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REVETEC HOLDINGS LIMITED
AND ITS CONTROLLED ENTITIES
ABN 39 115621317
Financial Report
for the Year Ended 30 June 2011
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115 621317
Contents
Directors' Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors' Declaration
Independent Auditor's Report to the Members
Auditor's Independent Declaration
Page
3
10
11
12
13
,. 38
39
.,
2
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115 621317
DIRECTORS' REPORT
For the year ended 30 June 2011
The directors of the company present their report together with the financial report of Revetec Holdings limited (the Company) and of the Group, being the Company and its controlled entities, for the financial year ended 30 June 2011 and the auditor's report Ihereon.
Index to Directors' report
1 Directors
2 Company secretary
3 Directors' meeting
4 Principal activities
5 Operating and financial review
6 Dividends
7 Events subsequent 10 reporting date
8 likely developments
9 Directors' interesls
10 Indemnification and insurance of officers and auditors
11 Non·audit seNices
12 Audi tor's independence declaration
3
4
4
5
5
7
7
7
8
8
8
9
9
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115621 317
1. Directors
DIRECTORS' REPORT
(continued)
For the year ended 30 June 2011
The directors in office at any time during, or since the end of, the year are:
Name and position Appointed Experience, special responsibilities and other directorships
Bradley David HoweU-Smith 4 August 2005 Inventor of the CCE concept, designer and builder of the first prototype engine . Executive Director, Chairperson ,
and Company Secretary.
Bradley Hawell-Smith resigned as Executive Director on 29 March 2012
lan Wai Lee Director
Lan Wai Lee resigned as Director on 21 January 2011 .
Sleven Valtas Director
Peter Lawrence Borthwick Ketty
Rajamurugan Rathinam
2. Company secretary
19 years experience in the automotive industry.
Automotive Mechanical Engineering certificates
7 September 2007 9 years experience in accountancy Member of CPA Australia
1 December 2008 28 years experience as a commercial property lawyer including over 16 years as a partner in a 7 partners practice employing more than 20 people.
14 February 2011 Certified Electrical Engineers Over 10 years experience in Project Management Over 13 years experience in Mortgage Finance
16 October 2011 Founder and Director of Galaxy Renewal Energy. India Promoter of Revetec Technologies India Private Limited. Entrepreneur with extensive contacts in Indian Auto Industry.
Bradley David HoweU-Smith was appointed to the position of Company Secretary in September 2007. Over the years Bradley has acquired the necessary experience to act as Company Secretary. When appropriate, BradJey seeks the advice of the Company's solicitors and/or accountants.
4
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39 115621317
3. Directors ' meetings
DIRECTORS' REPORT
(continued)
For the year ended 30 June 201 1
The number of directors' meetings and number of meetings attended by each of the directors of the Company during the financial year are:
Director
Bradley David Howell-Smith
Sleven Vallas
Peter Lawrence Borthwick Kelly
A - Number of meeting attended
Board Meetings
A
12
'2
'2
8
'2
'2
'2
B - Number of meetings held during the time the director held office during the year.
4. Principal activities
The Group's principal activities are the research, design , development and commercialisation of combustion
engines, known as the CCE design technology. The major activities during the year were continued testing and
developing of the CCE technology.
The entity's focus since the directors' report of the previous financial year, has been:
Licensing agreement with Alalan Makine in Turkey: In July 2010 the Company entered into a development agreement with Atalan Makine in Tur1<.ey. This agreement was intended to combine the resources of Atalan, with
Reveiec's engine technology and expertise and knowledge of combustion engines for the development and
production of the Developed Products. Both parties agreed to conduct a development program for the purpose of
developing , optimizing and certifying of the Developed Products for commercial sale.
Joint venture with Indian p romoters - On 19 June 2011 the Company entered in to a Joint Venture with a group of Indian promoters who are to provide wor1<.ing capital of $2.Sm USD towards commercialisation, patent renewals and listing expenses in consideration of Revelec Holdings limited granting to Revetec Technologies India Private limited a Global Master licence Agreement. One of the conditions of the agreement was that all pre-existing licences which were granted were to be terminated.
Licensing agreement with Revetec Technologies India Private Limited - In June 2011 , the Company entered
into a global master licence agreement with Revetec Technologies India Private Limited, a company incorporated
in India with Managing Director Mr. Raja Murugan.
5
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115621317
4. Principal activities (cont)
Further licensing:
DIRECTORS' REPORT
(continued)
For the year ended 30 June 2011
1) Testing of the proof of Concept look place in Gaggenau Germany at Peus Testing in July 2011 . Unfortunately due to a mechanical breakdown testing was not fully completed.
2) In November 2011 both the Atalan Makine licence and Peu5 Testing Ucence have been terminated at the insistence of Ashok Leyland as a precondition 10 licensing.
3) Ashok Leyland has requested and received from Revetec detailed budgets for the cuslomisalion of a number of its engines.
4) Ashok leyland has embarked on an assessment of the manufacturabilily and durability of the current design.
5) Revelec Technologies India Private Limited has provided funding sporadically. Consequently the board has raised worXing capital by issuing shares to existing shareholders.
6) Atatan Makine has remained supportive of Revetec and has raised its own funds to manufacture a diesel engine prototype with a view to assisting Revetec to market its technotogy to the diesel engine marXet. Completion of this engine is imminent.
7) Revetec proposes to grant 10 Hakan Atalan a national licence for the Turkish and Middle Eastern Market conditionaUy upon successfut testing of the diesel prototype either through Revetec Technologies India Private Limited or directly in the event that the Global Master Licence Agreement currently held by Revelec Technologies India Private Limited is terminated for non-performance.
8) Revetec Technologies India Private Limited has been unable 10 provide the Company with the investment funding which it promised.
9) Revetec Technologies India Private limited engaged Mr. A Subramanian, India's leading engine designer to evaluate the commercial potential of designing a diesel engine using Revetec Technology.
