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ENVIRONMENTAL CLEAN TECHNOLOGIES LIMITED. — Annual Report 2021
Aug 26, 2021
64819_rns_2021-08-26_ba57e7cb-3fdf-4ca8-a70f-7159725db75b.pdf
Annual Report
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Appendix 4E
Preliminary Final Report for the Year Eneded 30 June 2021
27 August 2021: Environmental Clean Technologies Limited (ASX: ECT) (“ ECT ” or “ Company ”) is pleased to provide the following Appendix 4E, Preliminary Final Report for the Year Ended 20 June 2021.
COVID Relief Provisions
ECT is relying on relief provided by ASIC Corporations Instrument 2020/451 and ASX Class Waiver Decision dated 3 May 2021 to extend lodgement dates for its audited annual reports (and the other documents required to be lodged with ASIC under section 319).
The Company will immediately make a further announcement to the market if it becomes aware of a material difference between the unaudited annual accounts lodged and its audited annual report to be lodged.
This announcement is authorised for release to the ASX by the Board.
For further information, please contact:
| INVESTORS | MEDIA |
|---|---|
| Glenn Fozard | Adam Giles |
| Chairman | Company Secretary |
| [email protected] / +6139849603 | [email protected] / +61398496203 |
About ECT
ECT is in the business of commercialising leading-edge energy and resource technologies, capable of delivering financial and environmental benefits.
We are focused on advancing a portfolio of technologies, which have significant market potential globally.
ECT’s business plan is to pragmatically commercialise these technologies and secure sustainable, profitable income streams through licensing and other commercial mechanisms.
About Coldry
Coldry is the gateway enabler of higher-value applications for low-rank coals.
Low-rank coals are a rich source of valuable hydrocarbons. However, they suffer from high moisture content that must be reduced to enable higher-value upgrading and conversion to solid fuels, liquid or gaseous hydrocarbons.
Drying is easy. However, drying efficiently and cost-effectively has been the challenge. Coldry meets this challenge through a combination of ‘brown coal densification’ and waste heat utilisation, delivering the world’s first low temperature, low pressure, low cost, zero CO2 emissions drying process.
388 Punt Road, South Yarra, VIC 3141 Australia | Phone +613 9849 6203| www.ectltd.com.au | ABN 28 009 120 405 Listed on the Australian Stock Exchange (ASX:ECT)
About HydroMOR
The HydroMOR process has the potential to revolutionise primary iron making.
HydroMOR is a simple, low cost, low emission, hydrogen-driven technology that enables ‘low value’ feedstocks to produce primary iron.
About COHgen
The COHgen process has the potential to deliver a lower cost, lower emission method for hydrogen production from brown coal.
COHgen is currently advancing through fundamental laboratory development intended to form the basis for a patent application ahead of scale-up and commercialisation.
About CDP-WTE
The catalytic depolymerisation-based waste-to-energy process converts ‘low-value resources into higher-value diesel and other valuable by-products.
CDP-WTE can be deployed as a standalone solution or integrated with the Coldry process to deliver higher-value, lower-emission energy solutions to lignite resource owners.
Forward-Looking Statements
Statements contained in this release, particularly those regarding possible or assumed future performance, revenue, costs, dividends, production levels or rates, prices or potential growth of ECT, are or may be, forward-looking statements. Such statements relate to future events and expectations and, as such, involve known and unknown risks and uncertainties. Therefore, actual results and developments may differ materially from those expressed or implied by these forward-looking statements depending on a variety of factors.
2
Environmental Clean Technologies Limited Appendix 4E Preliminary final report
1. Company details
Name of entity: Environmental Clean Technologies Limited ABN: 28 009 120 405 Reporting period: For the year ended 30 June 2021 Previous period: For the year ended 30 June 2020
2. Results for announcement to the market
The consolidated entity has adopted Accounting Standards AASB 16 'Leases' for the year ended 30 June 2020. The Accounting Standard was adopted using a modified retrospective approach and as such comparatives have not been restated.
| $ | |||
|---|---|---|---|
| Revenues from ordinary activities | down | 95.1%to | 4,488 |
| Loss from ordinary activities after tax attributable to the owners of | |||
| Environmental Clean Technologies Limited | down | 9.6%to | (1,869,725) |
| Loss for the year attributable to the owners of Environmental Clean | |||
| Technologies Limited | down | 9.6%to | (1,869,725) |
Dividends
There were no dividends paid, recommended or declared during the current financial period.
Comments
The loss for the consolidated entity after providing for income tax amounted to $1,869,725 (30 June 2020: $2,067,973).
Refer to the 'Review of operations' within the Directors' report for further commentary on the results.
3. Net tangible assets
Net tangible assets per ordinary security
| Reporting period Cents 0.011 |
Previous period Cents (0.054) |
|---|---|
Net tangible assets includes right-of-use lease assets recognised pursuant to AASB 16 'Leases'.
4. Control gained over entities
Not applicable.
5. Loss of control over entities
Not applicable.
Environmental Clean Technologies Limited Appendix 4E Preliminary final report
6. Dividends
Current period
There were no dividends paid, recommended or declared during the current financial period.
Previous period
There were no dividends paid, recommended or declared during the previous financial period.
7. Dividend reinvestment plans
Not applicable.
8. Details of associates and joint venture entities
Not applicable.
9. Foreign entities
Details of origin of accounting standards used in compiling the report:
Not applicable.
10. Audit qualification or review
Details of audit/review dispute or qualification (if any):
The financial statements are in the process of being audited. An unmodified opinion from the auditor is currently expected with a section addressing material uncertainty related to going concern.
11. Attachments
Details of attachments (if any):
The Preliminary Financial Report of Environmental Clean Technologies Limited for the year ended 30 June 2021 is attached.
12. Signed
As authorised by the Board of Directors
Signed
_________ Date: 27 August 2021
Glenn Fozard Executive Chairman Melbourne
Environmental Clean Technologies Limited Review of operations 30 June 2021
The loss for the consolidated entity after providing for income tax amounted to $1,869,725 (30 June 2020: $2,067,973).
