible for monitoring the contribution of individual Directors and consulting with them in
any areas of improvement.
Principle 3: Instil a culture of Acting lawfully, ethically and responsibly
3.1 : Code of Conduct
The Board acknowledges the need for continued maintenance of the highest standards of Corporate
Governance Practices and ethical conduct by all Directors and employees of the Group.
The Company has developed a Code of Conduct, an Employee Handbook and a comprehensive suite of
policies which have been approved by the Board and apply to all employees, officers and Directors. This set of
policies is regularly reviewed and may be amended as necessary to ensure it continues to reflect the best
practices necessary to consider legal obligations, maintain the Company’s integrity and comply with the
reasonable expectations of the Company’s shareholders. The Code of Conduct is disclosed in the Company’s
Corporate Governance documents.
3.2 : Trading Policy
Trading in Company securities is regulated by the Corporations Act and the ASX Listing Rules. The Company’s
policy regarding directors and employees trading in its securities is set by the Board, and is disclosed in the
Company’s Corporate Governance documents. The policy restricts directors and employees from acting on
material information until it has been released to the market and adequate time has been given for this to be
reflected in the security’s price.
Principle 4: Safeguard the integrity of corporate reports
The following structure is set up to independently verify and safeguard the integrity of financial reporting.
4.1 : Audit Committee
The Board has established an audit committee. The names and qualifications of those appointed to the audit
committee for the year ended 30 June 2020 and their attendance at meetings of the committee are included in
the directors’ report. The audit committee consists of a majority of independent directors, refer 2.3 Board
Composition. Following the appointment of independent non-executive Director Matthew Driscoll, the audit
committee is constituted with three members. Mr Driscoll has been appointed as Chairman of the audit
committee. The Board of the company now has six members including Alternate Director, however following
the appointment of Mr Driscoll and the skills matrix, the Board has decided to retain the expanded structure at
this time. The Board has decided not to appoint Alfred J. Chown, the Managing Director, to the audit
committee. The Chief Financial Officer is invited to audit committee meetings at the discretion of the
committee. The external auditor meets with members of the committee at least twice during the year.
The charter of the audit committee is disclosed in the Company’s Corporate Governance documents.
The responsibilities of the audit committee include:
•
•
Assessing whether non-audit services provided by the external auditor are consistent with maintaining
the external auditor’s independence. Each reporting period the external auditor provides an
independence declaration in relation to the audit or review.
Providing advice to the Board in respect of whether the provision of the non-audit services by the
external auditor is compatible with the general standard of independence of auditors imposed by the
Corporations Act 2001.
21
Energy Technologies Limited – 2020 Annual Report
Corporate Governance Statement (Cont’d)
4.1 : Audit Committee (Cont’d)
The Company does not have an internal audit function due to the size and lack of complexity of the Company.
The Company’s Board and Management oversee the key areas of the business including the risk management
and internal control processes of the Company and evaluate and look for opportunities to continually improve
the effectiveness of these processes.
4.2 : Financial Reporting
To assist the Board in approving the Company’s financial statements, the Managing Director and the Chief Financial
Officer are required to present a declaration with regard to the integrity of the financial statements to confirm to the
Board that the Company’s financial statements present a true and fair view in all material respects of the Company’s
financial condition and that operational results are in accordance with applicable accounting standards and the
Corporations Act.
4.3 : External Auditors
The Board of Directors ensures that the Company’s external auditor attends all Annual General Meetings and
be available to answer shareholders’ questions about the conduct of the audit and the preparation and content
of the auditor’s report.
Principle 5: Make timely and balanced disclosure
Disclosure
The Company has a Continuous Disclosure policy to ensure compliance with ASX Listing Rules and Corporations
Act obligations to keep the market fully informed of any information which may have material effect on the price or
value of its securities. The policy is disclosed in the Company’s Corporate Governance documents. All ASX
announcements are linked to the Company’s website as soon as possible after confirmation from ASX, including
financial statements.
The Company Secretary in consultation with the CEO and Directors is responsible for communications with the
ASX. He is also responsible for ensuring compliance with the continuous disclosure requirements of the ASX Listing
Rules, and overseeing and coordinating information disclosure to the ASX, analysts, brokers, shareholders, the
media and the general public.
Principle 6: Respect the rights of shareholders
6.1 Information on website
The Company takes advantage of electronic communication for investor relations. The Company’s, and subsidiary
Bambach Wires and Cables Pty Ltd, website contains extensive information about the Board and management
globally. It includes relevant press releases and media announcements in relation to the Company’s operations,
relevant announcements made to the market via the ASX, Company presentations and copies of financial
statements. The Company has recently upgraded its website and further development to ensure continuous and full
disclosure is currently under way.
The Company provides shareholders with copies of all announcements made to the ASX by mail on request.
Copies are also available in its web site or the ASX web site, ensuring that all shareholders are kept informed
about the Company. Shareholders also have the option of receiving a hard copy of the Annual Report each
year.
6.2 and 6.3 Investor relations and participation at meetings
The Board encourages full participation of attending shareholders at the Annual General Meeting to maintain a high
level of accountability and allow shareholders to identify the Company’s strategies and goals. The Company
completes the Notice of Meeting and Explanatory Notes so that they provide clearly and concisely all of the
information relevant to shareholders to enable them to make decisions on matters to be voted on at the meeting.
The General Meetings are viewed as a tool to communicate with shareholders and the Company encourages and
allows time for participation in the meetings. The full Board and senior executives are present and available to
answer questions from the floor, as is the external auditor.
22
Energy Technologies Limited – 2020 Annual Report
Corporate Governance Statement (Cont’d)
6.2 and 6.3 Investor relations and participation at meetings (Cont’d)
Informal meetings and factory site visits with shareholders are also held from time to time. A regular newsletter
is produced which is available on request.
6.4 Electronic Communication
The Company also encourages electronic communication directly via email with shareholders at all times.
Principle 7: Recognise and manage risk
7.1 : Risk Committee
The Group takes a proactive approach to risk management. The Board is responsible for ensuring that risks,
and also opportunities, are identified on a timely basis and that the Group's objectives and activities are aligned
with the risks and opportunities identified by the Board.
The Group believes that it is crucial for all Board members to be a part of this process, and as such the Board
has not established a separate risk management committee. Instead sub-committees are convened as
appropriate in response to particular issues and risks identified by the Board as a whole, and the sub-
committee further examines the issue and reports back to the board.
7.2 : Risk Review
The Board identifies potential areas of business risk arising from changes in the financial and economic
circumstances of its operating environment. It regularly assesses the Company performance in light of risks
identified.
The Board has several mechanisms in place to ensure that management's objectives and activities are aligned
with the risks identified by the Board. These include the following:
•
•
•
•
•
•
Board approval of a strategic business plan, which encompasses the entity's vision, mission and
strategy statements, designed to meet stakeholder’s needs and manage business risk.
Implementation of Board-approved operating plans and budgets and board monitoring of progress
against these budgets, including the establishment and monitoring of key performance indicators
(KPI's) of both a financial and non-financial nature.
The establishment of committees to report on specific business risks, including for example, such
matters as occupational health and safety.
Regular management meetings involving executive directors, specified executives, and staff during
which reports are given on production, sales, financial, compliance and strategic issues and decisions
taken on operating matters, or referred to the Board.
Regular reports and cash forecasts from the CFO which assist in discharging the Board's responsibility
to manage the Group's financial risks. The Board is advised on such matters as the Group's liquidity,
available credit and currency exposures and monitors actions to ensure they are in line with Company
policy.
The Board holds ongoing discussion of issues raised in the shareholder open days, in addition to the
AGM, as well as other shareholder communications, to ensure that the Board is cognizant of the
diverse needs of various stakeholders and assist in identifying the risks the business may face if those
needs are not met, as well as specifically review and update the corporate strategy as necessary.
7.3 : Internal Audit
The Board does not employ an internal auditor, although as part of the Company’s strategy to implement an
integrated framework of control, the Board requests the external auditors review internal control procedures.
Recommendations once presented are considered by the Board.
7.4 : Sustainability Risks
The Board regularly assesses risks associated with economic, global, environmental and social sustainability
risks.
23
Energy Technologies Limited – 2020 Annual Report
Corporate Governance Statement (Cont’d)
Principle 8: Remunerate fairly and responsibly
8.1 : Remuneration Committee
The Board has established a remuneration committee. The remuneration committee reviews and makes
recommendations to the Board on remuneration packages and policies applicable to the Managing Director,
senior executives and staff and directors themselves. It is also responsible for share option schemes, incentive
performance packages, and compliance with superannuation requirements, termination entitlements, fringe
benefits policies and professional indemnity and liability insurance policies as applicable.
The names of the members of the remuneration committee and their attendance at meetings of the committee
are detailed in the directors’ report. The remuneration committee in place for the year ended 30 June 2020
consists of three directors and has a majority of independent directors. The Chief Financial Officer is invited to
remuneration committee meetings, as required, to discuss senior executives and staff performance and
remuneration packages.
The charter in relation to the remuneration committee is disclosed in the Company’s Corporate Governance
documents.
There are no schemes for retirement benefits other than statutory superannuation for non-executive directors.
8.2 : Executive and Directors Remuneration Policies
Remuneration levels are set to attract and retain appropriately qualified and experienced directors, senior
executives and staff to run the consolidated entity. The board considers that the remuneration structure will be
able to attract and retain the best executives with the necessary incentives to work to grow long-term
shareholder value.
independent advice as necessary on
The remuneration committee obtains
the appropriateness of
remuneration packages, given trends in comparative companies both locally and internationally. Remuneration
includes a mix of fixed remuneration and performance-based remuneration. All senior executives receive a
base salary, superannuation, fringe benefits and performance incentives. The remuneration committee reviews
executive packages annually by reference to company performance, executive performance, comparative
industry information and relevant independent advice. The performance of executives is measured against
criteria agreed which is based on the forecast growth of the Company’s turnover and profits and shareholders’
value.
The Company’s non-executive directors are paid directors’ fees for their normal performance of duties as a
director. Where there is a significant and sustained requirement for work by a director in excess of that
considered normal for the Company, the Company will pay a one-off bonus in respect of that work.
The amount of remuneration for all directors and the highest paid executives, including all monetary and non-
monetary components, are detailed in the Directors’ Report.
8.3 : Equity based Remuneration Scheme
A revised Directors Equity Plan was established in 2017 and approved by shareholders at the 2017 Annual
General Meeting.
Executives and employees are also entitled to participate in the EGY Share Option Plan also approved by
shareholders at the 2017 Annual General Meeting.
24
Level 17, 383 Kent Street
Sydney NSW 2000
Correspondence to:
Locked Bag Q800
QVB Post Office
Sydney NSW 1230
T +61 2 8297 2400
F +61 2 9299 4445
E info.nsw@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of Energy Technologies Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Energy
Technologies Limited the year ended 30 June 2020, I declare that, to the best of my knowledge and belief, there have
been:
a
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b
no contraventions of any applicable code of professional conduct in relation to the audit.
Grant Thornton Audit Pty Ltd
Chartered Accountants
C F Farley
Partner - Audit & Assurance
Sydney, 30 September 2020
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
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another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
25
Energy Technologies Limited – 2020 Annual Report
Consolidated Income Statement
for the year ended 30 June 2020
Sales Revenue
Cost of Sales
Gross Margin
Rendering of services
Other Income
Gain on Debt Settlement
Marketing expenses
Occupancy expenses
Administrative expenses
Finance costs
Depreciation and amortisation expenses
Other expenses
(Loss)/Profit before income tax
Income tax (expense)/benefit
(Loss)/Profit after income tax
Loss attributable to non-controlling interest
(Loss)/Profit attributable to members of the parent entity
Earnings per share
Basic (loss)/profit per share (cents per share)
Diluted (loss)/profit per share (cents per share)
Consolidated
Note
2020
$
2019
$
2(a)
3
2(a)
2(b)
2(b)
3
3
4
8
8
10,058,633
12,592,484
(7,642,791)
(10,019,392)
2,415,842
2,573,092
67,409
760,552
69,727
247,004
-
5,357,429
(124,285)
(453,533)
(38,187)
(727,822)
(4,484,138)
(4,689,436)
(1,241,723)
(911,379)
(1,235,901)
(454,307)
(81,829)
(124,546)
(4,377,606)
1,301,575
(37,729)
89,423
(4,415,335)
1,390,998
13,115
12,559
(4,402,220)
1,403,557
(5.1)
(5.1)
4.3
4.3
The accompanying notes form part of these financial statements.