10) Revetec Technologies India Private limited is willing to pay for the design of a serial production diesel or petrol engine provided Mr. Subramanian endorses Ihe technology. However, it is not willing to fund the Company patent as agreed.
11) Hakan AIIan, our Turkish partner, has managed to design and manufacture a diesel engine using Revetec Technology. Revelec Holdings Limited has provided limited funding recently to enable final parts to be ordered. These parts have been received and the assembly is in progress with testing to follow.
Financial Activities: The Company made an offer 10 existing Revetec shareholders to invest further into the Company. The Company's operation was limited due to the lack of capital.
Business development During this period we continued to market our technology to companies overseas.
6
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
5. Operating and financial review
Overview of the Group
During the year ended 30 June 2011 :
ABN 39115621 317
DIRECTORS' REPORT
(continued)
For the year ended 30 June 201 1
• The Group incurred a loss for the year of $248,134 (2010: $313,581 loss)
• The Group obtained significant funding from the following source
Income tax research and development concession
Shares issued
Sales of plant & equipment
Interest received
Significant Changes in the State of Affairs
GST exclusive
$153,545
$1 10,868
S9.091
$2,328
$275,832
In the opinion of the directors, other than outlined above, there were no significant changes in the stale of affairs of the Group that occurred during the financial year.
6. Dividends
No dividends have been paid or declared by the Company since the start of the financial year. No recommendation for payment of dividends has been made during the financial year.
7. Events subsequent to reporting date
There have been a number of material events that have significantly changed the state of affairs of the Group since the end of the 2011 financial year.
They are as follows:
1) Testing of the proof of Concept took place in Gaggenau Germany at Peus Testing in July 201 1. Unfortunately due to a mechanical breakdown testing was not fully completed.
2) In November 2011 both the Alalan Makine licence and Peus Tesling licence have been terminated at the insistence of Ashok leyland as a precondition to licensing.
3) Ashok l eyland has requested and received from Revetec detailed budgets for the customisation of a number of its engines.
4) Ashok leyland has embarked on an assessment of the manufacturability and durability of the current design.
5) Revetec Technologies India Privale limited has provided funding sporadically. Consequently the board has raised working capital by issuing shares 10 existing shareholders.
6) Atalan Makine has remained supportive of Revetec and has raised its own funds to manufacture a diesel engine prototype with a view to assisting Revetec to mar1tet its technology to the diesel engine mar1<.et. Completion of this engine is imminent.
7) Revetec proposes to grant to Hakan Alalan a national licence for the Turkish and Middle Eastem Mar1tet conditionally upon successful testing ofthe diesel prototype either through Revetec Technologies India Private limited or directly in the event that the Global Master licence Agreement currently held by Revetec Technologies India Private limited is terminated for non-performance.
7
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115 621317
DIRECTORS' REPORT
(continued)
For the year ended 30 June 2011
7. Events subsequent to reporting date (cont)
8) Revetec Technologies India Private limited has been unable to provide the Company with the investment funding which it promised.
9) Revelee Technologies India Private limited engaged Mr. A Subramanian, India's leading engine designer 10 evaluate the commercial potential of designing a diesel engine using Revelee Technology.
10) Revelee Technologies India Private Limited is willing to pay for the design of a serial production diesel or petrol engine provided Mr. Subramanian endorses the technology. However, it is not willing to fund the Company patent as agreed.
11) Hakan Atlan Turkey has managed to design and manufacture a diesel engine using Revetec Technology. Revetec Holdings Limited has provided limited funding recently to enable final parts to be ordered and the assembly is now in progress with testing to follow.
8. Likely Developments
See summary in section 4 above.
9. Directors ' interests
The relevant interest of each director in the share capital of the Group as at the date of this report is as follows:
Directors
Bradley David Howell-Smith
Lan Wai Lee
Steven Valtas
Peter Lawrence Borthwick Kelly
10. Indemnification and insurance of officers and auditors
Indemnification
Ordinary shares
32.235,987
30,000
6,322,943
1,562,750
The Group has not indemnified or made a relevant agreement for indemnifying against a liability any person who is or has been an officer of the Company.
The Company has entered into an agreement with its current auditor W Wen & Co, indemnifying them against claims by third parties arising from their report on the Annual Financial Report, except where the liability arises out of conduct involving a lack of good faith.
Insurance premium s
During the financial period. Ihe Company has not paid premiums in respect of directors or executive officers for professional indemnity or other liabilities.
8
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39 115 621 317
11 . Non-audit services
DIRECTORS' REPORT
(continued)
For the year ended 30 June 2011
During the year W Wen & Co, the Company's auditor, has performed certain other services in addition to their statutory duties. The board has considered the non-audit services provided during the year by the auditor and is satisfied that the provision of those non·audit services during the year by the auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services were subject 10 the corporate governance procedures adopted by the Company and have been reviewed by the board to ensure they do not impact the integrity and objectivity of the auditor; and
• the non-audit services provided do not undennioe the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did nol involve reviewing or auditing Ihe auditor's own work, acting in a management or decision making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.
12. Auditor's Independence Declaration
A copy of the auditor's independence declaration as required under s 307C of the Corporations Act 2001 is set oul on page 41 .
Signed in accordance with a resolution of the Board of Directors:
Chairperson
IIt~, U 1j
Sydney
9
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39 115621 317
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2011
Consolidated
Revenue
Other income
Depreciation expenses
Directors fees
Management fees
Employee benefits
Materials and engine testing expenses
Other expenses
Loss from operating activities
Financial income
Financial expenses
Net financial income
(Loss) before income tax
Income lax benefit
(Loss) for the year
Other comprehensive income for the year
Total comprehensive (loss) for the year attributable to equity holders of the company
Loss per share
Basic loss per share
Diluted loss per share
Note
6
7
9
10
10
2011
$
9,091
(1 )
(105.772)
(181,044)
(378)
(125,577)
(403,681)
2,328
(326)
2,002
(401 ,679)
153,545
(248,1 34)
(248,134)
(0.0010)
(0.0010)
2010
$
95,918
(4 ,676)
(112,380)
(18,000)
(190,100)
(53,352)
(1 62.136)
(464.726)
1,915
(2)
1,913
(462,81 3)
149,232
(313,581 )
(313,581)
(0.0014)
(0.0014)
The consolidated statement of comprehensive income should be read in conjundion with the notes to the financial statements.