Major Highlights:
ECT Finance Limited
(i) Equity Lending Facilities
In July and August 2017, the consolidated entity's subsidiary, ECT Finance Ltd, entered into limited recourse loans with option-holders allowing them to obtain finance to exercise ESIOA and ESIOB options. Where the principal balance of the loan at the end of the loan term was less than the initial loan balance, shares were released to the borrower. 35,704,636 shares were released to borrowers in these circumstances. Loans secured by 916,407,834 shares defaulted on 31 July 2020, being the expiry date of the loan arrangements, as borrowers decided not to repay the loans. These shares were used as security for 4 new ELFs along with a further 383,592,166 new shares that were approved for issue at the Company’s AGM on 15 January 2021. Therefore, a total of 1,300,000,000 shares secured these ELFs which have a term of 2 years and expire on 15 January 2023.
In 2020, ECT Finance Ltd advanced an ELF loan to the value of $750,000 to Mr Iain McEwin which was initially secured by 750,000,000 ECT fully paid ordinary shares and 300,000,000 ECTOE options. This loan enabled Mr McEwin to subscribe for the balance of the shortfall of shares and options in connection to the non-renounceable rights issue made by the Company during the year. This subscription was made under arrangement with ECT with the intention of subsequently transferring the shares and options issued to him to service providers contracted to rebuild the Bacchus Marsh facility. During 2021, 274,679,966 shares and 106,658,654 ECTOE options had been transferred to creditors associated with the Bacchus Marsh rebuild or other general creditors. The loan was due to expire on 10 May 2021 and has been extended by one year.
At 31 July 2020, the total value of the loan book was $2,110,200 (including interest accrued and capitalised, and management fees capitalised to the loans to 31 July 2020). The value of security held was $805,000 (based on a $0.001 share price). The loans in respect of the ESIOA and ESIOB options expired on 31 July 2020. The loans in respect of the unlisted options were due to expire on 31 July 2021, however by mutual agreement between ECTF and the borrowers, the loans were wound up prior to the end of the financial year. Interest rates across each of the loans can vary according to payment methods. For accounting purposes pursuant to accounting standards, the ELF loans and the related shares issued are not recognised but are treated as the issue of options (refer to note 12 to the financial statements for further details). Notwithstanding this, the loans represent funds owed to ECT Finance Ltd by shareholders pursuant to commercial and legal contracts.
Environmental Clean Technologies Limited
- (ii) Receipt of research and development tax incentive and repayment of Brevet loan balance
On 16 September 2020, the Company received the full amount of the research and development tax incentive receivable recognised in the financial statements at 30 June 2020 amounting to $899,612.
(iii) Capital raising activities
During the year the Company undertook capital raisings via a share placement and a share purchase plan (SPP). The share placement raised $1,500,000 and was completed in April 2021. The SPP concluded in June 2021 and raised $394,600.
(iv) High Volume Test Facility (HVTF)
In October 2019, the Company’s HVTF in Bacchus Marsh was substantially damaged by a fire. Plans were announced to upgrade the facility whereby the Coldry capacity will be increased to 25,000 tonnes per annum. Much of this production will then be directed to the char market. Char serves two key markets; as a smokeless fuel (e.g. BBQ fuel) and as a carburiser, used in specialty metallurgical applications.
The successful delivery of these upgrades and subsequent realisation of potential sales is estimated to deliver net positive cashflow from operations that may be used to advance the Company’s suite of technologies along the commercialisation pathway.
The project has been divided into two phases:
Environmental Clean Technologies Limited Review of operations 30 June 2021
Phase 1 - Coldry process scale up:
-
(1) Design, construction, installation and individual commissioning of each key stage of the process, including primary processing train, conditioning system and drying system; and
-
(2) Integration of the plant and equipment across each key stage of the process to establish continuous, steady state operations.
Phase 2 – Char plant installation and integration:
-
(1) Design, procurement, installation and individual commissioning of the char kiln; and
-
(2) Integration of the char kiln with the Coldry process to establish continuous, steady state operations and waste energy utilisation for drying.
-
(3) Trial of alternative applications utilising existing process assembly (e.g. PFAS remediation)
Phase 1 of the project is substantially complete .
- (v) Expiry of options
ECTOC options (originally called ESIOC options) were bonus options issued to shareholders on the basis of one option for every four shares held as at 21 July 2017. This resulted in the issue of 846,088,751 ECTOC options with an exercise price of $0.045 and expiry date of 31 July 2019. These options expired on 31 July 2019.
Financial results:
The reportable loss for the consolidated entity was lower at $1,869,725 compared to the prior year loss of $2,067,973.
| Sales Other income (excluding interest) Impairment and write offs Remeasurement of financial liabilities Loss on debt extinguishment Other operating costs (excluding interest, depreciation and amortisation) EBITDA Depreciation and amortisation Finance costs Interest revenue Net (loss) for year |
2021 $ - 1,298,452 - (470,744) - (2,278,224) |
2020 $ 87,454 2,964,770 (170,690) 53,073 (664,297) (3,342,230) |
Change Change $ % (87,454) (100%) (1,666,318) (56%) 170,690 (100%) (523,817) (987%) 664,297 (100%) 1,064,006 (32%) (378,596) 65,799 (17%) 511,487 (83%) (442) (9%) 198,248 |
|---|---|---|---|
| (1,450,516) | (1,071,920) | ||
| (320,809) (102,888) 4,488 |
(386,608) (614,375) 4,930 |
||
| (1,869,725) | (2,067,973) |
There were no sales of by-products from the consolidated entity’s research and development activities during the year as a result of the fire at the high volume test facility at Bacchus Marsh in October 2019. In the prior year, sales included the supply of Coldry test product to its first ‘steam and boiler package’ customer.