26
Energy Technologies Limited – 2020 Annual Report
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2020
Note
Consolidated
2020
$
2019
$
(LOSS)/PROFIT FOR THE YEAR
(4,415,335)
1,390,998
OTHER COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR
AFTER TAX:
Items that will be reclassified subsequently to profit or loss
when specific conditions are met:
Movement in foreign exchange relating to translation of controlled
foreign entities
Exchange differences on
controlling interest
foreign exchange relating
to non-
(1,799)
(1,799)
(3,318)
(3,317)
Revaluation of Plant and Equipment to fair value
13
-
6,838,699
TOTAL OTHER COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR
TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR
(3,598)
6,832,064
(4,418,933)
8,223,062
TOTAL COMPREHENSIVE (LOSS)/INCOME ATTRIBUTABLE TO:
Members of the parent entity
Non-controlling interest
(4,404,019)
8,238,939
(14,914)
(15,877)
(4,418,933)
8,223,062
The accompanying notes form part of these financial statements.
27
Energy Technologies Limited – 2020 Annual Report
Consolidated Statement of Financial Position
as at 30 June 2020
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
Right of use assets
Deferred tax assets
Other non-current assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Lease liabilities
Borrowings
Short-term provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Lease liabilities
Long-term provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Other Contributed equity
Reserves
Accumulated losses
Parent interest
Non-controlling interest
TOTAL EQUITY
Note
9
10
11
16
13
14
15
19(a)
16
17
15
18
20
18
15
20
21
22
Consolidated
2020
$
2019
$
27,676
4,188,418
2,326,951
357,389
6,900,434
29,940
5,248,053
3,479,718
212,380
8,970,091
12,871,545
11,768,283
4,737,132
3,876,560
228,927
215,408
21,929,572
28,830,006
6,268,901
882,252
3,865,247
846,510
11,862,910
338,963
3,395,172
156,692
3,890,827
15,753,737
13,076,269
4,083,426
-
266,656
209,024
16,327,389
25,297,480
4,587,414
428,877
2,009,593
823,184
7,849,068
-
129,662
196,049
325,711
8,174,779
17,122,701
25,351,729
25,279,229
300,000
5,781,848
-
5,783,647
(17,745,460)
(13,343,240)
13,688,117
17,719,636
(611,848)
(596,935)
13,076,269
17,122,701
The accompanying notes form part of these financial statements.
28
Energy Technologies Limited – 2020 Annual Report
Consolidated Statement of Changes in Equity
for the year ended 30 June 2020
Issued
Capital
$
Other
Contributed
Equity
$
Reserves
Accumulated
losses
$
$
Non-Controlling
Interest
$
Total
$
Consolidated
Balance at 01 July 2018
9,496,447
-
(1,051,735)
(14,746,797)
(581,058) (6,883,143)
Comprehensive income
Profit (Loss) for the year
Other comprehensive income
for the year
Total comprehensive income
(loss) for the year
Transactions with owners, in
their capacity as owners, and
other transfers
-
-
-
Contributions of equity
16,432,132
Cost of raising capital
Total transactions with
owners, in their capacity as
owners, and other transfers
(649,350)
15,782,782
Balance at 30 June 2019
25,279,229
Balance at 01 July 2019
25,279,229
Comprehensive income
Loss for the year
Other comprehensive income
for the year
Total comprehensive income
(loss) for the year
Transactions with owners, in
their capacity as owners, and
other transfers
-
-
-
Shares issued in lieu of fees
72,500
-
-
-
-
-
-
-
-
-
-
-
-
Contributions of equity
-
300,000
Total transactions with
owners, in their capacity as
owners, and other transfers
72,500
300,000
-
1,403,557
(12,559)
1,390,998
6,835,382
-
(3,318)
6,832,064
6,835,382
1,403,557
(15,877)
8,223,062
-
-
-
-
-
-
- 16,432,132
-
(649,350)
- 15,782,782
5,783,647
(13,343,240)
(596,935) 17,122,701
5,783,647
(13,343,240)
(596,935) 17,122,701
-
(4,402,220)
(13,115) (4,415,335)
(1,799)
-
(1,798)
(3,597)
(1,799)
(4,402,220)
(14,913) (4,418,932)
-
-
-
-
-
-
-
-
72,500
300,000
-
372,500
Balance at 30 June 2020
25,351,729
300,000
5,781,848
(17,745,460)
(611,848) 13,076,269
The accompanying notes form part of these financial statements.
29
Energy Technologies Limited – 2020 Annual Report
Consolidated Statement of Cash Flows
for the year ended 30 June 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Receipts from government subsidies - R&D grant
Receipts from government subsidies – Jobkeeper/Cash boost
Interest received
Payments to suppliers and employees
Finance costs
Consolidated
Note
2020
$
2019
$
10,179,605
10,728,936
948,903
372,318
943
1,148,210
-
566
(9,975,134)
(12,598,520)
(1,042,894)
(297,716)
Net cash inflow (outflow) from operating activities
27(a)
483,741
(1,018,524)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment
Purchases of property, plant and equipment
Purchases of intangible development assets
Net cash outflow from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Less cost of raising capital
Proceeds from contribution of equity
Proceeds from borrowings
Proceeds from government grants – RJIP grant
Repayment of borrowings
Repayment of lease liabilities
Loans from directors
Net cash inflow from financing activities
Net (decrease) increase in cash held
Cash at beginning of financial year
Effect of exchange rates on cash holdings in foreign currencies
Cash at end of financial year
13,400
28,000
(1,920,454)
(3,455,965)
(1,507,596)
(1,754,938)
(3,414,650)
(5,182,903)
-
-
3,500,000
(649,350)
300,000
-
2,307,896
2,063,960
1,452,000
(965,862)
(586,821)
421,420
1,450,000
(411,389)
-
89,561
2,928,633
6,042,782
(2,276)
29,940
12
27,676
(158,645)
188,541
44
29,940
15
29
9
The accompanying notes form part of these financial statements.
30
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 1 Summary of Significant Accounting Policies
(a) Basis of Preparation
The financial statements are a general purpose financial report, which has been prepared in accordance with
Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of
the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The Group is a for-profit
entity for financial reporting purposes under Australian Accounting Standards.
The financial statements are presented in Australian dollars unless otherwise stated.
The financial statements were authorised for issue on 30 September 2020 by the directors of Energy
Technologies Limited.
Energy Technologies Limited is a listed public company, incorporated and domiciled in Australia.
(b) Statement of compliance
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in
financial statements containing relevant and reliable information about transactions, events and conditions.
Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply
with International Financial Reporting Standards as issued by the IASB. Material accounting policies adopted in
the preparation of these financial statements are presented below and have been consistently applied unless
stated otherwise.
Except for cash flow information, 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.
(c) Going Concern
The consolidated entity made a FY2020 loss after tax attributable to members of $4,402,220 (2019: profit of
$1,403,557). The FY2019 consolidated profit included a gain on the extinguishment of debt of $5,357,429,
following the issue of shares at a discounted percentage of outstanding debt to Debenture, Convertible Note and
loan holders in full satisfaction of the company’s obligations. The consolidated entity has positive cash flows
from operations of $483,741 for the year ended 30 June 2020 (2019: negative $1,018,524). Consolidated net
assets as at 30 June 2020 are $13,076,269.
Fully owned subsidiary Bambach Wires and Cables (Bambach) incurred a loss after tax of $3,374,589 (2019:
$2,650,579). This loss was impacted by the impact of Covid-19, particularly in the last quarter FY2020, and by
transitional issues in relocating the primary manufacturing facility from Sydney to Victoria.
This matter gives rise to a material uncertainty that may cast doubt upon the consolidated entity’s ability to
continue as a going concern. The ongoing operation of the consolidated entity is dependent upon it achieving
cash flow positive trading operations from its existing business.
Management have prepared a cash flow projection for the period to 30 September 2021 that supports the ability
of the consolidated entity to continue as a going concern. Supporting the cash flow projection is the fact that the
company restructure as reported last year is materially complete and the large manufacturing facility in Rosedale
Victoria is operational and progressing to full production capability. This facility is capable of producing up to 250
tonnes of finished product per month. The cash flow remains conservative in revenue projections FY21 and the
company balance sheet remains strong with net assets of $13,076,269. Significant cost savings are projected
FY2021 from the relocation to Rosedale, in particular rent and outgoings savings of more than $600,000 per
annum and net staffing cost reductions as the Sydney factory closed.
The company also announced on 24 June 2020 a capital raising of up to $5m, which has subsequently been fully
raised through a Placement and Rights Issue.
31
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 1 Summary of Significant Accounting Policies (Cont’d)
(c) Going Concern (Cont’d)
In the event that the consolidated entity is unable to achieve the matters detailed above, it may not be able to
continue as a going concern and therefore the consolidated entity may not be able to realise its assets and
extinguish its liabilities in the ordinary course of operations and at the amounts stated in the financial
statements. Whilst the matters above give rise to an uncertainty that may cast doubt upon the consolidated
entity’s ability to continue as a going concern, no adjustments have been made to the recoverability and
classification of recorded asset values and the amount and classification of liabilities that might be necessary
should the consolidated entity and company not continue as going concerns.
(d) Principles of Consolidation
The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by
Energy Technologies Limited (EGY) at the end of the reporting period. 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.
Where controlled entities have entered or left the Group during the year, the financial performance of those
entities is included only for the period of the year that they were controlled. A list of controlled entities is
included in Note 12 to the financial statements.
In preparing the consolidated financial statements, all intragroup balances and transactions between entities in
the consolidated group have been eliminated in full on consolidation.
Non-controlling interests, being the equity in the subsidiary not attributable, directly or indirectly, to a parent,
are reported separately within the equity section of the consolidated statement of financial position and
statements showing profit or loss and other comprehensive income. The non-controlling interests in the net
assets comprise their interests at the date of the original business combination and their share of changes in
equity since that date.
Changes in a parent’s ownership interest in a subsidiary that do not result in a loss of control are accounted for
as equity transactions (ie. transactions with owners in their capacity as owners).
(e) Business Combinations
Business combinations occur where an acquirer obtains control over one or more businesses.
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).
Where 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 in each reporting period to fair
value, recognising any change to fair value in the profit or loss, unless the change in value can be identified as
existing at acquisition date.
All transaction costs incurred in relation to business combinations are expensed.
The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase. A gain
from a bargain purchase is accounted for in the income statement at the acquisition date.
(f) Foreign currencies
The functional currency of each of the Group’s entities is measured using the currency of the primary economic
environment in which that entity operates. The consolidated financial statements are presented in Australian
dollars (A$), which is the parent entity’s functional currency.
32
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 1 Summary of Significant Accounting Policies (Cont’d)
(f) Foreign currencies (Cont’d)
Foreign currency transactions are translated into functional currency at the exchange rates prevailing at the date
of the transaction. Foreign currency monetary items are retranslated at the year-end exchange rate. Non-
monetary items measured at fair value are reported at the exchange rate as at the date when fair value was
determined.
Exchange differences arising on the translation of monetary items are recognised in the profit or loss, except
where deferred in equity as a qualifying cash flow or net investment hedge. Exchange differences arising on the
translation of non-monetary items are recognised directly in other comprehensive income to the extent that the
underlying gain or loss is recognised in other comprehensive income; otherwise the exchange difference is
recognised in profit or loss.
The financial results and position of foreign operations, whose functional currency is different from the Group’s
presentation currency, are translated as follows:
(i) Assets and liabilities are translated at exchange rates prevailing at the end of the reporting period;
(ii)
Income and expenses are translated at average exchange rates for the period; and
(iii) Retained earnings are translated at the exchange rates prevailing at the date of the transaction.
The functional currencies of the overseas subsidiaries are:
Dulhunty Engineering Limited (formerly D Power International Limited) – Hong Kong Dollars
Exchange differences arising on translation of foreign operations with functional currencies other than Australian
dollars are recognised in other comprehensive income and included in the foreign currency translation reserve
in the statement of financial position. The cumulative amount of these differences is reclassified into profit or
loss in the period in which the operation is disposed of.
(g) Property, plant and equipment
Each class of Plant and equipment is stated at cost or fair value as indicated, less accumulated depreciation
and any impairment in value.
Increases in the carrying amount arising on revaluation of plant and equipment are credited to a revaluation
surplus in equity. Decreases that offset previous increases of the same asset are recognised against
revaluation surplus directly in equity; all other decreases are recognised in profit or loss.
Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the
asset and the net amount is restated to the revalued amount of the asset.
Depreciation is calculated on both a straight-line and diminishing value basis over the estimated useful life of
the asset as follows:
Buildings & Leasehold Improvements
Plant and equipment
Leased plant & Equipment
Impairment
10% to 25%
5% to 25%
10% to 25%
The carrying values of plant and equipment are reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be recoverable. For an asset that does not generate largely
independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset
belongs.
If any such indication exists and where the carrying values exceed the estimated recoverable amount, the
assets or cash-generating units are written down to their recoverable amount. The recoverable amount of plant
and equipment is the greater of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset.
Impairment losses are recognised in the revaluation surplus or in the income statement, as set out above.
33
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 1 Summary of Significant Accounting Policies (Cont’d)
(h) Intangibles
Intangible assets
Intangible assets acquired separately are capitalised at cost as at the date of acquisition. Following initial
recognition, the cost model is applied to the class of intangible assets.
The useful lives of Patents, Computer Software and Licenses are assessed and amortised over their useful
lives and amortisation charged is taken to the income statement. Patents and licenses are amortised over 10
years and Computer Software over 4 years.
Intangible assets, excluding development costs, created within the business are not capitalised and expenditure
is charged against profits in the year in which the expenditure is incurred.
Intangible assets are tested for impairment where an indicator of impairment exists, and in the case of indefinite
life intangibles, at each reporting date, either individually or at the cash generating unit level. Useful lives are
also examined on an annual basis and adjustments, where applicable, are made on a prospective basis.
Research and development costs
Expenditure on research activities is recognised as an expense when incurred.
Expenditure on development activities is capitalised only when it is probable that future benefits will exceed
deferred costs and these benefits can be reliably measured. Capitalised development expenditure is stated at
cost less accumulated amortisation. Amortisation is calculated using a straight-line method to allocate the costs
over an estimated useful life of 20 years during which the related benefits are expected to be realised.
Development expenditure is tested annually for impairment or more frequently if events or changes in
circumstances indicate that it might be impaired. Capitalised development expenditure is measured at cost less
any accumulated amortisation and impairment losses.
Intellectual Property
The Group purchased Intellectual Property consisting of brands, trademarks and design patents from Advance
Cables Pty Ltd during the year ended 30 June 2019 for $500,000. These assets have yet to be utilised as the
new factory facility in Rosedale Victoria has not commenced production of Advance specific products.
Amortisation will be applied using a straight line over an estimated useful life of 20 years commencing financial
year 2021.
(i)
Investments
All investments are initially recognised at cost, being the fair value of the consideration given and including
acquisition charges associated with the investment.
Financial assets are classified at ‘fair value through profit or loss’ when they are held for trading for the purpose
of short term profit taking. Such assets are subsequently measured at fair value with changes in carrying value
being included in profit or loss.
Amortised cost is calculated by taking into account any discount or premium on acquisition, over the period to
maturity.
For investments carried at amortised cost, gains and losses are recognised in income when the investments are
derecognised or impaired, as well as through the amortisation process.
For investments where there is no quoted market price, fair value is determined by reference to the current
market value of another instrument which is substantially the same or is calculated based on the expected cash
flows of the underlying net asset base of the investment.
34
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 1 Summary of Significant Accounting Policies (Cont’d)
(j)
Inventories
Manufacturing
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition is accounted for as follows:
•
•
Raw materials — valued on a weighted average cost;
Finished goods and work-in-progress — cost of raw materials and standard cost of labour and a proportion
of manufacturing overheads based on estimated machine man minute. Standard cost approximates actual
cost.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of
completion.
(k)
Impairment of non-financial assets
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired.
Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where the
carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written
down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an
individual asset, unless the asset's value in use cannot be estimated to be close to its fair value less costs to
sell and it does not generate cash inflows that are largely independent of those from other assets or groups of
assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset
belongs.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset.
(l) Government Grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all
attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income
on a systematic basis over the periods that the related costs, for which it is intended to compensate, are
expensed.
When the grant relates to an asset, it is recognised against the asset released to profit or loss over the
expected useful life of the related asset as a reduced depreciation charge.
(m) Cash and cash equivalents
Cash on hand and in banks and short-term deposits are stated at nominal value.
For the purposes of the Statement of Cash Flows, cash includes cash on hand and in banks.
(n)
Investments in Associates
At the date of this report there are no investments in associates.
35
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 1 Summary of Significant Accounting Policies (Cont’d)
(o) Financial Instruments
Recognition and de-recognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire,
or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is
derecognised when it is extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at
the transaction price in accordance with AASB 15, all financial assets are initially measured at fair value
adjusted for transaction costs (where applicable).
Financial assets, other than those designated and effective as hedging instruments, are classified into the
following categories:
• amortised cost
• fair value through profit or loss (FVTPL)
• fair value through other comprehensive income (FVOCI).
In the periods presented the corporation does not have any financial assets categorised as FVOCI. The
classification is determined by both:
• the entity’s business model for managing the financial asset
• the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognised in profit or loss are presented within
finance costs, finance income or other financial items, except for impairment of trade receivables which is
presented within other expenses.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not
designated as FVTPL):
• they are held within a business model whose objective is to hold the financial assets and collect its contractual
cash flows
• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and
interest on the principal amount outstanding
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is
omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most
other receivables fall into this category of financial instruments.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to collect and
sell’ are categorised at fair value through profit and loss. Further, irrespective of business model financial assets
whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL. All
derivative financial instruments fall into this category.
Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair
values of financial assets in this category are determined by reference to active market transactions or using a
valuation technique where no active market exists.
36
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 1 Summary of Significant Accounting Policies (Cont’d)
Impairment of financial assets
AASB 9’s impairment requirements use more forward-looking information to recognise expected credit losses –
the ‘expected credit loss (ECL) model’. This replaced AASB 139’s ‘incurred loss model’. Instruments within the
scope of the new requirements included loans and other debt-type financial assets measured at amortised cost
and FVOCI, trade receivables, contract assets recognised and measured under AASB 15 and loan
commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value
through profit or loss.
Recognition of credit losses is no longer dependent on the Group first identifying a credit loss event. Instead the
Group considers a broader range of information when assessing credit risk and measuring expected credit
losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected
collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
• financial instruments that have not deteriorated significantly in credit quality since initial recognition or that
have low credit risk (‘Stage 1’) and
• financial instruments that have deteriorated significantly in credit quality since initial recognition and whose
credit risk is not low (‘Stage 2’).
‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date.
‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are
recognised for the second category.
Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses
over the expected life of the financial instrument.
Classification and measurement of financial liabilities
The Group’s financial liabilities include borrowings and trade & other payables.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs
unless the Group designated a financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for
derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains
or losses recognised in profit or loss (other than derivative financial instruments that are designated and
effective as hedging instruments).
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or
loss are included within finance costs or finance income.
Derivative financial instruments
Derivative financial instruments are accounted for at fair value through profit and loss (FVTPL) except for
derivatives designated as hedging instruments in cash flow hedge relationships, which require a specific
accounting treatment. To qualify for hedge accounting, the hedging relationship must meet all of the following
requirements:
• there is an economic relationship between the hedged item and the hedging instrument
• the effect of credit risk does not dominate the value changes that result from that economic relationship
• the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item
that the entity actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge
that quantity of hedged item.
37
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 1 Summary of Significant Accounting Policies (Cont’d)
(p) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are
capitalised during the period of time that is necessary to complete and prepare the asset for its intended use or
sale. Other borrowing costs are expensed in the period in which they are incurred and reported in finance costs.
(q) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying consolidated benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance
cost.
(r) Leases
Policies applied from 1 July 2019
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at
cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments
made at or before the commencement date net of any lease incentives received, any initial direct costs incurred,
and, except where included in the cost of inventories, an estimate of costs expected to be incurred for
dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain
ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life.
Right-of use assets are subject to impairment or adjusted for any re-measurement of lease liabilities.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for
short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these
assets are expensed to profit or loss as incurred.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at
the present value of the lease payments to be made over the term of the lease, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity’s incremental
borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease
payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees,
exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any
anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are
expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are
remeasured if there is a change in the following: future lease payments arising from a change in an index or a
rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a
lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if
the carrying amount of the right-of-use asset is fully written down.
Policies applicable for comparative accounting period
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the
leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at
the present value of the minimum lease payments.
Lease payments are apportioned between the finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged
directly against income.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease
term.
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified
as operating leases. Operating lease payments are recognised as an expense in the income statement on a
straight-line basis over the lease term.
38
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 1 Summary of Significant Accounting Policies (Cont’d)
(s) Revenue recognition
Revenue is recognised using the 5-step process:
1 Identifying the contract with a customer
2 Identifying the performance obligations
3 Determining the transaction price
4 Allocating the transaction price to the performance obligations
5 Recognising revenue when/as performance obligation(s) are satisfied.
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected
to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer,
the consolidated entity: identifies the contract with a customer; identifies the performance obligations in the
contract; determines the transaction price which takes into account estimates of variable consideration and the
time value of money; allocates the transaction price to the separate performance obligations on the basis of the
relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when
or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods
or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as
discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent
events. Such estimates are determined using either the 'expected value' or 'most likely amount' method. The
measurement of variable consideration is subject to a constraining principle whereby revenue will only be
recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue
recognised will not occur. The measurement constraint continues until the uncertainty associated with the
variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle
are initially recognised as deferred revenue in the form of a separate refund liability.
Sale of goods
Sale of goods revenue is recognised at the point of sale, which is where the customer has taken delivery of the
goods, the risks and rewards are transferred to the customer and there is a valid sales contract. Amounts
disclosed as revenue are net of sales returns and trade discounts.
Rendering of Service
Revenue is recognised as services are provided over time.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Interest
Revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly
discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying
amount of the financial asset.
Dividends
Revenue is recognised when the shareholders' right to receive the payment is established.
39
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 1 Summary of Significant Accounting Policies (Cont’d)
(t)
Income tax
The income tax expense for the year comprises current income tax expense/(income) and deferred tax
expense/(income). Deferred income tax is provided on all temporary differences at the balance sheet date
between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes,
except for deferred tax liability on revaluation of plant and equipment not recognised due to the existence of
unrecognised tax losses available for offset.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax
assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which
the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be
utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance sheet date.
(u) Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
• where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority,
in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense
item as applicable; and
•
receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables
or payables in the statement of financial position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows
arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority
are classified as operating cash flows.
(v) Contributed equity and other contributed equity
Contributed equity
Issued and paid up capital is recognised at the fair value of the consideration received by the Company.
Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of
the share proceeds received.
Other contributed equity
Capital contribution received in advance of share allotment is recognised at the fair value of the consideration
received by the Company as other contributed equity.
Any transaction costs arising on the related equity issuance are recognised directly in equity as a reduction of
the share proceeds received.
(w) Employee benefits
Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to
balance date. Employee benefits that are expected to be settled within one year have been measured at the
amounts expected to be paid when the liability is settled, plus related on-costs.
Employee benefits payable later than one year have been measured at the present value of the estimated future
cash outflows to be made for those benefits.
40
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 1 Summary of Significant Accounting Policies (Cont’d)
(x) Fair Value
The Group subsequently measures some of its assets at fair value on a recurring basis. Fair value is the price
the Group would receive to sell an asset in an orderly (ie unforced) transaction between independent,
knowledgeable and willing market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used
to determine fair value. Adjustments to market values may be made having regard to the characteristics of the
specific asset. The fair values of assets that are not traded in an active market are determined using one or
more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable
market data.
To the extent possible, market information is extracted from either the principal market for the asset (ie the
market with the greatest volume and level of activity for the asset) or, in the absence of such a market, the most
advantageous market available to the entity at the end of the reporting period (ie the market that maximises the
receipts from the sale of the asset after considering transaction costs and transport costs). For non-financial
assets, the fair value measurement also takes into account a market participant’s ability to use the asset in its
highest and best use or to sell it to another market participant that would use the asset in its highest and best
use.
(y) Critical Accounting Estimates and Judgments
The directors evaluate estimates and judgments incorporated into the financial statements based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future events
and are based on current trends and economic data, obtained both externally and within the group.