10
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115 621317
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2011
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Prepayments and deposits
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
TOTAL CURRENT LIABILITIES
TOTAL LIABILIT IES
NET ASSETS
EQUITY
Issued capital
Accumulated losses
TOTAL EQUITY/(DEFICIENCY)
Note
11
12
13
14
14
14
2011
$
Consolidated
362
7,620
7,982
7,982
225,675
225,675
225,675
(217,693)
15,226,340
(15,444 ,033)
(217,693)
2010
$
83,289
6,520
89,809
1
1
89,810
220,237
220,237
220,237
(130,427)
15,065.472
(15,195,899)
(130,427)
The consolidated statement of financial position should be read in conjunction with the notes to the financial
statements.
11
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN39115621317
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 201 1
Balance at 1 July 2009
Total comprehensive loss for the year
Transactions with owners, recognised directly in equity
Contributions by and distributions to owners
Shares issued 10 convertible note holder
Shares issued 10 directors and consultants as share-based payments
Shares issued 10 shareholders - right issue
Shares issued to shareholders
Balance at 30 June 2010
l oss
Total other comprehensive income
Total comprehensive loss for the year
Transactions with owners, recog nised directly in equity
Contributions by and distributions to owners
Shares issued to directors and consultants as share-based payments
Shares issued to shareholder
Balance at 30 June 2011
Share capital
$
14,790,222
25,000
66,000
8 ,750
175,500
15,065,472
50,000
110,868
15,226,340
Accumulated tosses
$
(14,882,318)
(313,581)
(1 5 ,195,899)
(248 ,134)
(248.134)
(15,444 ,033)
Total
$
(92 ,096)
(313,581)
25,000
66,000
8,750
175,500
(130,427)
(248,134)
(248,134)
50,000
110,868
(217,693)
The consolidated statement of changes in equity should be read in conjunction with the notes to the financial
statements
12
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39 115621317
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2011
Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Commercial Ready Grant funds received
Cash paid to suppliers and employees
Income tax - R & D concession refund received
Interest received
Interest paid
Net cash provided by (used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant & equipment
Net cash provided by (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issue of share capital
Net cash provided by (used in) used in financing activities
Net (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of financial year
Cash and cash equivalents at end of financial year
Note
9
18
14
11
2011
$
(358.433)
153,545
2,328
(326)
(202,886)
9,091
9,091
11 0,868
110,868
(82,927)
83,289
362
2010
S
56,106
(512,579)
149,232
1,915
(305,326)
188,750
188,750
(116,576)
199,865
83,289
The consolidated statement of cash flows should be read in conjunction with the notes to the financia l statements.
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115621317
1. Reporting entity
NOTES TO THE CONSOLIDATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
Revetec Holdings Limited (the "Company") is a company domiciled in Australia. The address of the Company's registered office is Level 4, 13-15 Moore Street, Liverpool , New South Wales, Australia. The consolidated financial report of the Company as at and for the year ended 30 June 2011 comprises the Company and its subsidiaries (together referred 10 as the ~Group") .
The Group primarily is involved in the research, design and development of combustion engines for various fuel applications, known as the CCE design technology.
2. Basis of preparation
(a) Statement of compliance
The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the COfporations Act 2001 .
The consotidated financial report of the Group complies with International Financial Reporting Standards (IFRSs) adopted by the International Accounting Standards Board (lASS).
The consolidated financial report were authorised for issue by the Board of Directors on 30 March 2013.
(b) Bas is of measurement
The consolidated financial statements have been prepared on the historical cost basis.
(c) Going concern
The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business operations and the realisation of assets and settlement of liabilities in the ordinary course of business.
For the year ended 30 June 2011 , the Group:
• Sourced additional funding of $110,868 from share issues, and $153,545 from the research and development tax concession; and
• Incurred an operating loss of $248.134 and had negative cash flows from operations of $202 ,886. At 30 June 2011 the Group had trade and other payables of $225,675, net liabilities of $217,693 and had minimal cash reserves of $362. Included in the trade and other payables are statutory obligations which were overdue at 30 June 2011 in the amount of $57,308 superannuation payable with a potential GST liability of $86,425 which was incurred by a related deregistered entity.
14
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN39115621317
NOTES TO THE CONSOLIDATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
2. Basis of preparation (continued)
(c) Going concern (continued)
The directors have prepared cash flow projections that support the Group's ability to meet its obligations, incorporating the key assumptions above. To continue as a going concern, it will be necessary for the Group 10:
Complete verification testing in Turkey to enable "proof of concept" that Revetec technology is not fuel specific and is in fact purely a mechanical advantage system; Recover from Revelec Technologies India Private Limited pursuant to our commercial agreement approximately $300,000 in August 2013; Receive approximately $99,000 in respect of the research and development tax incentive and continue to receive the research and development tax concessions in the next financial year;
In the event that the Group cannot continue as a going concern, they may not realise their assets or settle their liabilities in the normal course of operations and at the amounts stated in the financial report.
(d) Functional and presentation currency
These consolidated financial statements are presented in Australian doJlars, which is the Company's functional currency and the functional currency of the Group.
le) Use of estimate and judgements
The preparation of consolidated financia l statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets , liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most Significant effect on the amount recognised in the consolidated financial statements are included in the following notes:
• Note 2(c) Going concern
(f) Changes in accounti ng po licies
Presentation o( transactions recognised in other comprehensive income
From 1 July 2012 the Group applied amendments to AASB 101 Presentation of Financial Statements outlined in AASB 2011-9 Amendments to Australian Accounting Standards - Presentation of Items of Other Comprehensive Income. The change in accounting policy ooly relates to disclosures and has had no impact on consolidated earnings per share or net income. The changes have been applied retrospectively and require the Group to separately present those items of other comprehensive income that may be reclassified to profit or loss in the future from those that will never be reclassified to profit or loss. These changes are included in the statement of profi t or loss and other comprehensive income.