The 'Other Income' category of $1,298,452 (2020: $2,964,770) predominantly includes insurance proceeds of $593,012 (2020: $1,905,560) as a result of the Bacchus Marsh plant fire and AusIndustry research and development tax incentive of $554,768 (2020: $924,448). The research and development tax incentive on the purchase of qualifying capital items has been offset against their carrying values. It is therefore recognised as a reduction to the capital items’ cost rather than as income.
Total operating costs (excluding impairment and write off expense, depreciation and amortisation, remeasurement of financial liabilities, loss on debt extinguishment and finance costs) decreased by $1,064,006 due to the fire at our Bacchus Marsh facility which resulted in production activities ceasing and construction activities commencing.
Finance costs decreased by $511,487 as a result of the reduction in borrowings during the year.
Environmental Clean Technologies Limited Review of operations 30 June 2021
Depreciation and amortisation decreased by $65,799. This is made up of an increase in depreciation of $217,235 and a reduction in amortisation of $431,631. The increase in depreciation related to depreciation on the CDP assets acquired in July 2019, depreciation on right-of-use assets and depreciation of assets acquired during the financial year. The decrease in amortisation was primarily due to fully impairing the Coldry intellectual property at the end of the previous financial year. Depreciation and amortisation is a non-cash expense line.
Finally, the change in fair value of financial liabilities represents the combined movement in the Coldry earn-out creditor (the present value of future commitments associated with the purchase of the Coldry intellectual property in 2009) and the Matmor deferred consideration (the present value associated with the purchase of the Matmor Test Plant assets in 2014). There was a net increase in the combined liabilities resulting in a loss on remeasurement for the year amounting to $470,744.
Coronavirus (COVID-19) Pandemic
The financial results for the year ended 30 June 2021 were impacted by COVID-19. The main impact was considerable delays on the shipping of equipment from overseas suppliers. All equipment sourced from overseas has now been received. These shipping delays lead to construction delays at Bacchus Marsh. There were other less significant delays in terms of being able to complete some tasks during periods of lockdown.
Matters subsequent to the end of the financial year
Capital restructure
To implement an improved capital structure for the Company moving forward, the Company has (following shareholder approval) consolidated its issued capital on a 10 to 1 basis. The Company will also conduct an unmarketable parcel sale facility which will provide the Company with the ability to rationalise small holdings. The Company currently has over 4,000 shareholders, and the Company expects that the unmarketable parcel sale facility will reduce the administrative burden and cost on the Company, and (together with the Consolidation) implement a more appropriate capital structure for the Company moving forward.
Sale of wood briquettes
In July 2021, the Company commenced selling wood briquettes. The wood briquettes are made from recycled Australian timber and are being marketed under the name ‘Wood247’. Briquettes are predominantly sold in 240L and 100L wheelie bins but are also available in 10kg bags.
ECTOE options
On 14 July 2021, the Company issued 50,000,000 ECTOE options to the shareholders that participated in the share placement. These options were issued on the same terms as the existing ECTOE options.
Coronavirus (COVID-19) pandemic
The consequences of the Coronavirus (COVID-19) pandemic are continuing to be felt around the world, and its impact on the Company, if any, has been reflected in its published results to date. Whilst it would appear that control measures and related government policies have started to mitigate the risks caused by COVID-19, it is not possible at this time to state that the pandemic will not subsequently impact the Company's operations going forward. The Company now has experience in the swift implementation of business continuation processes should future lockdowns of the population occur, and these processes continue to evolve to minimise any operational disruption. Management continues to monitor the situation both locally and internationally.
No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.
Environmental Clean Technologies Limited
ABN 28 009 120 405
Annual Financial Report - 30 June 2021
Environmental Clean Technologies Limited Contents 30 June 2021
2 3 4 5 6
Statement of profit or loss and other comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements
1
Environmental Clean Technologies Limited Statement of profit or loss and other comprehensive income For the year ended 30 June 2021
| Note Revenue 1 Other income 2 Interest revenue calculated using the effective interest method Total income Expenses Corporate costs Engineering and pilot plant costs Remeasurement of financial liabilities Depreciation and amortisation expense 3 Employee benefits expense 3 Sales and marketing Finance costs 3 Legal costs Occupancy expense Travel and accommodation Impairment of receivables Loss on debt extinguishment 3 Write-off of assets Total expenses Loss before income tax expense Income tax expense Loss after income tax expense for the year attributable to the owners of Environmental Clean Technologies Limited Other comprehensive income for the year, net of tax Total comprehensive loss for the year attributable to the owners of Environmental Clean Technologies Limited Basic loss per share 16 Diluted loss per share 16 |
Consolidated 2021 2020 $ $ - 87,454 1,298,452 2,964,770 4,488 4,930 1,302,940 3,057,154 (1,466,058) (1,403,054) (411,867) (754,783) (470,744) 53,073 (320,809) (386,608) (125,860) (664,634) (107,284) (145,459) (102,888) (614,375) (80,863) (117,165) (68,996) (211,018) (17,296) (46,117) - (109,668) - (664,297) - (61,022) (3,172,665) (5,125,127) (1,869,725) (2,067,973) - - |