Key Estimates
i)
Impairment
The Group assesses impairment at the end of each reporting period by evaluating conditions and events
specific to the company that may be indicative of impairment triggers. Recoverable amounts of relevant assets
are reassessed using value-in-use calculations which incorporate various key assumptions.
ii) Estimation of useful lives of assets
The estimation of the useful lives of assets has been based on historical experience as well as manufacturer’s
warranties (for plant and equipment), lease terms (for leased equipment), long term sales projections and
customer requirements (for intangible assets) and turnover policies (for motor vehicles). In addition, the
condition of the assets is assessed at least once per year and considered against the remaining useful life.
Adjustments to useful lives are made when considered necessary.
iii) Revaluation of plant and equipment – refer to Note 13.
iv) Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based
on the lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an
overall expected credit loss rate for each group. These assumptions include recent sales experience, historical
collection rates, the impact of the Coronavirus (COVID-19) pandemic and forward-looking information that is
available. The allowance for expected credit losses, as disclosed in note 10, is calculated based on the
information available at the time of preparation. The actual credit losses in future years may be higher or lower.
v) Capitalised development costs
Distinguishing the research and development phases of a new customised product and determining whether the
recognition requirements for the capitalisation of development costs are met requires judgement. After
capitalisation, management monitors whether the recognition requirements continue to be met and whether
there are any indicators that capitalised costs may be impaired.
41
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 1 Summary of Significant Accounting Policies (Cont’d)
vi) Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and lease liability.
Judgement is exercised in determining whether there is reasonable certainty that an option to extend the lease
or purchase the underlying asset will be exercised, or an option to terminate the lease will not be exercised,
when ascertaining the periods to be included in the lease term. In determining the lease term, all facts and
circumstances that create an economical incentive to exercise an extension option, or not to exercise a
termination option, are considered at the lease commencement date. Factors considered may include the
importance of the asset to the consolidated entity's operations; comparison of terms and conditions to prevailing
market rates; incurrence of significant penalties; existence of significant leasehold improvements; and the costs
and disruption to replace the asset. The consolidated entity reassesses whether it is reasonably certain to
exercise an extension option, or not exercise a termination option, if there is a significant event or significant
change in circumstances.
Key Judgements
i) Going Concern: Refer to details in Note 1(c)
ii) Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences as management considers that it is
probable that future taxable profits will be available to utilise those temporary differences. Significant
management judgement is required to determine the amount of deferred tax assets that can be recognised,
based upon the likely timing and the level of future taxable profits over the next two years together with future
tax planning strategies.
iii) Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the COVID-19 pandemic has had, or may have,
on the consolidated entity based on known information. This consideration extends to the nature of the products
and services offered, customers, supply chain, staffing and geographic regions in which the consolidated entity
operates. The potential impact has been detailed in specific notes elsewhere in the report.
(z) New and Revised Accounting Standards
Refer to Note 31.
42
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 2 Revenue and Other Income
(a) Revenue
Goods transferred at a point in time
Services transferred over time
(b) Other Income
Management fee
R&D grant
Finance revenue
Gain on debt settlement
Gain on sale of fixed assets
Jobkeeper payment scheme
Other income
Total Other Revenue and Other Income
Note 3 Profit/(Loss) for the Year
Included in the determination of (Loss)/Profit before income tax
from continuing operations are the following expenses:
Expenses
Cost of sales
Note
Consolidated
2020
$
2019
$
10,058,633
12,592,484
67,409
69,727
10,126,042
12,662,211
8,244
126,300
943
-
13,400
513,000
98,665
760,552
16,488
201,949
567
5,357,429
28,000
-
-
5,604,433
10,886,594
18,266,644
7,642,791
10,019,392
Finance costs on lease liabilities
15
199,023
-
Other finance costs
Foreign exchange losses
1,042,700
911,379
2,284
31,953
Defined superannuation contributions expense
218,977
238,342
Research and development expenditure
Depreciation and amortisation expenses
Amortisation on right of use asset
15
290,344
638,421
597,480
464,938
454,307
-
43
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 4
Income Tax Expense/(Benefit)
(a) The components of Income tax expense/(benefit) comprise:
Current tax
Deferred tax
Consolidated
2020
$
2019
$
-
37,729
37,729
-
(89,423)
(89,423)
(b) Reconciliation of the prima facie tax on profit/(loss) to income tax
expense:
Prima facie tax on profit/(loss) before income tax at 27.5% (2019:
27.5%)
(1,203,842)
357,933
Tax effect of:
- other non-allowable items
- R&D expenses non-allowable
- other assessable items
- tax losses*
- deferred income tax
- R&D grant non assessable
- utilised tax losses not previously recognised
- other non assessable item
Income tax expense/(benefit)
128,754
79,845
4,615
1,029,045
37,729
(34,732)
37,092
127,858
8,936
628,930
(89,423)
(55,536)
-
(1,097,513)
(3,685)
37,729
(7,700)
(89,423)
*Current year tax losses unable to be offset within the group and not
brought to account.
44
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 5 Key Management Personnel Compensation
Compensation of Key Management Personnel
Refer to the remuneration report contained in the Directors’ Report for details of the remuneration paid or payable to
each member of the Group’s key management personnel (KMP) for the year ended 30 June 2020 and the
comparative year.
The totals of remuneration paid to KMP of the company and the Group during the year are as follows:
Short-term employee benefits
Post-employment benefits
Short-term employee benefits
Consolidated
2020
$
2019
$
915,194
60,868
976,062
909,021
55,529
964,550
These amounts include fees and benefits paid to the executive Chair and non-executive directors as well as all
salary, paid leave benefits, fringe benefits and cash bonuses awarded to executive directors and other KMP.
Post-employment benefits
These amounts are the current year’s estimated cost of providing for superannuation contributions made during the
year and post-employment life insurance benefits.
Share-based payments
There were no share-based payments to KMP issued in the current year or the prior year.
Note 6 Auditors' Remuneration
Remuneration of the auditor of the parent entity:
(a) Grant Thornton
Audit Services
2020
$
2019
$
Audit and review of financial reports
136,000
99,598
Non-audit Services
Other services
Total remuneration of Grant Thornton
11,000
147,000
-
99,598
45
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 6 Auditors' Remuneration (Cont’d)
Consolidated
2020
$
2019
$
(b) Nexia Sydney Audit & Assurance
Audit Services
Audit and review of financial reports
Non-audit Services
Other services
Total remuneration of Nexia Sydney Audit & Assurance
-
-
-
Total remuneration of the auditor of the parent entity
147,000
Remuneration of other auditors for:
Audit and review of financial reports
Tax compliance services
Note 7 Dividends
5,000
3,508
8,508
28,278
-
28,278
127,876
-
1,073
1,073
No dividends have been paid or proposed by the Parent for the year ended 30 June 2020 (2019: Nil).
Note 8 Earnings per Share
(a) Reconciliation of earnings to profit or loss:
Profit (loss)
Loss/(Profit) attributable to non-controlling interest
Earnings used to calculate basic and dilutive EPS
(b) Weighted average number of ordinary shares outstanding during
the year used in calculating basic EPS
Note
$
$
(4,415,335)
1,390,998
13,115
12,559
(4,402,220)
1,403,557
Number
Number
85,668,582
32,299,031
Weighted average number of dilutive options outstanding
(c)
-
-
Weighted average number of ordinary shares outstanding during
the year used in calculating dilutive EPS
85,668,582
32,299,031
(c) During the 2020 financial year no ordinary share options were issued to employees under an approved Share
Option Plan. There were no outstanding share options at 30 June 2020.
46
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 9 Cash and Cash Equivalents
Cash at bank and on hand
Reconciliation of cash
Cash at the end of the financial year as shown in the statement of
cash flows is reconciled to items in the Statement of Financial
Position as follows:
Cash and cash equivalents
Note 10 Trade and Other Receivables
CURRENT
Trade receivables
R & D grant receivable
Government grant receivable
Other receivables
(a)
Trade debtors are based on normal terms of trade, typically
30 days from end of month. Retention of title terms exist on
sales.
Note 11
Inventories
At cost
Raw materials and stores
Work in progress
Finished goods
Allowance for obsolete and slow-moving inventory
Consolidated
2020
$
2019
$
27,676
27,676
29,940
29,940
27,676
27,676
29,940
29,940
Note
$
$
(a)
2,788,593
2,771,947
782,104
948,604
169,500
1,075,143
448,221
4,188,418
452,359
5,248,053
658,703
17,466
612,204
345,159
1,750,782
2,522,355
(100,000)
-
2,326,951
3,479,718
47
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 12 Controlled Entitles
Controlled Entitles Consolidated
Parent Entity:
Energy Technologies Limited
Subsidiaries of Energy Technologies Limited :
Bambach Wires & Cables Pty Limited
Cogenic Pty Limited
Country of
Incorporation
Australia
Australia
Australia
Dulhunty Engineering Limited (previously D Power
International Limited)
British Virgin Islands
Dulhunty Engineering Limited (Hong Kong Branch)
Hong Kong
* Percentage of voting power is in proportion to ownership
Percentage Owned (%)*
2020
2019
100
100
51
51
100
100
51
51
48
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 13 Property, Plant and Equipment
Leasehold Improvements
Leasehold Improvements at independent valuation
Less: Accumulated depreciation
Total Leasehold Improvements
Plant and Equipment
Plant and equipment at independent valuation
Less: Accumulated depreciation
Plant and equipment at cost
Less: Accumulated depreciation
Leased Plant and Equipment
Capitalised leased assets – at cost
Less: Accumulated depreciation
Total Plant and Equipment
Total Property, Plant and Equipment
Consolidated
2020
$
2019
$
624,936
(13,128)
611,808
624,936
-
624,936
9,941,807
9,941,807
(296,618)
-
9,645,189
9,941,807
1,568,835
(77,672)
1,491,163
44,775
(41,760)
3,015
1,537,467
1,517,931
(414,082)
(319,406)
1,123,385
1,198,525
12,259,737
11,143,347
12,871,545
11,768,283
Movements in Carrying Amounts
Movements in carrying amounts for each class of property, plant and equipment between the beginning and the
end of the current financial year:
Leasehold
Improvements
Plant and
Equipment
Leased Plant
and
Equipment
$
$
$
Total
$
Consolidated Entity:
Carrying amount at the beginning of the year
624,936
9,944,822
1,198,525
11,768,283
Additions
Depreciation expense
Offset RJIP Government Grant
Revaluation for fair value
-
1,900,917
19,536
1,920,453
(13,128)
(332,530)
(94,676)
-
-
(376,857)
-
-
-
(440,334)
(376,857)
-
Carrying amount at the end of the year
611,808
11,136,352
1,123,385
12,871,545
49
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 13
Property, Plant and Equipment (Cont’d)
Revaluation of Plant and Equipment to Fair Value
In accordance with the measurement choice available under AASB 116 Property, Plant & Equipment and in order
to reflect fair value, subsidiary Bambach Wires and Cables Pty Ltd (BWC) obtained an independent valuation of
existing plant and equipment as at 30 June 2019. The valuation reports were completed under the following bases
of value:
Fair Value as defined in AASB13 (FV)
The fair value of BWC Plant and Equipment and Leasehold Improvements under FV was $10,566,743 at 30 June
2019. The Board adopted this value, which resulted in an increase in net plant and equipment value of $6,838,699
in BWC at 30 June 2019. The revaluation amount was recognised in the Asset Revaluation Reserve. A deferred
tax liability of $1,276,992 at 30 June 2020 (2019: $1,299,215) in respect of the revaluation, has been set off against
tax losses available to offset any liability arising upon a disposal of plant and equipment. Refer Note 19(d). EGY
has no plans to dispose of its plant and equipment.
The Group initially recognises and measures its Plant and Equipment and Leasehold Improvements at cost. The
Group subsequently measures its plant and equipment and its leasehold improvements at fair value on a recurring
basis in accordance with AASB 116: Property, Plant and Equipment. Refer Notes 1(g) and 1(x).
Fair Value Measurement
AASB 13 Fair Value Measurement requires the disclosure of fair value information by level of the fair value
hierarchy, which categorises fair value measurements into one of three possible levels based on the lowest level
that an input that is significant to the measurement can be categorised into, as follows:
• Level 1: Measurements based on quoted prices in active markets for identical assets that the entity can access
at the measurement date.
• Level 2: Measurements based on inputs other than the quoted prices included in Level 1, but that are
observable for the asset, either directly or indirectly.
• Level 3: Measurements based on unobservable inputs for the asset or liability.
50
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 13
Property, Plant and Equipment (Cont’d)
EGY’s management considers that the inputs used for the fair value measurement are Level 2 and Level 3 inputs.