15
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115621317
NOTES TO THE CONSOLIDATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
3. Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities.
(a) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until lhe date that control ceases.
(il) Transactions eliminated on consolidation Inlra-group balances and transactions, and any unrealised gains and losses or income and expenses arising from intra-gfoup transactions, are eliminated in preparing the consolidated financial statements.
(b) Property, plant and equipment
m Recognmon and measu'emen'
Items of property, plant and equipment are measured at cost or deemed cost less accumulated depreciation and accumulated impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.
Any gain and loss on disposal of an item of property, plant and equipment (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss.
(ii) Depreciation
Depreciation is charged 10 the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment.
The estimated useful lives in Ihe current and prior periods are as follows:
leasehold improvements
plant and equipment
fixtures and fittings
motor vehicles
15 years
4 years
4 years
5 years
The residual value, the useful life and the depreciation melhod applied to an asset are reviewed at each reporting date
16
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39 115621 317
NOTES TO THE CONSOLIDATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
3. Significa nt accounting policies (continued)
(c) Intangible assets
(11 Research and development
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical
knowledge and understanding , is recognised in the profit or loss as incurred.
Development activities involve a plan or design for the production of new or substantially improved products
and processes. Development expenditure is capitalised only if development costs can be measured reliably,
the product or process is technically and commerdally feasible , future economic benefits are probable. and
the Group intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials, direct labour and overheads that are directly
attributable to preparing the asset for its intended use and capitalised borrowing costs. Other development expenditure is recognised in the profit or loss as incurred.
Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated
impairment losses (see accounting policy (d».
(d ) Impairment
(i) Financial assets
A financial asset is assessed at each reporting date to determine whether there is any objective evidence
that it is impaired. A financial asset is impaired if there is objective evidence of impairment as a result of one
or more events that occurred after the initial recognition of the asset, and that the loss event(s) had an
impact on the estimated future cash flows of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount, and the present value of the estimated future cash flows discounted at the Original effective interest rate.
Individually significant financial assets are tested for impairment on an individual basis. The remaining
financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profit or loss.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the
impairment loss was recognised . For financial assets measured at amortised cost and available-far-sale financia l assets that are debt securities, the reversal is recognised in profit or loss.
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115 621 317
NOTES TO THE CONSOUOATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
3. Significant accounting policies (continued)
(d) lmpainnent (continued)
(ii) Non·financial assets
The carrying amounts of the Group's non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-Iax discount rate that refleds current mar1<et assessments of the time value of money and the risks specific to the asset. For Impairment testing. assets are grouped together into the smallest group of assets that generate cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the -cash generating unit").
An impainnentloss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash
flows that largely are independent from other assets and groups. Impainnent losses are recognised in profit or loss. Impainnent losses recognised in respect of cash-generating units are allocated first to reduce the
carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.
In respect of other assets, impainnent losses recognised in prior periods are assessed at each reporting
date for any indications that the loss has decreased or no longer exists. An impainnent loss is reversed if there has been a change in the estimates used to delennine the recoverable amount. An impainnent loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that 'NOUld have been detennined, net of depreciation, if no impainnent loss had been recognised.
(e) Financial instruments
(I) Non-derivative financial Instruments
Non-derivative finandal instruments comprise investments in equity securities. trade and other receivabl~ .
cash and cash equivalents, loans and borrowings, and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value plus. for instruments not at fair value through profit Of loss, any directly attributable transaction costs. Subsequent to initial recognition nonderivative financial instruments are measured as desaibed below.
A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognlsed if the Group's contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control Of substantially all risks and rewards of the asset.
Regular way purchases and sales of financial assets are accounted for at trade date, i.e ., the date that the Group commits itself to purchase or sett the asset. Financial liabilities are derecognised if the Group's obligations specified in the contract expire or are discharged or cancelled.
"
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115 621317
NOTES TO THE CONSOLIDATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
3. Significant accounting policies (continued)
ee) Financial iO$truments (continued)
(I) Non-derivative financial instruments (continued)
Cash and cash equivalents comprise cash balances and eaU deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are induded as a component of cash and cash equiva!ents for the purpose of the statement of cash flows.
Other financial instruments
Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.
(ii) Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.
Dividends
Dividends are recognised as a liability in the period in which they are declared.
Convertible note
Convertible note arrangements that will be settled by the Company delivering a fixed number of its own equity instruments in exchange for a fixed amount of cash is recognised as an equity instrument. The equity instrument is measured as the amount received under the arrangement. Changes in the fair value of an equity instrument are not recognised in the financial statements.
Share based payments
Goods or services received or acquired in a share-based payment transaction are recognised when the Group obtains the goods or as the services are received. The Group recognises a corresponding increase in equity if the goods or services were received in an equity-settled share-based payment transaction or a liability if the goods 0( services were acquired in a cash-settled share-based payment transaction.
For equity-settled share-based paymenltransactions, the Group measures the goods or services received, and the corresponding increase in equity, directly, at the fair value of the goods or services received, unless that fair value cannot be estimated reliably. If the entity cannot estimate reliably the fair value of the goods or services received, the entity shall measure their value, and the corresponding increase in equity, indirectly. by reference to the fair value of the equity instruments granted.
"
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115 621317
NOTES TO THE CONSOLIDATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
3. Significant accounting policies (continued)
(f) Revenue
(i) Goods sold and services rendered
Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of retums, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have been transferred 10 the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is I'lO continuing management involvement with the goods, and the amount of revenue can be measured reliably.