Consolidated 2021 2020 $ $ - 87,454 1,298,452 2,964,770 4,488 4,930 1,302,940 3,057,154 (1,466,058) (1,403,054) (411,867) (754,783) (470,744) 53,073 (320,809) (386,608) (125,860) (664,634) (107,284) (145,459) (102,888) (614,375) (80,863) (117,165) (68,996) (211,018) (17,296) (46,117) - (109,668) - (664,297) - (61,022) (3,172,665) (5,125,127) (1,869,725) (2,067,973) - - |
|---|---|---|
| (1,869,725) - |
(2,067,973) - |
|
| (1,869,725) | (2,067,973) | |
| Cents (0.023) (0.023) |
Cents (0.047) (0.047) |
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
2
Environmental Clean Technologies Limited Statement of financial position As at 30 June 2021
| Note Assets Current assets Cash and cash equivalents Trade and other receivables 4 Inventories Other Total current assets Non-current assets Property, plant and equipment 5 Right-of-use assets 6 Intangibles 7 Total non-current assets Total assets Liabilities Current liabilities Trade and other payables 8 Borrowings 9 Lease liabilities Provisions Other financial liabilities 10 Total current liabilities Non-current liabilities Borrowings Lease liabilities Provisions Other financial liabilities 11 Total non-current liabilities Total liabilities Net assets Equity Issued capital 12 Reserves 13 Accumulated losses Total equity |
Consolidated 2021 2020 $ $ 1,014,490 1,104,781 2,276,858 966,669 84,703 - 49,102 58,413 |
Consolidated 2021 2020 $ $ 1,014,490 1,104,781 2,276,858 966,669 84,703 - 49,102 58,413 |
|---|---|---|
| 3,425,153 | 2,129,863 | |
| 2,551,603 636,702 254,250 |
293,370 782,296 - |
|
| 3,442,555 | 1,075,666 | |
| 6,867,708 | 3,205,529 | |
| 1,757,005 1,285,558 147,871 6,079 3,857 |
125,582 28,930 122,827 - 227 |
|
| 3,200,370 | 277,566 | |
| - 547,324 517 1,797,532 |
26,519 689,889 210 1,330,418 |
|
| 2,345,373 | 2,047,036 | |
| 5,545,743 | 2,324,602 | |
| 1,321,965 | 880,927 | |
| 81,091,892 118,285 (79,888,212) |
78,605,405 495,698 (78,220,176) |
|
| 1,321,965 | 880,927 |
The above statement of financial position should be read in conjunction with the accompanying notes
3
Environmental Clean Technologies Limited Statement of changes in equity For the year ended 30 June 2021
| Consolidated Balance at 1 July 2019 Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive loss for the year Transactions with owners in their capacity as owners: Share-based payments (note 17) Issue of shares via non-renounceable rights issue, net of costs Premium received on ELF options (note 13) Balance at 30 June 2020 Consolidated Balance at 1 July 2020 Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive loss for the year Transactions with owners in their capacity as owners: Share-based payments (note 17) Options exercised Issue of shares via placement and purchase plan, net of costs Premium received on ELF options (note 13) Transfer option premium (exercised options) Balance at 30 June 2021 |
Issued capital $ 73,686,351 - - |
Reserves $ 444,005 - - |
Accumulated losses $ (76,152,203) (2,067,973) - |
Total equity $ (2,021,847) (2,067,973) - |
|---|---|---|---|---|
| - 180,021 4,739,033 - |
- - - 51,693 |
(2,067,973) - - - |
(2,067,973) 180,021 4,739,033 51,693 |
|
| 78,605,405 | 495,698 | (78,220,176) | 880,927 | |
| Issued capital $ 78,605,405 - - |
Reserves $ 495,698 - - |
Accumulated losses $ (78,220,176) (1,869,725) - |
Total equity $ 880,927 (1,869,725) - |
|
| - 41,667 294,009 1,874,598 276,213 - |
- 118,285 (294,009) - - (201,689) |
(1,869,725) - - - - 201,689 |
(1,869,725) 159,952 - 1,874,598 276,213 - |
|
| 81,091,892 | 118,285 | (79,888,212) | 1,321,965 |
The above statement of changes in equity should be read in conjunction with the accompanying notes
4
Environmental Clean Technologies Limited Statement of cash flows For the year ended 30 June 2021
| Note Cash flows from operating activities Receipts from customers (inclusive of GST) Research and development tax incentive Payments to suppliers and employees Government grants (COVID-19) Interest received Interest and other finance costs paid Net cash used in operating activities 14 Cash flows from investing activities Payments for property, plant and equipment 5 Payments for intangibles 7 Proceeds from security deposits Insurance recoveries Net cash from/(used in) investing activities Cash flows from financing activities Proceeds from issue of shares 12 Proceeds from issue of options Proceeds from borrowings Repayment of borrowings Repayment of lease liabilities Net cash from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year |
Consolidated 2021 2020 $ $ 37,389 133,697 899,612 1,511,621 (987,943) (3,329,633) 113,283 83,094 4,488 4,622 (102,888) (210,316) |
Consolidated 2021 2020 $ $ 37,389 133,697 899,612 1,511,621 (987,943) (3,329,633) 113,283 83,094 4,488 4,622 (102,888) (210,316) |
|---|---|---|
| (36,059) | (1,806,915) | |
| (3,646,706) - 31 593,012 |
(275,234) (48,369) - 1,882,130 |
|
| (3,053,663) | 1,558,527 | |
| 1,894,600 - 1,259,039 (28,930) (125,278) |
1,770,544 51,693 1,188,270 (1,958,502) (86,060) |
|
| 2,999,431 | 965,945 | |
| (90,291) 1,104,781 |
717,557 387,224 |
|
| 1,014,490 | 1,104,781 |
The above statement of cash flows should be read in conjunction with the accompanying notes
5
Environmental Clean Technologies Limited Notes to the financial statements 30 June 2021
Note 1. Revenue
| Sales of product Disaggregation of revenue The disaggregation of revenue from contracts with customers is as follows: Major product lines Coldry Geographical regions Australia Timing of revenue recognition Goods transferred at a point in time Note 2. Other income Research and development tax incentive Insurance recoveries Government grants (COVID-19) Rent concessions (COVID-19) Other income Other income |
Consolidated 2021 2020 $ $ - 87,454 |
Consolidated 2021 2020 $ $ - 87,454 |
|---|---|---|
| Consolidated 2021 2020 $ $ - 87,454 |
||
| - | 87,454 |
|
| - | 87,454 |
|
| Consolidated 2021 2020 $ $ 554,768 924,448 593,012 1,905,560 113,283 95,594 - 38,968 37,389 200 |
||
| 1,298,452 | 2,964,770 |
Research and development tax incentive
The Company has recognised a receivable related to the research and development tax incentive of $1,971,535 at 30 June 2021 (2020: $899,612) which relates to eligible expenditure. An amount of $1,416,766 of the incentive received or receivable has been deferred and offset against the cost of plant and equipment and intangible asset acquisitions. Refer note 5 and note 7.