Valuation techniques
AASB 13 requires the valuation technique used to be consistent with one of the following valuation approaches:
• Market approach: techniques that use prices and other information generated by market transactions for
•
identical of similar assets.
Income approach: techniques that convert future cash flows or income and expenses into a single discounted
present value.
• Cost approach: techniques that reflect the current replacement cost of an asset at its current service capacity.
EGY commissioned an external independent valuer to conduct a valuation of its unencumbered plant and
equipment and leasehold improvements at 30 June 2019 using a market approach technique. The technique
predominantly used recent observable market data for similar new equipment, adjusted for loss in value caused by
physical deterioration, functional obsolescence and economic obsolescence. EGY’s management considers that
the market approach is the appropriate valuation technique in relation to its plant and equipment and leasehold
improvements.
Inputs used in the market approach technique to measure Level 2 and Level 3 fair values were:
•
current replacement cost of the property being appraised less the loss in value caused by physical
deterioration, functional obsolescence and economic obsolescence;
• historical cost and relevant market data and industry expertise; and
•
sales comparison for assets where available.
The assessments of the physical condition, functional obsolescence and economic obsolescence are considered
Level 3 inputs.
EGY management has determined that the fair value of the plant and equipment as at 30 June 2020 does not differ
materially from its carrying value.
Recurring fair value measurements:
Plant and equipment
Leasehold improvements
Total non-financial assets recognised at fair value
2020
$
2019
$
11,136,352
611,808
11,748,160
9,944,822
624,936
10,569,758
The highest and best use of the assets is the fair market value in continued use, using the market approach
technique.
51
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 14 Intangible Assets
Computer software at cost
Accumulated amortisation
Net carrying value
Intellectual Property at cost
Accumulated amortisation
Net carrying value
Development Assets
Accumulated amortisation
Net carrying value
Total intangible assets
Consolidated
2020
$
2019
$
47,651
(21,659)
25,992
47,651
(15,161)
32,490
500,000
500,000
-
-
500,000
500,000
4,688,738
3,836,945
(477,598)
4,211,140
4,737,132
(286,009)
3,550,936
4,083,426
Movements in Carrying Amounts
Movements in carrying amounts for each group of Intangible Assets between the beginning and the end of the
current financial year:
Software
Development
Assets
Intellectual
Property
$
$
$
Total
$
Consolidated Entity:
Carrying amount at the beginning of the year
32,490
3,550,936
500,000
4,083,426
Additions
R&D Grant receivable
Amortisation expense
Carrying amount at the end of the year
-
-
(6,498)
25,992
1,507,596
(655,804)
(191,588)
-
-
-
1,507,596
(655,804)
(198,086)
4,211,140
500,000
4,737,132
Intangible assets have finite useful lives. The current amortisation charges in respect of intangible assets are
included under depreciation and amortisation expense.
The recoverable amount of intangible development assets has been reviewed to confirm to management that no
impairment indicators exist as at 30 June 2020, and that the 5% amortisation applied and consistent is
applicable. Testing was undertaken using information sourced both externally and internally and with a view to
reaching a conclusion which satisfies AASB 136.
The Group purchased Intellectual Property consisting of brands, trademarks and design patents from Advance
Cables Pty Ltd during the year ended 30 June 2019 for $500,000. These assets have yet to be utilised as the
new factory facility in Rosedale Victoria has not commenced production of Advance specific products.
Amortisation will be applied using a straight line over an estimated useful life of 20 years commencing financial
year 2021.
52
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 15 Right of Use Assets and Lease Liabilities
Right of Use Assets
Right of use assets
Less: Accumulated Amortisation
Consolidated
2020
$
2019
$
4,474,040
(597,480)
3,876,560
-
-
-
The consolidated entity has leased office and factory premises under operating leases with various expiry dates,
some with options to extend. The leases have various escalation clauses. On renewal, the terms of the leases
are renegotiated.
Reconciliations
Reconciliations of the written down values at the beginning and end of the current financial year are set out
below:
Balance at 1 July 2019
Adoption of AASB 16 on 1 July 2019
Additions
Amortisation expense
Balance at 30 June 2020
Lease Liabilities
Note
31(i)
Premises
$
-
4,474,040
-
(597,480)
3,876,560
Lease liabilities include the net present value of the following lease payments:
•
fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• variable lease payment that are based on an index or a rate, initially measured using the index or rate as at
the commencement date;
• amounts expected to be payable by the Group under residual value guarantees;
•
the exercise price of a purchase option if the group is reasonably certain to exercise that option; and
payments of penalties for terminating the lease, if the lease term reflects the group exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement
of the liability. The lease payments are discounted using the interest rate implicit in the lease.
If that rate cannot be readily determined, the entity’s incremental borrowing rate is used, being the rate that the
individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the
right-of-use asset in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Group uses recent arm's length borrowing rate received as a
starting point, adjusted to reflect changes in financing conditions since borrowing was received, making
adjustments specific to the lease (e.g. term, country, currency and security).
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss
over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the
liability for each period.
53
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 15 Right of Use Assets and Lease Liabilities (Cont’d)
Lease liabilities are presented in the statement of financial position as follows:
CURRENT
Office and factory premises
Hire purchase agreements*
NON-CURRENT
Office and factory premises
Hire purchase agreements*
Total lease liabilities
Consolidated
2020
$
2019
$
566,244
316,008
882,252
3,320,975
74,197
3,395,172
4,277,424
-
428,877
428,877
-
129,662
129,662
558,539
* Lease liabilities on Hire purchase agreements are secured by the underlying financed assets
Additional profit or loss and cash flow information on lease liabilities-
office and factory premises
Amounts recognised
comprehensive income:
in
Amortisation
the statement of profit or
loss and other
Interest expenses on lease
Amounts recognised in the statement of cash flows:
Repayment of lease liabilities
Interest paid
Total cash outflow in respect of leases in the year
30 June
2020
$
30 June
2019
$
597,480
199,023
586,821
199,023
785,844
-
-
-
-
-
54
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 16 Other Assets
Note
CURRENT
Prepayments
NON-CURRENT
Other receivables
Deposits
Note 17 Trade and Other Payables
CURRENT
Unsecured liabilities:
Trade payables
Sundry payables and accrued expenses
Consolidated
2020
$
2019
$
357,389
357,389
212,380
212,380
135,241
80,167
215,408
126,173
82,851
209,024
(a)
(b)
2,385,541
3,883,360
6,268,901
2,917,440
1,669,974
4,587,414
(a) Trade payables are based on normal terms of trade, typically 60 days from end of month.
(b) Sundry payables and accrued expenses include $89,772 for redundancy post reporting date
55
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 18 Borrowings
CURRENT
Secured borrowings
Asset Finance Facility
Debtor Finance Facility
Trade Finance Facility
Convertible Notes
Director Loan
Unsecured borrowings
Director and executive loans
Other loans
Total Current Borrowings
NON CURRENT
Secured borrowings:
Asset Finance Facility
Total Non-Current Borrowings
Total Borrowings
Total current and non-current secured borrowings
Debtor Finance facility
Trade Finance Facility
Asset Finance Facility
Director Loan
Convertible Notes
Note
Consolidated
2020
$
2019
$
(e)
(c)
(d)
29
29
(b)
(e)
106,365
1,398,684
1,046,406
-
575,000
3,126,455
200,981
537,811
738,792
3,865,247
-
1,895,032
-
25,000
-
1.920,032
89,561
-
89,561
2,009,593
338,963
338,963
4,204,210
-
-
2,009,593
1,398,684
1,046,406
445,328
575,000
-
3,465,418
1,895,032
-
-
-
25,000
1,920,032
56
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 18 Borrowings (Cont’d)
(a) During the financial year, the group repaid $965,862 (2019: $411,389) of both long and short term interest
bearing debt.
(b) During the year an external party made an unsecured loan to subsidiary Bambach Wires and Cables Pty Ltd.
As at 30 June 2020 the loan principal was $450,000. This loan incurred an establishment fee of $50,000 and
interest is paid or accrued at the rate of 14.5% per annum.
(c) During the year subsidiary Bambach Wires and Cables Pty Ltd entered into an agreement to increase the limit
on the secured Debtor Finance facility to $5m from the previous limit of $3m. This facility is drawn down to
amount $1,398,684 as at 30 June 2020. Interest is charged on the facility at rate of 2.65% above base rate,
currently 8.77%.
(d) During the year subsidiary Bambach Wires and Cables Pty Ltd entered into a secured Trade Finance facility
with a limit of $1,500,000, drawn down to amount $1,046,406 as at 30 June 2020. Interest is charged on the
facility at rate of 14.17%.
(e) During the year subsidiary Bambach Wires and Cables Pty Ltd also entered into a secured Asset Finance
facility for an amount of $500,000, repayable over four years and secured by plant and equipment. As at 30
June 2020 the facility balance was $445,328 (FY2019 Nil). Interest is charged on the facility at rate of 16%.
Note 19 Tax
(a) Deferred Tax Assets
Deferred tax assets comprise:
Employee and other provisions
(b) Reconciliations
(i) Gross Movements
Note
Consolidated
2020
$
2019
$
19(b)(ii)
228,927
228,927
266,656
266,656
The overall movement in the deferred tax account is as follows:
Opening balance
Credit/(Charge) to the income statement
4
Closing balance
266,656
(37,729)
228,927
177,233
89,423
266,656
57
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 19 Tax (Cont’d)
(ii) Deferred Tax Assets
The movement in deferred tax assets for each temporary
difference during the year is as follows:
Employee and other provisions
Opening balance
(Charged)/Credited to the income statement
Closing Balance
Total Deferred Tax Assets
(c) Deferred tax assets not brought to account, the benefits of
which will only be realised if the conditions for deductibility
set out in Note 1(t) occur are:
Temporary differences
Tax losses: capital losses
Tax losses: operating losses
Less potential tax loss benefits offset against deferred tax
liability - refer (d)
Tax losses: operating losses net of offsets*
(d) Deferred tax liability is offset against unrecognised tax
losses:
Revaluation of plant and equipment, and
improvements
leasehold
Less: Offset of unrecognised tax loss benefit
Net deferred tax liability
Consolidated
2020
$
2019
$
266,656
(37,729)
228,927
228,927
177,233
89,423
266,656
266,656
97,847
80,196
1,256,950
1,256,950
5,602,790
4,580,958
(1,276,992)
(1,299,215)
4,325,798
3,281,743
1,276,992
1,299,215
(1,276,992)
(1,299,215)
-
-
*Tax Losses of $4,325,798 have not been brought to account as it is unlikely that these losses will be utilised in
the near future.
58
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 20 Provisions
Employee Entitlements
Current
Non-current
Consolidated
2020
$
2019
$
846,510
156,692
823,184
196,049
1,003,202
1,019,233
Provision for Employee Entitlements
A provision has been recognised for employee entitlements relating to annual leave and long service leave. In
calculating the present value of future cash flows in respect of long service leave and annual leave not expected to
be settled within twelve months, the probability of that leave being taken is based on management estimates
considering amongst other items, historical data. The measurement and recognition criteria relating to employee
benefits have been disclosed in Note 1(w) to the financial statements.
Note 21 Issued Capital
Number of Ordinary shares fully paid 85,772,955 (2019: 85,486,742):
Consolidated
2020
$
2019
$
25,351,729
25,279,229
25,351,729
25,279,229
59
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 21
Issued Capital (Cont’d)
Ordinary Shares
At the beginning of reporting period
Shares issued during year
15/02/2019 Issued @ $0.002
22/02/2019 Consolidation 100:1
25/02/2019 issued at $0.20
30/04/2019 issued at $0.20
13/05/2019 issued at $0.20
29/05/2019 issued at $0.24
16/08/2019 issued at $0.24
13/12/2019 issued at $0.27
18/05/2020 issued at $0.25
Capital Transaction Costs
At reporting date
2020
Number
2019
Number
Consolidated
2020
$
2019
$
85,486,742
348,245,332
25,279,229
9,496,447
-
-
-
-
-
-
131,250
112,963
42,000
-
85,772,955
5,372,125,309
-
10,744,251
57,203,903
23,650,000
1,350,000
2,500,000
782,839
-
85,486,742
-
-
-
-
31,500
30,500
10,500
-
25,351,729
4,730,000
270,000
500,000
187,881
(649,350)
25,279,229
On 16 August 2019 EGY issued 131,250 shares in lieu of fees for services provided.