Revenue from services rendered is recognised in the income statement in proportion to the stage of
completion of the transaction at the reporting date. The stage of oompletion is assessed by reference to surveys of work perfonned.
(ii) Govemment grants
Government grants are recognised in the balance sheet initially as deferred income when there is reasonable assurance that they will be received and that the Group will comply with the conditions associated with the grant.
Grants that compensate the Group fOf expenses incurred are recognised as other income in the income statement on a systematic basis in the same periods in whiCh the expenses are Incurred. Grants that compensate the Group for the cost of an asset are recognised in the income statement as other income on a systematic basis over the useful life of the asset
(g) Leases
Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the lolallease expense and spread over the lease term.
(hi Finance Income and c:osts
Finance income comprises interest income on funds invested. Interest income is recognised as it accrues in profit or loss, using the effective interest method.
Finance expenses comprise interest expense on borrowings. All borrowing costs are recognised in profit or loss using the effective interest method.
Foreign currency gains and losses are reported on a net basis.
20
REVETEC HOLDiNGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115 621317
NOTES TO THE CONSOLIDATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
3. Significant accounting policies (continued)
(i) Income tax
Income tax expense comprises current and deferred tax. Income lax is recognised in the income statement exceptio the extent that it relates 10 items recognised directly in equity, in which case it is recognised in equity.
The current income tax benefit in the form of research and development tax concessions are recognised on receipt and relate to research and development expenses incurred in the previous financial year. Income tax benefits are not recognised as a receivable at the end of each financial year, as they are not considered recoverable until assessed and paid by the Commissioner of Taxation. Rather they are disclosed as an unrecognised deferred tax asset.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to Investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on laws that have been enacted or substantivelyenacted by the reporting date. Deferred lax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profils will be
available against whidl the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend is recognised.
The Company and ils wholly owned Australian resident subsidiaries have not elected 10 form a tax Group.
(j) Good and services tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the assel or as part of the expense.
Receivables and payables are staled with the amount of GST included. The net amount of GST recoverable from, or payable 10, the ATD is induded as a current asset or liability in the balance sheet. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from , or payable to, the ATD are classified as operating cash flows.
"
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115 621317
NOTES TO THE CONSOLIDATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
3. Significant accounting policies (continued)
(k) Eamings per share
The Group presents basic and diluted eamings per share (EPS) data for its ordinary shares. Basic EP$ is
calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profrt or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilulive potential ordinary shares, which comprise convertible notes and share options granted 10 employees.
(I) Foreign currency transactions
Transactions in foreign currencies are translated to the respedive functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the foreign exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional rurrency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the period. Foreign currency differences arising on retranslation are recognised in profrt or loss.
(m) New standard and interpretations not yet adopted The following standards, amendments 10 standards and interpretations are effective for annual periods beginning after 1 July 2011, and have not been applied in preparing these consolidated financial statements:
Contingent consideration
The fair value of contingent consideration is calculated using the income approach based on the expected payment amounts and their associated probabilities. When appropriate, it is disclosed to present value.
22
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
A6N 39 115621 317
NOTES TO THE CONSOLIDATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
4. Determination of fair values
A number of the Group's accounting policies and disclosures require the determination of fair value, for both
financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or
disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific 10 that asset or liability.
(i) Trade and other receivables The fair value of trade al'\d other receivables is estimated as the present value of Mure caSh flows , discounted at the market rale of interest at the balance dale.
Ili) Non-derivative financial liabilities Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows , discounted at the maJ1(et rate of interest at the balance date.
(iil) Share-based payments
The fair value of share based payments are measured by reference to the fair value of the services
provided.
5. Segment reporting
The Group comprises one main business segment being engine development. This incorporates the
research and design of petrol and diesel application engines.
The Group'S business segment typically operates in Australia. During the year ended 30 June 2011 there were no revenues, assets or significant capital expenditure In this geographical segment.
23
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115 621317
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
Consolidated
Note 2011
$
2010
$
6. Other income
Commercial ready grant income
Gain on sale of plant & equipment
Total revenue
7. Other expenses
lease payments
Fees and charges
Patents and trade maf1(s
Repairs and maintenance
Consultants fees
Other
8. Auditors' remuneration
Audit services
auditing or reviewing the financial report
Other audit services
9,091
9,091
35,750
1,832
30,460
57,535
125,577
95,918
95,918
39,000
35,849
30,268
183
11 ,000
65,836
182,136
20,500
6,700
27,200
24
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115 621317
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
Consolidated
9. Income tax expense/(benefit)
Recognised in the income statement
Current tax (benefit)
Current year
Total income tax (benefit) in the income statement
Numerical reconciliation between tax benefits and pre-tax net loss
Loss before tax
Income tax using the domestic corporation tax rate of 30% (2010: 30%)
Increase in Income tax expense due to:
Effect of tax losses and temporary differences not recognised
Decrease in income tax expense due to:
Research and development tax concession received
Income tax (benefit) on pre-Iax nelloss
Unrecognised deferred tax assets
2011
$
(153,545)
(153,545)
(401 ,679)
(120,504)
120.504
(153,545)
(153,545)
Deferred tax assets have not been recognised in respect of the following items:
Tax losses
Deductible temporary differences
1,531,714
37,658
1,569.3n
2010
$
(149,232)
(149,232)
(464,813)
(139,444)
139.444
(1 49.232)
(149,232)
1,411 ,210
37,658
1.448.868
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilise the benefits from.