Insurance recoveries
The consolidated entity received $593,012 of insurance proceeds during the year ended 30 June 2021 as a result of the fire which occurred at the Bacchus Marsh facility in 2019.
Government grants (COVID-19)
The consolidated entity received JobKeeper support payments as grants from the Australian Government during the year of $21,350 (2020: $6,000) which were passed on to eligible employees. These have been recognised as grant income in the periods in which the related employee benefits were recognised as an expense.
The consolidated entity recognised grants from the Australian Government amounting to $37,500 (2020: $89,594) as part of the government's ‘Boosting Cash Flow for Employers’ scheme. These amounts have been recognised as grant income on the basis that there was reasonable assurance that the Company would comply with any conditions attached.
Rent concessions (COVID-19)
Rent concessions represent the amount of rent that landlords agreed to waive at the Company’s Bacchus Marsh and South Yarra premises. There were no concessions received during the year.
6
Environmental Clean Technologies Limited Notes to the financial statements 30 June 2021
Note 3. Expenses
| Loss before income tax includes the following specific expenses: Depreciation Plant and equipment Office equipment Buildings right-of-use assets Total depreciation Amortisation Intellectual property - Waste-to-energy Total depreciation and amortisation Loss on settlement of debt Loss on conversion of securitised loans to equity (note 9) Loss on conversion of convertible notes to equity (note 9) Net loss on conversion of trade and other payables to equity Total loss on settlement of debt Remeasurement of financial liabilities Remeasurement of deferred consideration for Matmor assets Remeasurement of Coldry earn-out provision Loss on fair value remeasurement of convertible note derivatives Total remeasurement of financial liabilities Finance costs Interest and finance charges paid/payable on lease liabilities Interest and facility costs Capital raising costs Finance costs expensed Share-based payments expense Share-based payments expense (refer to note 17) Employee benefits expense Defined contribution superannuation expense Other employee benefits Total employee benefits expense |
Consolidated 2021 2020 $ $ 163,624 177,255 3,833 5,536 153,352 155,448 |
Consolidated 2021 2020 $ $ 163,624 177,255 3,833 5,536 153,352 155,448 |
|---|---|---|
| 320,809 | 338,239 | |
| - | 48,369 |
|
| 320,809 | 386,608 | |
| - - - |
192,076 386,712 85,509 |
|
| - | 664,297 |
|
| (55,055) 525,799 - |
(295,513) 227,803 14,637 |
|
| 470,744 | (53,073) | |
| 38,426 64,462 - |
46,755 515,630 51,990 |
|
| 102,888 | 614,375 | |
| 104,183 | 180,021 | |
| 14,745 111,115 |
53,104 611,530 |
|
| 125,860 | 664,634 |
7
Environmental Clean Technologies Limited Notes to the financial statements 30 June 2021
Note 4. Current assets - trade and other receivables
| Other receivables Research and development tax incentive receivable BAS receivable Note 5. Non-current assets - property, plant and equipment Plant and equipment - at cost Less: Accumulated depreciation Fixtures and fittings - at cost Less: Accumulated depreciation Office equipment - at cost Less: Accumulated depreciation |
Consolidated 2021 2020 $ $ - 67,057 1,971,535 899,612 |
Consolidated 2021 2020 $ $ - 67,057 1,971,535 899,612 |
|---|---|---|
| 1,971,535 | 966,669 | |
| 305,323 | - | |
| 2,276,858 | 966,669 | |
| Consolidated 2021 2020 $ $ 8,066,712 5,651,071 (5,516,730) (5,361,288) |
||
| 2,549,982 | 289,783 | |
| 12,102 (12,102) |
12,102 (12,102) |
|
| - | - |
|
| 43,338 (41,717) |
41,471 (37,884) |
|
| 1,621 | 3,587 | |
| 2,551,603 | 293,370 |
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
| Consolidated Balance at 1 July 2019 Additions Write off of assets Depreciation expense Balance at 30 June 2020 Additions R&D tax incentive offset Depreciation expense Balance at 30 June 2021 |
Plant and equipment $ 232,259 295,802 (61,023) (177,255) |
Office equipment $ 6,261 2,862 - (5,536) |
Total $ 238,520 298,664 (61,023) (182,791) |
|---|---|---|---|
| 289,783 3,644,839 (1,221,016) (163,624) |
3,587 1,867 - (3,833) |
293,370 3,646,706 (1,221,016) (167,457) |
|
| 2,549,982 | 1,621 | 2,551,603 |
8
Environmental Clean Technologies Limited Notes to the financial statements 30 June 2021
Note 6. Non-current assets - right-of-use assets
| Land and buildings - right-of-use Less: Accumulated depreciation |
Consolidated 2021 2020 $ $ 945,502 937,744 (308,800) (155,448) |
Consolidated 2021 2020 $ $ 945,502 937,744 (308,800) (155,448) |
|---|---|---|
| 636,702 | 782,296 |
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
| Consolidated Balance at 1 July 2019 Additions Reassessment of asset on lease extension Depreciation expense Balance at 30 June 2020 Reassessment of asset on change in terms Depreciation expense Balance at 30 June 2021 Note 7. Non-current assets - intangibles Coldry IP - at cost Less: Accumulated amortisation Less: Impairment Waste-to-energy IP - at cost Less: Accumulated amortisation Right of access to mine |
Land and buildings $ - 973,384 (35,640) (155,448) |
Total $ - 973,384 (35,640) (155,448) |
|---|---|---|
| 782,296 7,758 (153,352) |
782,296 7,758 (153,352) |
|
| 636,702 | 636,702 | |
| Consolidated 2021 2020 $ $ 9,600,000 9,600,000 (4,800,000) (4,800,000) (4,800,000) (4,800,000) |
||
| - | - |
|
| 48,369 (48,369) |
48,369 (48,369) |
|
| - | - |
|
| 254,250 | - | |
| 254,250 | - |
9
Environmental Clean Technologies Limited Notes to the financial statements 30 June 2021
Note 7. Non-current assets - intangibles (continued)
Reconciliations of Intellectual property
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
| Consolidated Balance at 1 July 2019 Additions Amortisation expense Balance at 30 June 2020 Additions R&D tax incentive offset Balance at 30 June 2021 Right-of-access - mining |
Waste-to- energy $ - 48,369 (48,369) |
Right of access - mining $ - - - |
Total $ - 48,369 (48,369) |
|---|---|---|---|
| - - - |
- 450,000 (195,750) |
- 450,000 (195,750) |
|
| - | 254,250 | 254,250 | |
During the year, the Company entered into an agreement with Energy Australia to secure supply of lignite on favourable pricing terms. The consideration paid to Energy Australia will be used to upgrade its plant to facilitate product supply to the Company.