On 13 December 2019 EGY issued 112,963 shares in lieu of fees for services provided.
On 18 May 2020 EGY issued 42,000 shares in lieu of fees for services provided.
Terms and conditions:
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one
vote per share at shareholders' meetings. In the event of winding up of the company, ordinary shareholders rank
after creditors and are fully entitled to any proceeds of liquidation.
Note 22 Reserves
Exchange differences arising on translation of foreign controlled subsidiaries
Asset Revaluation
Consolidated
2020
$
2019
$
(1,987,960)
(1,986,161)
7,769,808
7,769,808
5,781,848
5,783,647
60
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 23 Parent Entity Disclosures
(a) Financial Position
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other Current Assets
TOTAL CURRENT ASSETS
NON CURRENT ASSETS
Trade and other receivables
Financial Assets
Property, plant and equipment
Intangible assets
TOTAL NON CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Borrowings
Short-term provisions
TOTAL CURRENT LIABILITIES
NON CURRENT LIABILITIES
Long-term provisions
TOTAL NON CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Contributed equity
Accumulated Losses
TOTAL EQUITY
61
2020
$
2019
$
12,215
8,843
13,256,191
13,095,281
169,781
75,409
13,438,187
13,179,533
135,241
126,174
-
5,658
10,400
-
3,015
13,167
151,299
142,356
13,589,486
13,321,889
925,254
575,000
210,483
1,710,737
34,204
34,204
545,431
75,000
193,465
813,896
21,432
21,432
1,744,941
835,328
11,844,545
12,486,561
25,351,729
25,279,229
300,000
-
(13,807,184)
(12,792,668)
11,844,545
12,486,561
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 23 Parent Entity Disclosures (Cont’d)
(b) Financial Performance
Gain/(Loss) for the year
Other comprehensive income
Total Comprehensive Income/(Loss)
2020
$
2019
$
(1,014,516)
3,586,922
-
-
(1,014,516)
3,586,922
(c) Parent entity result includes impairment of investment in controlled entities of Nil (2019: $479,773)
(d) The parent entity has co-guaranteed finance facilities with subsidiary Bambach Wires and Cables Pty Ltd to a
maximum drawdown limit of $7m (Guarantees FY2019: $3m).
(e) Contingent Liabilities of the Parent Entity – Refer to Note 25.
(f) Commitments for the acquisition of Property, Plant and Equipment by the parent entity Nil (2019 $Nil)
Note 24 Capital and Leasing Commitments
(a) Operating Lease Commitments
Non-cancellable short term operating leases contracted for but not
capitalised in the financial statements
Payable — minimum lease payments
not later than 12 months
between 12 months and 5 years
5 or more years
Consolidated
2020
$
2019
$
103,222
1,401,340
-
-
2,118,413
1,807,905
103,222
5,327,658
(b) Capital Expenditure Commitments
Deposits have been paid totalling $46,275 for new equipment quoted at total cost $138,586.
62
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 25 Contingent Liabilities
John Fielding Limited
Previous financial statements of the company have noted a contingent liability to John Fielding Limited for services
carried out prior to 30 June 1995 in regard to amendments to income tax returns. However, in accordance with the
contract no fee is payable until a cash benefit is received by the Company. At this stage no cash benefit has been
received by the Company. The maximum liability is $130,241.
Note 26 Segment Reporting
Primary reporting - Business segments
The Group’s primary business segment is Specialist and Industrial Cables. Therefore, the segment details are
fully reflected in the results and balances reported in the Statement of Profit and Loss and Statement of Financial
Position.
Management currently identifies the Group’s as one operating segment being Specialist and Industrial Cables.
This segment is the only segment monitored by the Group’s chief operating decision makers and strategic
decisions are made on the basis of this segment result only.
Segment accounting policies
Inter-segment pricing is determined on an arms-length basis and is eliminated on consolidation.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can
be allocated on a reasonable basis.
Segment capital expenditure is the total costs incurred during the period to acquire segment assets that are
expected to be used for more than one period.
63
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 27 Cash Flow Information
(a) Reconciliation of Cash Flow from Operations with Net
Profit/(Loss) after Income Tax
Net profit/(loss) after income tax
Non-cash flows in profit/(loss)
Provision for obsolete and slow moving inventories
Depreciation of non-current assets
Amortisation of intangibles
Amortisation on right of use assets
Unrealised foreign exchange movements
Hire Purchase Interest Charges
Asset Finance interest charges
Amortisation of debenture transaction costs
Amortisation of loan establishment fee
Net gain on disposal of property, plant and equipment
Gain on debt forgiveness
Non-Operating Cash Flow Cash Items
Shares issued in lieu of fees
Lender reserve movement
Changes in assets and liabilities
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
Increase/(decrease) in trade payables and accruals
(Increase)/decrease in deferred tax asset
(Increase) /decrease in value of other current assets
(Increase) /decrease in value of other non-current receivables
Increase/(decrease) in provisions for employee entitlements
Consolidated
Note
2020
$
2019
$
15
(4,415,335)
1,390,998
100,000
440,335
198,086
597,480
(3,609)
41,499
44,518
-
311,123
143,184
-
(1,055)
76,916
-
-
189,714
162,811
(13,400)
-
(28,000)
-
(5,357,429)
72,500
14,000
-
-
640,296
(240,358)
1,052,767
1,263,519
1,681,487
1,067,254
37,729
(6,383)
(145,009)
(16,031)
(89,423)
34,931
(18,136)
238,238
Net Cash inflow (outflow) from operations
483,741
(1,018,524)
(b) Credit Facilities
The Group has in place hire purchase facilities. At balance date $390,205 (2019: $558,539) of these facilities
have been utilised.
64
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 27 Cash Flow Information (Cont’d)
(c) Reconciliation of liabilities arising from financing activities
30/06/2019
Cash flows
Costs
Transaction
Note
$
Convertible Notes
Directors loans
Executives loans
Other loans
Debtor Finance
Facility
Asset Finance
Facility
Trade Finance
Facility
Hire Purchase
liabilities
18
18
18
18
18
18
18
15
25,000
89,561
-
-
$
(25,000)
421,420
190,000
450,000
$
-
75,000
-
87,811
1,895,032
(496,348)
-
-
-
400,810
44,518
1,046,406
-
558,539
(209,833)
41,499
Total
2,568,132
1,777,455
248,828
Note 28 Events After the Reporting Period
Non-cash changes
Foreign
exchange
movement
Loans
converted to
shares
30/06/2020
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
585,981
190,000
537,811
1,398,684
445,328
1,046,406
390,205
4,594,415
EGY announced on 24 June 2020 a capital raising of up to $5 million, comprising a $1.6 million Placement and
a non- renounceable Rights Issue for up to $3.4 million. Subsequent to 30 June 2020 the completion of the
Placement and the Rights Issue successfully raised $5 million through the allocation of 20,000,0000 ordinary
shares in the placement, raising $1.6 million, and a further 42,500,000 ordinary shares under the rights issue,
raising a further $3.4 million.
Impact of Covid-19/Victorian Lockdown
The occurrence of Covid-19 during the critical transitioning from Sydney factory to new Rosedale factory
impacted the Bambach business negatively, causing a sharp drop in revenues for the last quarter of the
financial year and into first quarter of financial year 2021. The main impact manifested itself in delays in
equipment installation caused by travel restrictions. This interrupted installation programmes and caused
production delays with a resultant slump in sales which continued into July 2020. By early August 2020 the re-
install back log was clearing and normal production was able to resume.
There has not arisen since the end of the financial period any other matter of circumstance which, in the
opinion of the directors of the Company, significantly affects the operations of the Group, the results of those
operations, or the state of affairs of the Group in subsequent financial years.
65
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
For the year ended 30 June 2020
Note 29 Related Party Transactions
No loans were made, guaranteed or secured by any entity in the consolidated entity to any group of key
management personnel during the financial year.
Loans by Directors to the company
During the 2020 financial year Director Matthew Driscoll, made a loan to the company of principal $500,000. This
loan holds second ranking security over the assets of the group. The loan incurred an establishment fee of
$75,000 and interest is paid or accrued at the rate of 15% per annum.
A loan from Director Alfred Chown to the company totalling $50,000 as at 30 June 2019 was repaid during the
period.
Included in Sundry payables and accrued expenses are unpaid Directors fees.
Loans by Directors to subsidiary company
A loan from Director Alfred Chown of $39,561 to subsidiary Bambach Wires and Cables Pty Ltd as at 30 June
2019 were repaid. During the 2020 financial year Director Alfred J. Chown made a further loan of $10,981 to the
company. This loan is unsecured and repayable on demand.
Loans by Key Management Personnel to subsidiary company
Two key management personnel made short term loans of $190,000 (2019: Nil) to subsidiary Bambach Wires
and Cables Pty Ltd. These loans were unsecured and incurred an establishment fee of 10%. The loans have
since been repaid.
The above loan transactions are on normal commercial terms and conditions.
Directors Guarantee
Subsidiary Bambach Wires and Cables Pty Ltd has varied existing business accounts with Moneytech to increase
the limit on the Trade Finance Facility to $1.5m and to increase the limit on the IF Facility to $5m. The Asset
Finance Facility limit remains at $500,000. To facilitate this Director Alfred Chown and Donna Chown (guarantors)
have provided in favour of Moneytech a guarantee for the performance of the obligations of Bambach under the
facility. Donna Chown has granted a mortgage in favour of Moneytech to secure her guarantee obligations.
Energy Technologies Limited has provided a guarantee and indemnity to the guarantors for any liability of
Bambach under the provisions of the Deed as tabled.
In consideration for providing the guarantee and security to Moneytech the fees payable to the guarantors are an
establishment fee of 3% of the amount guaranteed ($210,000), and a monthly service fee based on 2% per
annum of the amount guaranteed ($11,667 per month). Fees will be paid in cash but with the right to accept
shares if acceptable to both parties.
Dulhunty Poles Pty Ltd (DPPL)
Other Receivable
Refer Note 16 Other receivables non-current amount owing by DPPL $135,241 (FY 2019 $126,173). This is
unsecured and management consider it to be recoverable.
Other transactions with the company or its controlled entities and director related entities
A number of specified directors and specified executives, or their personally-related entities, hold positions in
other entities that result in them having control or significant influence over the financial or operating policies of
these entities.
66
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 29 Related Party Transactions (Cont’d)
A number of these entities transacted with the company or its subsidiaries in the reporting period. The terms and
conditions of those transactions were no more favourable than those available, or which might reasonably be
expected to be available, on similar transactions to unrelated entities on an arms-length basis.
Details of these transactions are as follows:
Mr Alfred J. Chown is a director of NLP International Limited. A subsidiary company, Dulhunty Engineering
Limited (DEL), formerly D Power International Limited, during the period employed the services of NLP
International Limited as consultants. The consideration paid for these services was $12,000 (2019: $12,000) and
is included in directors’ emoluments.
An entity related to directors Gary A Ferguson and Philip W Dulhunty has entered into commercial hire purchase
transactions with subsidiary Bambach Wires and Cables Pty Ltd. These transactions are secured by equipment.
Interest rates vary between 9.25% and 12.5% per annum.
An entity related to director Alfred J. Chown has entered into commercial hire purchase transactions with
subsidiary Bambach Wires and Cables Pty Ltd. These transactions are secured by equipment. Interest rates vary
between 4.9% and 10.0% per annum.
The transactions above are on normal commercial terms and conditions.
Note 30 Financial Risk Management Disclosures
(a) Capital Risk Management
Energy Technologies Limited (EGY) manages its capital to ensure that entities in the EGY Group will be able to
continue as a going concern while maximising the potential return to stakeholders through the optimum balance
of debt and equity. This strategy remains unchanged from FY2019.
The capital structure of the EGY Group consists of cash and cash equivalents, debt and equity attributable to
equity holders of the EGY parent and to its operating subsidiary.
The EGY Group operates internationally through its subsidiary company DEL based in Hong Kong. The EGY
Group senior management monitors all externally imposed capital requirements in each jurisdiction to ensure
compliance.
Operating cash flows are used to maintain and expand the Group manufacturing and distribution asset base as
well as to meet routine outflows including tax and the repayment of maturing debt. The EGY Group Board and
senior management consider the costs of capital and monitor the gearing ratio as a proportion of net debt to
equity.
The gearing ratio at year end was as follows:
Consolidated
2020
$
2019
$
4,594,415
2,568,132
(27,676)
(29,940)
4,566,739
2,538,192
13,076,269
17,122,701
Current and Non Current Financial liabilities
Debt (i)
Cash and cash equivalents
Net Debt
Equity (ii)
(i) Debt is defined as long-term and short-term borrowings.