"
REVETEC HOLDiNGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 3911 5 621317
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
Consolidated
10. Loss per share
Basic loss per share
2011
$
2010
$
The calculated of basic loss per share at 30 June 2011 was based on the loss attributable to ordinary
shareholders of $248,134 (2010: $313,581) and a weighted average number of ordinary shares
outstanding of 241 ,983,233 (2010: 237,624,935), calculated as follows:
Loss attributable to ordinary shareholders
Weighted average number of ordinary shares
Issued ordinary shares at 1 July
Effect of shares issued during the year
Weighted average number of ordinary shares at 30 June
Diluted loss per share
(248 ,134)
Number
241 ,089.972
893,261
241 ,983.233
(3l3,58l)
Number
234.1 11 ,757
3,513,178
237,624,935
The calculated of diluted loss per share at 30 June 2011 was based on loss attributable to ordinary
shareholding (diluted) of$248,l34 (2010: $313,581 ) and a weighted average number of ordinary shares
(diluted) outstanding during the financial year ended 30 June 2011 of 241,983,233 (2010: 237,624,935),
calculated as follows:
Loss attributable to ordinary shareholders (diluted)
Weighted average number of ordinary shares (diluted)
Weighted average number of ordinary shares at 30 June
Weighted average number of ordinary shares (diluted) at 30
June
(248 ,134)
241 ,983,233
241 ,983,233
(313,581)
237,624.935
237,624.935
26
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39 11 5 621 317
NOTES TO TH E CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
Consolidated
11 . Cash and cash equivalents
Cash at bank and in 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
12. Property, plant & equipment
leasehold improvements
At cost
Accumulated depreciation
Plant and equipment
At cost
Accumulated depreciation
Fixtures and frttings
At cost
Accumulated depreciation
Motor vehicles
Alcosl
Accumulated depreciation
201 1
$
362
362
362
362
7,048
(7,048)
59,577
(59,577)
37,414
(37.414)
34,398
(34,398)
2010
$
83,289
83,289
83,289
83,289
7,048
(7,048)
59,577
(59,576)
1
37,414
(37.414)
34,398
(34,398)
27
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39 115 621317
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
CONSOUDATEO
12. Property, plant & equipment (continued)
a. Movements in carrying amounts
2011
$
2010
$
Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year.
Leasehold improvement
Opening balance all July
Depreciation expense
Carrying amount at 30 June
Plant & equipment
Opening balance at 1 July
Depreciation expense
Carrying amount at 30 June
Fixtures & fittings
Opening balance at 1 July
Depreciation expense
Carrying amount at 30 June
Motor vehicles
Opening balance at 1 July
Depredation expense
Carrying amount al 30 June
13. Trade and other payables
Trade payables
Other accruals & payable
Superannuation payable
PAYG payable
GST payable
Total current trade and other receivables
(1 )
36,705
25,985
57,308
19,251
86,426
225,675
2,345
(2,344)
44,318
21 ,581
42,408
23,334
88,596
220,237
"
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39 115 621 317
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
14. Capital and reserve
Share capital
Ordinary shares
On issue 1 July - fully paid
Issued 10 convertible note holder
Issued to directors and consultants as share-based payments
Issued to shareholders - rights issue
Issued to shareholders - other
On issue at 30 June - fully paid
2011
Number
241,089,972
416,667
923,900
242,430,539
2010
Number
234,111 ,757
1,035.715
2,380,000
350,000
3,212,500
241 ,089,972
Effective 1 July 1998, the Company Law Review Act abolished the concept of par value shares and the concept of authorised capital. Accordingly, the Company does not have authorised capital or par value in respect of its issued shares.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. In the event of winding up of the Group, ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any proceeds of liquidation.
Convertible notes
On 10 February 2009, the Group executed a deed of variation to the amended convertible loan facility
dated 27 July 2006. The new terms of the loan facility provided that $122 ,036 of funds was able to be drawn down over 6 months to July 2009, with specific terms of receipt including $32 ,026 in February 2009, and $15,000 per month February inclusive and for the 5 months thereafter. The deed of variat ion also provided that the note holder will be released from obligations under the convertible note instrument dated 9 November 2005, and all subsequent variations and addendums, upon the Company receiving all advances of funds within the periods stipulated above.
29
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115 621317
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
14. Capital and reserve (continued)
Convertible notes (continued)
Amounts received and ordinary shares issued, under the terms of this 10 February 2009 variation to the
amended convertible nole facility, during the years ended 30 June 2009 and 30 June 2010:
Date amount received Date share issued
14 May 2009
29 March 2010
22 July 2009
4 April 2010
$
2011 2010
Amount $
15,000
10,000
25,000
At 30 June 2010 there is still $50,000 outstanding from this facility (2010: $50,(I()O)
Share·based payments
Amount
750,000
285,715
1,035,715
During the year, compensation by way of ordinary shares issued were provided to director, Sleven Valtas, in recognition of directorship service for the period. The fa ir value of the share based payment was measured by reference to the fair value of the services provided , being $50,000 made up of 416,667 issued at 12 cents per share on 3 February 2011 . The share-based payment was recognised as an expense of $50,000 over the period the services were provided.
Amounts recognised as share capital and ordinary shares issued under these agreements, during the years ended 30 June 2010 and 30 June 2011 :
Share based payments to directors
Share based payments to consultants
Shares issued to other shareholders
2011
$
50,000
Number
41 6,667
2010
$
55,000
11,000
Number
2,000,000
380,000
During the year, the Group issued 923,900 shares each at 12 cents per share to investors as part of capital raisings.
Date shares issued $ Number
30 July 2010 79,800
27 August 2010 4 ,992
3 February 201 1 20,016
27 Apri l 2011 45,000
2 June 2011 660
Dividends
No dividends were paid during the year to 30 June 201 1 (2010: $nil) and no dividends are currently proposed.
665,000
41 ,600
166,800
5,400
5,500
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115 621 317
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
15. Financial instruments
Overview
The Group have exposure to the following risks from its use of financial instruments:
• credit risk • liquidity risk • market risk
This note presents infannalion about the Group's exposure to each of the above risks, their objectives and policies and processes for measuring and managing risk. Further quantitative disclosures are included throughout this financial report
The Board of Oirectors has overall responsibility for the establishment and oversight of the risk management framework. Risk management policies are established 10 identify and analyse the risks faced by the Group, to sel appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regular1y to reflect changes in market conditions and the Group's activities. The Group, through their training, management standards and procedures, aim to develop a disciplined and constructive COf"Itrol environment in which all employees understand their roles and obligations.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group's exposure to credit risk relates to holdings of cash and cash equivalents.