Note 8. Current liabilities - trade and other payables
| Trade payables Other payables Note 9. Current liabilities - borrowings RnD Funding Loan Equipment finance |
Consolidated 2021 2020 $ $ 1,544,142 85,227 212,863 40,355 |
Consolidated 2021 2020 $ $ 1,544,142 85,227 212,863 40,355 |
|---|---|---|
| 1,757,005 | 125,582 | |
| Consolidated 2021 2020 $ $ 1,259,039 - 26,519 28,930 |
||
| 1,285,558 | 28,930 |
RnD Funding loan
The RnD Funding loan relates to a facility agreement that provided for funding based on the value of the anticipated AusIndustry Tax Incentive program for the respective financial year and is secured by the research and development tax rebate provided to the Company under the research and development tax incentive program.
Equipment finance
The assets pledged as security for the equipment finance are represented by the underlying assets subject to financing. Financing of certain plant and equipment is over terms ranging from 2 to 5 years at interest rates of approximately 6%.
10
Environmental Clean Technologies Limited Notes to the financial statements 30 June 2021
Note 10. Current liabilities - other financial liabilities
| Earn-out provision - Coldry Refer to note 11 for further details. |
Consolidated 2021 2020 $ $ 3,857 227 |
Consolidated 2021 2020 $ $ 3,857 227 |
|---|---|---|
Note 11. Non-current liabilities - other financial liabilities
| Earn-out provision - Coldry Deferred consideration - Matmor |
Consolidated 2021 2020 $ $ 1,507,894 985,725 289,638 344,693 |
Consolidated 2021 2020 $ $ 1,507,894 985,725 289,638 344,693 |
|---|---|---|
| 1,797,532 | 1,330,418 |
Deferred consideration - Matmor
As part consideration for the acquisition of the Matmor asset, deferred consideration of $3.5 million of cash was incurred. The timing of paying consideration up to the cash amount of $3.5 million to Matmor Steel is dependent upon if, and when, issued options of the Company are exercised as well as the various milestones being met. The consideration will become payable through combination of any of the following triggers, and at the amounts attributed to each trigger, until the liability has been satisfied:
(a) 50% of proceeds received by the Company from exercise of ECT Options up to a cash amount of $1 million
(b) a minimum of 15% of proceeds received by the Company from exercise of ECT Options thereafter
(c) $500,000 on signing a binding contract for construction of the Matmor Pilot Plant
(d) $500,000 on the Matmor Pilot Plant operations achieving an agreed steady state as well as conversion targets
(e) $1 million on signing of a binding contract for construction of a commercial scale Matmor plant
(f) first collection of revenue in any form from commercialisation of Matmor technology
At reporting date, a total of $2,000,215 (2020: $2,000,215) has been repaid under triggers (a) and (b) which were satisfied in prior years. In measuring the value of the liability, management have estimated when the remaining milestones will likely be achieved. At each reporting date, the deferred consideration liability is reassessed against revised estimates and any increase or decrease in the net present value of the liability will result in a corresponding gain or loss to profit or loss. The increase in the liability resulting from the passage of time or the change in discount rate is recognised as a finance cost.
Earn-out provision - Coldry
The earn-out provision represents deferred consideration payable related to the acquisition of the Coldry intellectual property from the Maddingley Group. The consideration payable is calculated based on $0.50 per projected processed tonne of Coldry pellets and is discounted at a rate of 18% (2020: 26%). The total consideration payable is $3,000,000 plus applicable interest at the Reserve Bank of Australia cash rate.
11
Environmental Clean Technologies Limited Notes to the financial statements 30 June 2021
Note 12. Equity - issued capital
| Ordinary shares - fully paid Treasury shares ELF shares |
2021 Shares 10,000,929,918 55,000,000 1,775,320,034 |
Consolidated 2020 2021 Shares $ 7,843,920,316 81,091,892 - - 1,757,112,470 - |
Consolidated 2020 2021 Shares $ 7,843,920,316 81,091,892 - - 1,757,112,470 - |
2020 $ 78,605,405 - - |
|---|---|---|---|---|
| 11,831,249,952 | 9,601,032,786 | 81,091,892 | 78,605,405 |
Ordinary share capital
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.