(ii) Equity includes all capital and reserves and minority interest.
67
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 30 Financial Risk Management Disclosures (Cont’d)
(b) Financial Risk Management
In common with other businesses the EGY Group is exposed to risks that arise from the use of financial
instruments. This note describes the objectives, policies and processes for managing those risks and the methods
used to measure them. The EGY Group’s financial instruments consist mainly of facilities with banks, convertible
notes, debentures, short term loans, hire purchase, accounts receivable and payable, loans to and from
subsidiaries, leases and derivatives. There have been no substantive changes in the EGY Group level of exposure
to financial instrument risks or the objectives and processes for managing those risks from previous periods unless
otherwise stated in this note.
(i)
Financial Risk Management Objectives
The Board of Directors has overall responsibility for the determination of the EGY Group financial risk management
framework and, whilst retaining ultimate responsibility for them, it has delegated authority for the design and
implementation of operating processes ensuring effective risk management to the EGY Group’s corporate treasury
and finance function, which provides services to the business including negotiation and co-ordination of finance
facilities, and the monitoring and management of the financial risks as they relate to the operations of the Group.
The Board receives regular reports through which it reviews the effectiveness of the processes put in place and the
appropriateness of the set objectives to control risk.
Overall the risk management strategy seeks to assist the Group in meeting its financial targets as well as
minimizing the potential adverse effects on financial performance. The main exposures to financial instrument risk
experienced by the EGY Group are credit risk, liquidity risk and market risk (including currency risk, interest rate risk
and price risk). The EGY Group does not enter into financial instruments, including derivative financial instruments,
for speculative purposes.
(ii) Credit Risk
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in a loss to the
EGY Group. This arises principally from the Group’s trade receivables. For the EGY Group this risk has been
determined as low.
The maximum exposure to credit risk by class of recognised financial assets at the end of the reporting period,
excluding the value of any collateral or other security held, is equivalent to the carrying amount and classification of
those financial assets (net of any provisions) as presented in the Statement of Financial Position.
The Group has a general policy of only dealing with creditworthy counterparties. As well, a credit check system is
also in place and credit checks are obtained from a reputable external source for selected new and overseas
customers. Overseas customers’ trade terms include use of documentary credit bank facilities in customer locations
deemed at risk, as well as collateral payment. There are no material amounts of collateral held as security at 30
June 2020.
(iii) Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Ultimate
responsibility for liquidity risk management vests with the EGY Board of Directors and the main subsidiary Board of
Directors, who apply an appropriate liquidity risk management framework to the Group’s short, medium and long
term funding requirements. The EGY Group manages liquidity risk by the retention of adequate reserves, banking
facilities and reserve borrowing facilities and by monitoring forecast and actual cash flows, which are updated
regularly by the treasury and finance function, and matching the maturity profiles of financial assets and liabilities.
(iv) Liquidity and interest rate tables
The following table details the EGY Group contractual maturity for non-derivative financial assets and liabilities and
are based on undiscounted cash flows of financial assets and liabilities on the earliest date on which repayment can
be required.
68
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 30 Financial Risk Management Disclosures (Cont’d)
Effective
Weighted
Average
Interest Rate -
%
Floating Interest Rate
$
Fixed Rate Within One
Year
$
Fixed Rate Over 1-5
Years
$
Non-interest Bearing
$
Total
$
CONSOLIDATED ENTITY
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Financial Assets:
Cash and cash equivalents
0.25
1.00
27,676
29,940
Receivables
-
-
-
-
Total Financial Assets
Financial Liabilities:
Trade payables
Sundry payables
27,676
29,940
-
-
-
-
Debtor Finance facility
8.77
8.37
1,398,684
1,895,032
Trade Finance Facility
Asset Finance Facility
Hire purchase liability
Lease Liability
Loans from directors and
executives
Other Loans
Convertible notes
14.17
16.00
9.43
5.00
15.00
-
-
8.63
-
-
14.50
10.00
-
9.50
1,046,406
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
106,365
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
338,963
-
-
-
-
-
-
-
-
316,008
428,877
74,197
129,662
566,244
500,000
450,000
25,000
-
-
-
-
-
3,320,975
-
-
-
-
-
-
-
-
-
27,676
29,940
4,188,418
5,248,053
4,188,418
5,248,053
4,188,418
5,248,053
4,216,094
5,277,993
2,385,541
2,917,440
2,385,541
2,917,440
3,883,360
1,669,974
3,883,360
1,669,974
-
-
-
-
-
-
-
-
-
-
1,398,684
1,895,032
1,046,406
445,328
-
-
390,205
558,539
3,887,219
-
275,981
87,811
-
89,561
775,981
89,561
-
-
537,811
-
-
25,000
Total Financial Liabilities
2,445,090
1,920,032
1,938,617
428,877
3,734,135
129,662
6,632,693
4,676,975
14,750,535
7,155,546
Net financial assets (liabilities)
(2,417,414)
(1,890,092)
(1,938,617)
(428,877)
(3,734,135)
(129,662)
(2,444,275)
571,078
(10,534,441)
(1,877,553)
69
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 30 Financial Risk Management Disclosures (Cont’d)
(b) Financial Risk Management (Cont’d)
(v) Maturity analysis
Trade and other payables are expected to be paid within a period of 6 months from year end for the
consolidated entity for 2020 and 2019.
(vi) Market Risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and
equity prices will affect the EGY Group’s income or the value of its holdings of financial instruments. The
objective of market risk management is to manage and control market risk within acceptable parameters,
while achieving optimum return.
(vii) Foreign currency risk management
The EGY Group is exposed to currency risk on investments that are denominated in a currency other than
the respective functional currencies of Group entities, primarily the Australian dollar (AUD) and Hong
Kong Dollar (HKD). The Group’s investments in, and loans to, its subsidiaries are not hedged as these
positions are considered to be long term in nature.
The carrying amount of the EGY Group’s foreign currency denominated monetary assets and monetary
liabilities at the reporting date is as follows:
US Dollars
Euros
Hong Kong Dollars
Swiss Francs
Total
(viii) Forward exchange contracts
Liabilities
Assets
2020
$’000
2019
$’000
2020
$’000
2019
$’000
24
-
11
-
35
1
36
9
-
46
-
-
-
-
-
1
-
-
-
1
The EGY Group policy is, where possible, to allow group entities to settle liabilities denominated in their
functional currency with the cash generated from their own operations in that currency. Where group entities
have liabilities denominated in a currency other than their functional currency, cash already denominated in
that currency will, where possible, be used from within the Group.
The Group’s primary operating exposure is where trade receivables and payables are not denominated in
their functional currency. The overall treasury function is based in Australia where the primary banking
facilities are maintained. The Group also enters into forward exchange contracts to buy and sell specified
amounts of foreign currencies in the future at stipulated exchange rates, with the objective of protecting the
Group against unfavourable exchange rate movements for contracted sales and purchases in foreign
currencies, primarily US Dollars.
At 30 June 2020 and 2019 there were no outstanding forward exchange contracts.
70
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 30 Financial Risk Management Disclosures (Cont’d)
(b) Financial Risk Management (Cont’d)
(ix) Foreign currency sensitivity analysis
The following table details the EGY Group’s sensitivity to a 10% increase or decrease in the Australian
Dollar against relevant foreign currencies. This sensitivity represents management’s assessment of the
reasonable possible change in foreign currency rates. Its analysis includes cash assets plus outstanding
foreign currency denominated trade receivables and payables and adjusts their translation at the period end
for a 10% change in foreign currency rates. A positive number indicates an increase in profit where the
Australian dollar strengthens against the respective currency. For a weakening of the Australian dollar
against the respective currency, there would be an equal and opposite impact on the profit.
Profit or Loss/Equity
US Dollars
Euros
Hong Kong Dollars
Total
Consolidated
2020
$’000
2019
$’000
(3)
-
(1)
(4)
-
(4)
(1)
(5)
(x) Interest Rate Risk Management
The EGY Group is exposed to interest rate risk on cash and cash equivalents, which is the risk that a
financial instrument’s value will fluctuate as a result of changes in the market interest rates on interest
bearing financial instruments. The EGY Group does not use derivatives to mitigate these exposures.
The EGY Group’s fixed rate financial instruments represent short term borrowings, at fixed rates maturing
over periods less than one year and long term borrowings at fixed rates maturing over periods of between
1 to 5 years. The Group’s variable rate financial securities consist of bank accounts and convertible notes
managed in Australia.
(xi) Interest rate sensitivity analysis
The following analysis indicates the effect of a 2% or 200 basis point increase or decrease in nominal
interest rates, based on exposures in existence at the reporting date, and holding all other variables
constant. This represents management’s assessment of the reasonably possible change in interest rates
as at that date.
Change in Net Profit:
Interest rise by 2% (200 basis points)
Interest cut by 2% (200 basis points)
Change in Equity:
Interest rise by 2% (200 basis points)
Interest cut by 2% (200 basis points)
71
Consolidated
2020
$’000
2019
$’000
(91)
91
(91)
91
(51)
51
(51)
51
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 30 Financial Risk Management Disclosures (Cont’d)
(b) Financial Risk Management (Cont’d)
(xii) Fair value of financial instruments
The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
Level 1 – the fair value is calculated using quoted prices in active markets.
Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly (as prices) or indirectly (derived from prices).
Level 3 – the value is estimated using inputs for the asset or liability that are not based on observable market
data.
Quoted market price represents the fair value determined based on quoted prices in active markets as at
the reporting date without any deduction for transaction costs.
For financial instruments not quoted in active markets, the Group uses valuation techniques such as
present value techniques, comparison to similar instruments for which market observable prices exist and
other relevant models used by market participants. These valuation techniques use both observable and
unobservable market inputs.
Financial instruments that use valuation techniques with only observable market inputs or unobservable
inputs that are not significant to the overall valuation include interest rate swaps, forward commodity
contracts and foreign exchange contracts not traded on a recognised exchange.
The fair values of other financial assets and liabilities approximates their carrying values at balance date.
Transfer between categories
There were no transfers between Level 1 and Level 2 during the year.
72
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 31 New and Amended Accounting Standards and Interpretations
(i) New and amended accounting standards and interpretations adopted by the Group
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by
the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been
early adopted.
The following Accounting Standards and Interpretations adopted during the year are most relevant to the
Group:
Interpretation 23 Uncertainty over Income Tax
The Group has adopted Interpretation 23 from 1 July 2019. The interpretation clarifies how to apply the
recognition and measurement requirements of AASB 112 ‘Income Taxes’ in circumstances where
uncertain tax treatments exists. The interpretation requires: the consolidated entity to determine whether
each uncertain tax treatment should be treated separately or together, based on which approach better
predicts the resolution of the uncertainty; the consolidated entity to consider whether it is probable that a
taxation authority will accept an uncertain tax treatment; and if the consolidated entity concludes that it is
not probable that the taxation authority will accept an uncertain tax treatment, it shall reflect the effect of
uncertainty in determining the related taxable profit (tax loss), tax bases, unused tax losses, unused tax
credits or tax rates, measuring the tax uncertainty based on either the most likely amount or the expected
value. In making the assessment it is assumed that a taxation authority will examine amounts it has a right
to examine and have full knowledge of all related information when making those examinations.
Interpretation 23 was adopted using the modified retrospective approach and as such comparatives have
not been restated. There was no impact of adoption on the opening accumulated losses as at 1 July 2019.
AASB 16 Leases
The consolidated entity has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117
'Leases' and for lessees eliminates the classifications of operating leases and finance leases. Except for
short-term leases and leases of low-value assets, right-of-use assets and corresponding lease liabilities
are recognised in the statement of financial position. Straight-line operating lease expense recognition is
replaced with a depreciation charge for the right-of-use assets (included in operating costs) and an interest
expense on the recognised lease liabilities (included in finance costs). In the earlier periods of the lease,
the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses
under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation)
results improve as the operating expense is now replaced by interest expense and depreciation in profit or
loss. For classification within the statement of cash flows, the interest portion is disclosed in operating
activities and the principal portion of the lease payments are separately disclosed in financing activities.
For lessor accounting, the standard does not substantially change how a lessor accounts for leases.