Liquidity risk
Liquidity risk is the risk that the Group will nol be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.
Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses as they fall due; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. Refer to note 2 Cc) Going concem, for further discussion with respect to how the Group are planning to manage liquidity risk over the next t 2 months.
Market risk The Group's exposure to market risk relates to holdings of cash and cash equivalents.
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115 621317
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
15. Financial instruments (continued)
(ii) Financial instruments disclosures
Credit risk
Exposure to credit risk
The canying amount of the Group's financial assets represents the maximum credit exposure. The Group's
maximum exposure to credit risk at the balance date was:
Cash and cash equivalents
Liquidity risk
Consolidated
Carrying amount
2011
$
362
362
2010
$
83,289
83,289
The following are the contractual malurities of financJal liabilities, including estimated interest payments and excluding the impact of netting arrangements:
Consolidated
Non-derivative financial Carrying Contractual 6mths or 6 to 12 ' ·2 2 to 5 More than liabilities amount cash flow less mths years y .. 5y ..
30 J une 2011
Trade and other payables (225,675) (225,675) (225,675)
(225,675) (225,675) (225.675)
30 June 201 0
Trade and other payables (220,237) (220,237) (220,237)
(220,233) (220,233) (220,233)
32
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115621317
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
15. Financial instruments (continued)
(ii) Financial instruments disclosures (continued)
Interest rate risk
At the balance date the interest rale profile of the Group's interest-bearing financial instruments was:
Variable rate instruments
Financial assets
Fair values
Fair values versus carrying amounts
Consolidated
Carrying amount
2011
$
362
362
2010
$
83,289
83,289
The Directors consider that the fai r value of the financial assets and liabilities of the Group are represented by their carrying amount.
16. Operating leases
Leases as lessee
Non-cancellable operating lease rentals are payable as follows:
Less than one year
Between one and five years
More than five years
Consolidated
2011
$
3,250
3,250
2010
$
39,000
3,250
42,250
33
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115621317
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
16. Operating leases (continued)
The Group leases business premises under an operating lease. On 4 August 2008, the Group (the lease is under the personal name of Bradley Howell·Smith) signed and entered a lease agreement for new business premises. The lease is for a period of 3 years, with an option 10 renew the lease after that dale.
During the year ended 30 June 2011, $35,750 was recognised as an expense in the income statement in respect of operating leases (2010: $39,000) .
17. Group entities
Parent entity
Revelec Holdings Limited
Subsidiaries
Revetec International Pty Ltd
Revolution Engine Technologies Pty Ltd
Country of Incorporation
Australia
Australia
Austral ia
18, Reconciliation of cash flow from operations with profit after income tax
l oss for the period after income tax
Adjustments for.
Depreciation
Share based payments to directors and consultants
Interest income
Gain on sale of property, plant and equipment
Interest expense
Income tax expense/(benefit)
Operating profit before ChangH In wor1dng capital
Changes in prepayments and deposits
Change in trade and other payables
Shares monies received in 2009 but issued in 2010
Change in deferred income
Interest paid
Interest income
Income tax refund - R&O concessions received
Net cash from operating activities
Ownership Interest
2011
100%
100%
2010
100%
100%
Consolidated
2011 2010
$ $
(248, 134) (313,581)
1 4 ,676
50,000 66,000
(2,328) (1,915)
(9,091)
326
(153,545) (149,232)
(362,771) (394,052)
(1,100) 4 ,444
5,438 (42,452)
20,500
(44,913)
(358 ,433) (456.473)
(326)
2,328 1,915
153,545 149,232
(202,886) (305,326)
34
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115 621317
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2011
19. Key management personnel disclosures
Key management personnel compensation The key management personnel compensation included in 'directors fees', 'employee benefits' and 'management fees' are as follows:
Consolidated
2011 2010
Short-term employee benefits
Individual directors and executives compensation disclosures
$
286,816
286,816
$
302,480
83,289
Apart from the details disclosed in this note, no director has entered into a material contract with the Group since the end of the previous financial year and there were no malerial contracts involving directors' interests existing at year-end.
Loans to and from key management personnel and their related parties (consolidated) There were no loans made , guaranteed or secured by any enlity in the Group 10 key management personnel and Iheir related parties.
Other key management personnel transactions with the Company or its controlled entities A number of key management persons, or their relaled parties, hold positions in olher entities that result in Ihem having conlrol or signifteant innuence over the financial or operating policies of those entities.
A number of these entities transacted with the Company or its subsidiaries in the reporting period. The terms and conditions of the transactions with management persons and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-direc1or related entities on an ann's length basis.
The aggregate amounts recognised during the year relating to key management personnel and their related parties were as follows:
Key management persons Transactions
Mr CCK Chan (resigned 7
September 2007)
Legal fees
Bookkeeping and
Consol idated
Note 2011 2010
(i)
administration services (I) 17,999
(i) Transactions between the Company or its controlled entities and entities related to Mr CCK Chan have not been disclosed for the year ended 30 June 2010 because Mr CCK Chan resigned as a director of Revetec Holdings Umiled on 7 September 2007.
There were no amounts receivable from and payable to other key management personnel at balance date (2010: nil).