| Details Date Balance 1 July 2019 Release of ELF shares 19 July 2019 Transfer from deferred share capital 27 July 2019 Release of ELF shares 13 August 2019 Release of ELF shares 12 September 2019 Release of ELF shares 13 November 2019 Issue of shares via non-renounceable rights issue 10 May 2020 Costs of non-renounceable rights issue 10 May 2020 Share based payments 10 May 2020 Balance 30 June 2020 Release of ELF shares 31 July 2020 Issue of new shares (director remuneration - vested) 4 March 2021 Issue of new shares (director remuneration - not vested) 4 March 2021 Release from ELF (share based payment) 16 March 2021 Issue of new shares (share placement) 15 April 2021 Release from ELF (share based payment) 30 April 2021 Release from ELF (share based payment) 21 May 2021 Release from ELF (share based payment) 26 May 2021 Issue of new shares (share purchase plan) 15 June 2021 Equity raising costs Balance 30 June 2021 |
Shares Issued Issue price 3,726,737,257 8,333,333 $0.0040 25,000,000 $0.0200 12,500,000 $0.0040 8,333,333 $0.0030 12,500,000 $0.0010 4,050,516,393 $0.0012 - $0.0000 - $0.0000 7,843,920,316 35,704,636 $0.0082 41,666,664 $0.0010 58,333,336 $0.0000 3,066,666 $0.0015 1,500,000,000 $0.0010 34,550,000 $0.0010 226,480,000 $0.0010 10,583,300 $0.0010 246,625,000 $0.0016 - $0.0000 10,000,929,918 |
$ 73,186,354 33,333 499,997 50,000 25,000 12,500 4,819,090 (80,057) 59,188 |
|---|---|---|
| 78,605,405 294,009 41,667 - 4,600 1,500,000 34,550 226,480 10,583 394,600 (20,002) |
||
| 81,091,892 |
During the year, the Company raised $1,500,000 through a placement of 1,500,000,000 fully paid ordinary shares to sophisticated and professional investors at an issue price of $0.001 per share. For every three shares issued under the Placement, the Company issued one free attaching ECTOE option exercisable at $0.003 and expiring 23 February 2023.
ELF share capital
The Company's subsidiary, ECT Finance Ltd, has entered into limited recourse loans with option-holders (Participants) allowing them to obtain finance to exercise share options issued by the Company. Shares in ECT were issued on exercise of options in accordance with the Loan and Security Agreement (the Agreement) of the Equity Lending Facility (ELF).
12
Environmental Clean Technologies Limited Notes to the financial statements 30 June 2021
Note 12. Equity - issued capital (continued)
All shares issued pursuant to the ELF and which are financed by limited recourse loans are considered, for accounting purposes, to be options issued. As a result, neither the value of the loans receivable, nor the value of shares issued, are recognised in the financial statements. Where the Company receives funds from Participants in the form of principal or interest, such amounts are treated as the receipt of option premium and recognised in the option reserve until the loan is settled (refer to note 13). Loans expire within 2-3 years from issue and interest is charged at commercial rates of interest.
Notwithstanding any other provision of the ELF, each Participant has a legal and beneficial interest in the ELF shares issued to them except that any dealings with those ELF shares by the Participant is restricted in accordance with the Agreement. ELF shares rank equally with all existing ordinary shares of the Company from the date of issue in respect of all rights issues, bonus issues, dividends and other distributions to, or entitlements of, ordinary shareholders. On termination of the loan facility, the Participant may elect to settle the loan or default on the loan and the Company would enforce the return of the ELF shares back to the Company, subject to requirements of the Corporations Act and as outlined in the Agreement signed by each borrower. Shares issued will only be recognised in equity after a participant's loan is repaid and shares are released to the holder.
The face value of limited recourse loans that had been issued at reporting date was $2,050,000 (2020: $13,386,069) and interest accrued on such loans was $85,050 (2020: $2,745,625).
As at reporting date there are 1,775,320,034 (2020: 1,757,112,470) shares held as security against these loans (ELF Shares) and therefore there are ELF Options of the same amount deemed to be on issue.
ELF share capital movements are as follows:
| Opening balance of ELF shares on issue Shares released during year ELF shares issued during year Transfers to Treasury Shares on expiry of ELF Loans Closing balance of ELF shares on issue |
Consolidated 2021 2020 1,757,112,470 1,048,779,136 (310,384,602) (41,666,666) 1,300,000,000 750,000,000 (971,407,834) - 1,775,320,034 1,757,112,470 |
|---|---|
During the year, the Company established an ELF with Kaai Capital who were appointed as the Lead Manager to the Company's share placement during that occurred during April and May 2020. The Company issued 350,000,000 shares to Kaai (or its nominees). The term of the ELF is 3 years, during which time Kaai may elect to pay the Company $700,000 (being a deemed price of $0.002 per Share) plus any interest and fees, subject to the terms of the ELF, to satisfy the loan and have the holding lock lifted. If the Lead Manager does not pay this amount by the due date, these Shares may be cancelled.
| Issue date 31 July 2017; expiry date 31 July 2020 | Exercise price | Movement | Balance |
|---|---|---|---|
| Opening balance at 1 July 2020 | $0.012 | 952,112,470 | |
| Exercised during year ended 30 June 2021 | $0.008 |
(35,704,636) | 916,407,834 |
| Expired during year ended 30 June 2021 | (916,407,834) | nil | |
Issue date 31 July 2018; expiry date 31 July 2021 |
Exercise price | Movement | Balance |
| Opening balance 1 July 2020 | $0.015 | 55,000,000 | |
| Termination of ELF (transfer to Treasury shares) | (55,000,000) | nil | |
Issue date 10 May 2020, expiry date 10 May 2023 |
Exercise price | Movement | Balance |
| Opening balance 1 July 2020 | $0.001 |
750,000,000 | 750,000,000 |
| Share based payments during year ended 30 June 2021 | $0.001 |
(274,679,966) | 475,320,034 |
Issue date 10 May 2020, expiry date 10 May 2023 |
Exercise price | Movement | Balance |
| Initial issue |
$0.001 |
1,300,000,000 | 1,300,000,000 |
13
Environmental Clean Technologies Limited Notes to the financial statements 30 June 2021
Note 12. Equity - issued capital (continued)
Treasury share capital
Treasury shares are shares in the Company that are held by ECT Finance Ltd, a subsidiary of the Company, prior to their allocation to shareholders under equity loan funding (ELF) arrangements with shareholders.