73
Energy Technologies Limited – 2020 Annual Report
Notes to the Financial Statements
for the year ended 30 June 2020
Note 31 New and Amended Accounting Standards and Interpretations (Cont’d)
Impact of adoption
AASB 16 was adopted using the modified retrospective approach and as such the comparatives have not
been restated. The impact of adoption on opening retained profits as at 1 July 2019 was as follows:
Operating Lease commitments as at 1 July 2019 (AASB 117)
Operating lease commitments discount based on the weighted average incremental
borrowing rate of 5% (AASB 16)
Right-of-use assets (AASB 16)
Lease liabilities - current (AASB 16)
Lease liabilities - non-current (AASB 16)
Impact on opening retained earnings as at 1 July 2019
1 July
2019
$
5,327,658
(853,618)
4,474,040
(1,153,065)
(3,320,975)
-
(ii) New accounting standards and interpretations not yet adopted by the Group
Australian Accounting Standards and Interpretations that have recently been issued or amended but are
not yet mandatory, have not been early adopted by the group for the annual reporting period ended 30
June 2020. The group's assessment of the impact of these new or amended Accounting Standards and
Interpretations, most relevant to the consolidated entity, are set out below.
New Conceptual Framework for Financial Reporting
A revised Conceptual Framework for Financial Reporting has been issued by the AASB and is applicable
for annual reporting periods beginning on or after 1 January 2020. This release impacts for-profit private
sector entities that have public accountability that are required by legislation to comply with Australian
Accounting Standards and other for-profit entities that voluntarily elect to apply the Conceptual
Framework. Phase 2 of the framework is yet to be released which will impact for-profit private sector
entities. The application of new definition and recognition criteria as well as new guidance on
measurement will result in amendments to several accounting standards. The issue of AASB 2019-1
Amendments to Australian Accounting Standards – References to the Conceptual Framework, also
applicable from 1 January 2020, includes such amendments. Where the group has relied on the
conceptual framework in determining its accounting policies for transactions, events or conditions that are
not otherwise dealt with under Australian Accounting Standards, the group may need to revisit such
policies. The group will apply the revised conceptual framework from 1 July 2020 and is yet to assess its
impact.
74
Energy Technologies Limited – 2020 Annual Report
Directors’ Declaration
The directors of Energy Technologies Limited declare that:
1.
the financial statements and notes, as set out on pages 26 to 74, are in accordance with the
Corporations Act 2001 and:
(a) comply with Accounting Standards and the Corporations Regulations 2001;
(b) comply with International Financial Reporting Standards as disclosed in Note 1; and
(c) give a true and fair view of the financial position as at 30 June 2020 and of the performance
for the year ended on that date of the company and consolidated entity;
2.
the Managing Director and Chief Financial Officer have each declared that:
(a) the financial records of the company for the financial year have been properly maintained in
accordance with section 286 of the Corporations Act 2001;
(b) the financial statements and notes for the financial year comply with the Accounting
Standards; and
(c) the financial statements and notes for the financial year give a true and fair view;
3.
in the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay
its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
Alfred J. Chown
Chairman/Managing Director
Sydney, 30 September 2020
75
Level 17, 383 Kent Street
Sydney NSW 2000
Correspondence to:
Locked Bag Q800
QVB Post Office
Sydney NSW 1230
T +61 2 8297 2400
F +61 2 9299 4445
E info.nsw@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of Energy Technologies Limited
Report on the audit of the financial report
Qualified opinion
We have audited the financial report of Energy Technologies Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated income statement,
the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated
statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary
of significant accounting policies, and the Directors’ declaration.
In our opinion, except for the effects of the matter described below in the Basis for Qualified Opinion section of our report,
the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance for the year
ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
76
Basis for qualified opinion
In the 30 June 2018 Independent Auditor’s Report, the previous auditor included a qualification relating to inadequacies
identified in the stocktake procedures performed by the Group, whereby quantities used in determining the inventory balance
differed materially from the quantities verified by the previous auditor at their stock attendance and subsequent recounts. The
previous auditor had estimated the potential impact of misstatements to be an additional write-down in inventory to a maximum
of $510,000. Whilst we have obtained sufficient appropriate audit evidence in relation to inventory at 30 June 2020, we are not
in a position to and do not express an opinion on the comparative period opening balances as at 1 July 2018. As these opening
balances enter into the determination of the comparative financial performance and cash flows, we were unable to determine
the effect of such adjustments, if any, as might have been determined to be necessary had this 30 June 2018 inventory
qualification not existed.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent
of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical
responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Material uncertainty related to going concern
We draw attention to Note 1(c) in the financial statements, which indicates that the Group incurred a net loss of $4,402,220
during the year ended 30 June 2020, and as of that date, the Group’s current liabilities exceeded its current assets by
$4,962,476. As stated in Note 1(c), these events or conditions, along with other matters as set forth in Note 1(c), indicate that
a material uncertainty exists that may cast doubt on the Group’s ability to continue as a going concern. Our opinion is not
modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the Material uncertainty related to going concern section, we have determined the
matters described below to be the key audit matters to be communicated in our report.
Key audit matter
How our audit addressed the key audit matter
Existence and valuation of inventory (Notes 1(j) and 11)
The Group has an inventory balance of $2,326,951 as at
30 June 2020, consisting of raw materials and stores,
work in progress, and finished goods. Inventories are
carried at the lower of cost and net realisable value and
management has recognised a provision for obsolescence
and slowing moving inventory of $100,000 at 30 June
2020.
This area is a key audit matter as a result of:
• The initial opening balance qualification in relation to
the existence of inventory;
• The inherent complexities in applying a standard cost of
production/manufacturing to work in progress and
finished goods; and
• The
level of management
in
assessing the provision for obsolescence and slow
moving stock.
judgement
involved
Our procedures included, amongst others:
• Attending stocktakes at significant locations and conducting
test counts of selected items, with counts agreed to final
inventory listings;
• For
raw materials,
the
reasonableness of average costs by comparing to recent
purchases;
testing on a sample basis
• For work in progress and finished goods, testing on a sample
basis bills of materials back to key inputs, being raw materials,
labour and manufacturing overheads;
• Assessing the net realisable value of inventories by testing
inventory items on a sample basis to subsequent sales
invoices and ensuring inventories are stated at the lower of
cost and net-realisable value;
• Obtaining slow-moving inventory reports and assessing the
adequacy of the provision for obsolescence and slow moving
inventory; and
• Assessing the adequacy of related financial report disclosures.
77
Key audit matter
How our audit addressed the key audit matter
Capitalised development costs (Notes 1(h), and 14)
Capitalised development assets had a net carrying value of
$4,211,140 at 30 June 2020.
During the year the Group capitalised $1,507,596 of
development assets. These intangible assets are being
amortised over a 20-year period, and an amortisation
expense of $191,588 has been
the
consolidated income statement pertinent to development
costs.
included
in
AASB 138:
the specific
Intangible Assets sets out
requirements to be met in order to capitalise development
costs. Intangible assets should be amortised over their
useful economic lives in accordance with AASB 138.
This area is a key audit matter as a result of:
• The subjectivity and management judgement applied in
the assessment of whether costs meet the development
phase criteria described in AASB 138 and in relation to
the estimate of the assets' useful lives; and
• The Group engaged an expert to assist in determining
Our procedures included, amongst others:
• Assessing
the Group’s accounting policy
capitalised development assets for adherence to AASB 138;
in respect of
• Evaluating the competence, capability and objectivity of the
management’s external expert and performing a detailed
review of their reports to understand the scope of their
engagement and any limitations in the report, and further
discussions on aspects of the report with the external expert;
• Evaluating management’s assessment of each project for
compliance with the recognition criteria set out in AASB 138;
including discussing project plans with management and
project leaders to develop an understanding of the nature and
feasibility of key projects at 30 June 2020;
• Testing a sample of costs capitalised by tracing to underlying
support such as vendor invoices and payroll records in order to
understand the nature of the item and whether the expenditure
was attributable to the development of the related asset, and
therefore whether capitalisation was in accordance with the
recognition criteria of AASB 138;
the level of capitalised costs.
• Evaluating the reasonableness of useful lives to be applied in
future reporting periods; and
• Assessing the adequacy of related financial report disclosures.
R&D tax incentive scheme (Notes 2(b), 10 and 14)
The Group engaged
in research and development
activities during the year, and recognised R&D grant
income of $126,300 in addition to recognising a $655,804
R&D tax incentive offset against the carrying value of
intangible assets.
This area is a key audit matter as a result of:
• The subjectivity and management judgement applied in
determining whether expenses are eligible for the R&D
claim;
• The incorrect treatment in the prior year of the
accounting for the R&D grant; and
• The Group engaged an expert to assist in determining
the level of capitalised costs.
Our procedures included, amongst others:
• Assessing
the Group’s accounting policy
in respect of
government grants for adherence to AASB 120: Accounting for
Government Grants and Disclosure of Government Assistance;
• Evaluating the competence, capability and objectivity of the
management’s external expert and performing a detailed
review of their reports to understand the scope of their
engagement and any limitations in the report. In addition we
held discussions with them;
• Testing a sample of R&D costs claimed by tracing to underlying
the costs were eligible
support and assessing whether
expenditure under the R&D tax incentive framework;
• Verifying the lodgement of the R&D claim, and agreeing
the bank account
the ATO
to
amounts received
subsequent to the year-end; and
from
• Assessing the adequacy of related financial report disclosures.
Information other than the financial report and auditor's report thereon
The Directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 30 June 2020, but does not include the financial report and our auditor’s report
thereon.
78
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the
audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the
Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: https://www.auasb.gov.au/auditors_responsibilites/ar1_2020.pdf. This description forms part
of our auditor’s report.
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 12 to 16 of the Directors’ report for the year ended 30
June 2020.
In our opinion, the Remuneration Report of Energy Technologies Limited, for the year ended 30 June 2020 complies
with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Grant Thornton Audit Pty Ltd
Chartered Accountants
C F Farley
Partner – Audit & Assurance
Sydney, 30 September 2020
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Energy Technologies Limited – 2020 Annual Report
ASX Additional Information
Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this report
is as follows. The information is current as at 31 August 2020.
(a) Distribution of equity securities
The number of shareholders, by size of holding, in each class of share are:
Ordinary shares
1
1,001
5,001
10,001
100,001
- 1,000
- 5,000
- 10,000
- 100,000
and over
Number of holders Number of shares
641
68
32
118
146
80,601
167,925
231,702
4,982,175
142,810,552
1,005
148,272,955
The number of shareholders holding less than a marketable parcel of
shares are:
719
305,496
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
No
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Name
J P Morgan Nominees Australia Pty Ltd
Advance Cables Pty Ltd
Alfred J Chown
Howe Automotive Limited
Garsind Pty Ltd (Ruth Ross Superfund A/C)
Auster Holdings Pty Ltd
Edmunds Lacis
Invermore Pty Ltd (The A Middendorp Family A/C)
Louandi Super Fund Pty Ltd (Louandi Superfund A/C)
Dasi Investments Pty Ltd
Morrmac Pty Ltd (Mimie MacLaren Pension Account)
HSBC Custody Nominees (Australia) Limited (No 2 A/C)
Tzelepsis Nominees Pty Ltd (Tzelepsis Superfund A/C)
Daniel Howard Sharp
Morrissey Wealth Management Pty Ltd (Lonnie Investment A/C)
Rosalind Lawrence (Rosalind Lawrence PSF A/C)
Glenbarry Pty Ltd (Thomas A Hutchins Family A/C)
Catwilly Pty Ltd (Harris Family Superfund A/C)
PP Legge Pty Ltd (P J Legge Super Fund A/C)
Samada Street Nominees Pty Ltd (Giles Family No 2 A/C)
No. of shares
%
23,437,500
10,782,839
8,243,575
4,989,465
3,922,795
3,476,058
3,226,951
3,125,000
2,873,889
2,500,000
2,392,529
2,264,001
2,250,000
2,000,000
1,970,346
1,808,688
1,763,858
1,696,764
1,685,334
1,562,500
85,972,092
15.81
7.27
5.56
3.37
2.65
2.34
2.18
2.11
1.94
1.69
1.61
1.53
1.52
1.35
1.33
1.22
1.19
1.14
1.14
1.03
57.98
80
Energy Technologies Limited – 2020 Annual Report
ASX Additional Information (Cont’d)
(c) Substantial shareholders
The number of shares held by substantial shareholders are:
J P Morgan Nominees Australia Pty Ltd
Advance Cables Pty Ltd
Alfred J. Chown
(d) Voting rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
Number of Shares
23,437,500
10,782,839
8,243,575
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