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39115 621317
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
19. Key management personnel disclosures (continued)
Movements in shares
The movement during the reporting period in the number of ordinary shares in Revetec Holdings limited held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:
Directors
Mt BD HoweU-Smith
Mr LW Lee
Mr SN Varlas
Mr Pl B Kelly (apPointed 14 February 2011)
Mr BD Howell-Smith
Mr LW l ee
Mr SN Valtas(appoinled 1 December 2008)
Held at
1 July 2010
32,380,987
30,000
5,906,276
1,557,250
Held at
1 July 2009
32,380,987
30,000
3,906.276
(1) Includes share based payments
20, Non-key management personnel disclosures
Identity of related parties
2011
Number
Purchases (1)
416,667
2010
Number
Purchases (1)
2,000,000
Sales
Sales
Held at
30 June 2011
32 ,380,987
30,000
6,322,943
1,557,250
Held at
30 June 2010
32,380,987
30,000
5,906,276
The Group has a related party relationship w ith its subsidiaries (see note 17) and with its key management personnel (see note 19).
Other related party transactions
The Group had no other related party transactions for the financial year ended 30 June 201 1.
36
=
- 21 .
~
~
0
22.
(;)
~
(i i)
~
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
ABN 39 115 621 317
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011
Parent entity disclosures
As at, and Ihroughoullhe financial year ending 30 June 2011 the parent entity of the Group was Revetec
Holdings limited .
Consolidated
2011 2010
$ $
Result of the parent entity
Nelloss (248.1 34) (313.581)
Other comprehensive income
Total comprehensive loss (248.134) (313,581)
Financial position of the parent entity at year end
Current assets 7,982 89,809
Non-current asset 2 3
Total assets 7,984 89,812
Current liabilities 225,675 220,239
Totalliabililies 225,675 220,239
Total assets (217,691) (1 30,427)
Equity
Issued capital 2,355,560 2,194,692
Accumulated losses (2,573,253) (2,325.119)
(217,693) (130,427)
Subsequent events
In the period since the balance date an additional 610,659 ordinary shares have been issued in the company, In addition to this, an offer was made in April 2012 and remains current whereby existing shareholders can acquire shares at 12 cents per share with one free option attached. $73,279 has been raised with 610,659 shares issued by 6 February 2013 and 158,999 options exercisable by 30 April 2014 at 12 cents per share.
On 23 Apri l 2012 a shareholder advanced the sum of $15,000 by way of unsecured loan which is returnable upon demand to assist the company to meet Patent renewal expenses.
37
W Wen & CO. Chartered Accountants & Business Advisors Wen Wen, Chartered Accountant, Registered Tax Agent & Registered Company Auditor
INDEPENDENT AUDITOR' S REPORT
TO THE MEMBERS OF REVETEC HOLDINGS LIMITED
Report on the Financial Report
PO Box 4621 North Rocks NSW 21 51
355 North Rocks Road North Rocks t. (02) 9871 3429 f. (02) 8079 6952
We have audited the accompanying financial report of Revetec Holdings limited (the company), which comprises the consolidated statement of financial position as at 30 June 2011 , and consolidated statement of comprehensive income, consol idated statement of changes in equity and consolidated statement of cash flows
for the year ended on that date, notes 1 to 22 comprising a summary of significant accounting policies and other explanatory information. and the directors' declaration of the Group comprising the company and the entities it
controlled at the year's end or from lime to time during the financial year.
Directors ' Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement whether due to fraud or error. In note 2 (a), the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements , that the financial statements of
the Group comply with International Financial Reporting Standards.
Auditor's Responsibility
Our responsibil ity is to express an opinion on the financial report based on our audit. We conduded our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves perfonning procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement. including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the financial report that
gives a true and fair view in order to design audit procedures that are appropnate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's intemal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.
We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting Standards, a true and fair view which is consistent with our understanding of the Group's financial position and of its performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our modified audit opinion.
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation
www.wwenandco.com.au
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 .
Basis (or Adverse Opinion
As described in Note 2(e) to the consolidated financial statements, the consolidated financial statements have been prepared on a going concern basis thal assumes the Group will continue 10 operate in the foreseeable future.
The Group is in a net liability position at the balance sheet date. and as at the date of this report, much of the liabilities outstanding at30 June 2011 remain unpaid, and the Group has been unable to negotiate or secure additional funding in order 10 settle its liabilities as they fall due. As a result. in our opinion it is highly improbable the Group can be considered to be a going concern and thus the preparation of its financial statements on a going concern basis is inappropriate.
In our opinion the financial statements should have been prepared on a liquidation basis as opposed to a going concern basis, to reflect adjustments to reduce the value of assets to their recoverable amount and to ensure completeness of liabilities to reflect that the Group may be required to realise its assets and extinguish its liabilities other than in the normal course of business and at amounts different from those stated in the financial report. We are unable to determine the total of the required adjustments and provisions with a reasonable degree of accuracy given the Oirectors have not performed this assessment.
Adverse Auditor's Opinion
In our opinion:
a. because of the significance of the matter described in the Basis for Adverse Opinion paragraph. the consolidated financial statements of Revetec Holdings Limited are not in accordance with the Corporations Act 2001. including:
(;) giving a true and fa;, view of Ihe company's financial pos;l;on as al 30 June 2011 and of lis performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 2(a).
WWen&Co.
Wen Wen
Principal
Dale: I, I ' /3 /"lo, c , ~o
40
-
W Wen & CO. Chartered Accountants & Business Advisors Wen Wen, Chartered Accountant, Registered Tax Agent & Registered Company Auditor
AUDITOR'S INDEPENDENCE DECLARATION UNDER S307C OF THE CORPORATIONS ACT 2001
TO THE DIRECTORS OF
PO Box 4621 North Rocks NSW 2151
355 North Rocks Road North Rocks t. (02) 98713429 f. (02) 8079 6952
REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2011, there have been:
i. no contraventions of the auditor independence requirements as sel out in the Corporations Act 2001 in
relation 10 the audit; and
it no contraventions of any applicable code of professional conduct in relation to the audil.
WWen & Co Chartered Accountants
Wen Wen
Sydney
Date: .;lie-reI, 20/3
Chartered Accountants
Liability llmited by a scheme approved under Professional Standards Legislation
www.wwenandco.com.au