| Details Date Balance 1 July 2019 Balance 30 June 2020 Transfer from ELF expired loan arrangements 31 July 2020 Transfer from treasury shares to ELF 4 March 2021 Transfer from ELF expired loan arrangements 30 June 2021 Balance 30 June 2021 |
Shares Issue price - - 916,407,834 $0.0000 (916,407,834) $0.0000 55,000,000 $0.0000 55,000,000 |
$ - |
|---|---|---|
| - - - - |
||
| - |
ECTOE Options on issue
Details of ECTOE options on issue during the year are as follows:
| Exercise price | Movement | Balance | |
|---|---|---|---|
| Initial issue | $0.003 |
1,758,722,154 | 1,758,722,154 |
| Share based payments during year ended 30 June 2020 | $0.003 |
161,484,333 | 1,920,206,487 |
| Options issued as part of ELF during year ended 30 June 2021 | - |
520,000,000 | 2,440,206,487 |
| Share-based payments during year ended 30 June 2021 | $0.001 |
106,658,654 | 2,546,865,141 |
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The consolidated entity's objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The consolidated entity monitors capital by reference to cash flow forecasts in relation the operating revenue and expenditure. The consolidated entity also monitors its capital expenditure requirements to identify any additional capital required.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to the current parent entity's share price at the time of the investment. The consolidated entity is not actively pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies.
The consolidated entity is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk management decisions. There have been no events of default on the financing arrangements during the financial year.
Note 13. Equity - reserves
Options reserve
| Consolidated | Consolidated |
|---|---|
| 2021 | 2020 |
| $ | $ |
| 118,285 | 495,698 |
14
Environmental Clean Technologies Limited Notes to the financial statements 30 June 2021
Note 13. Equity - reserves (continued)
Options reserve
The balance of the options reserve recognises the value of consideration received for options issued that remain unexercised. Such options may include those issued as share-based payments and receipt of principal and interest on ELF loan repayments which are treated as receipt of option premium for accounting purposes (refer to note 12 for further details). Movements in the reserve are provided below.
Movements in options reserves
Movements in each class of options reserve during the current and previous financial year are set out below:
| Consolidated Balance at 1 July 2019 Receipt of premium Balance at 30 June 2020 Exercise of options Expiry of options Share based payments (note 17) Balance at 30 June 2021 |
ECTOE options reserve $ - - |
ELF reserve $ 444,005 51,693 |
Total $ 444,005 51,693 |
|---|---|---|---|
| - - - 118,285 |
495,698 (294,009) (201,689) - |
495,698 (294,009) (201,689) 118,285 |
|
| 118,285 | - | 118,285 |
ECTOE options reserve
The ECTOE options reserve is used to recognise the value of ECTOE listed options provided to employees, directors and suppliers as part of their compensation for services and/or goods received. Refer to note 12 for details of ECTOE options on issue. Refer to note 17 for details of share-based payments.
ELF reserve
Where the company receives funds from ELF Participants in the form of principal or interest, such amounts are treated as the receipt of option premium and recognised in the ELF reserve until the loan is settled
15
Environmental Clean Technologies Limited Notes to the financial statements 30 June 2021
Note 14. Reconciliation of loss after income tax to net cash used in operating activities
| Loss after income tax expense for the year Adjustments for: Depreciation and amortisation Write off of non-current assets Share-based payments Revaluation of financial liabilities Finance costs - non-cash Inventory write downs Insurance proceeds classified as investing cash flows Impairment of trade receivables Loss on revaluation of financial derivatives Research and development incentives deferred Loss on settlement of debt Rent concessions Change in operating assets and liabilities: Decrease/(increase) in trade and other receivables Increase in inventories Increase in prepayments Increase/(decrease) in trade and other payables Increase/(decrease) in employee benefits Net cash used in operating activities |
Consolidated 2021 2020 $ $ (1,869,725) (2,067,973) 320,809 386,608 - 61,026 416,165 180,021 470,745 (67,709) - 404,060 32,146 - (593,012) (1,905,560) - 109,668 - 14,637 1,416,766 - - 664,297 - (38,968) (1,310,189) 634,728 (107,575) - - (12,862) 1,181,425 (29,460) 6,386 (139,428) |
Consolidated 2021 2020 $ $ (1,869,725) (2,067,973) 320,809 386,608 - 61,026 416,165 180,021 470,745 (67,709) - 404,060 32,146 - (593,012) (1,905,560) - 109,668 - 14,637 1,416,766 - - 664,297 - (38,968) (1,310,189) 634,728 (107,575) - - (12,862) 1,181,425 (29,460) 6,386 (139,428) |
|---|---|---|
| (36,059) | (1,806,915) |
Note 15. Changes in liabilities arising from financing activities
| Consolidated Balance at 1 July 2019 Net cash used in financing activities Recognition on adoption of AASB 16 Lease repayments Conversion to equity Lease reassessment Rent concessions Balance at 30 June 2020 Net cash from financing activities Interest accrued Lease repayments Other changes Balance at 30 June 2021 |
R&D Funding loans $ 1,028,806 (1,028,806) - - - - - |
Securitised loan payable $ 408,141 - - - (408,141) - - |
Convertible note $ 790,636 - - - (790,636) - - |
Lease liabilities $ - - 973,384 (86,060) - (35,640) (38,968) |
Equipment finance $ 84,379 (28,930) - - - - - |
Total $ 2,311,962 (1,057,736) 973,384 (86,060) (1,198,777) (35,640) (38,968) |
|---|---|---|---|---|---|---|
| - 1,259,039 - - - |
- - - - - |
- - - - - |
812,716 - 38,426 (162,478) 6,531 |
55,449 - 4,801 (33,731) - |
868,165 1,259,039 43,227 (196,209) 6,531 |
|
| 1,259,039 | - | - | 695,195 | 26,519 | 1,980,753 |
16
Environmental Clean Technologies Limited Notes to the financial statements 30 June 2021
Note 16. Earnings per share
| Loss after income tax attributable to the owners of Environmental Clean Technologies Limited Basic loss per share Diluted loss per share |
Consolidated 2021 2020 $ $ (1,869,725) (2,067,973) |
Consolidated 2021 2020 $ $ (1,869,725) (2,067,973) |
|---|---|---|
| Cents (0.023) (0.023) |
Cents (0.047) (0.047) |
| At 30 June 2021, there were 1,775,320,034 shares held as security which are subject to the repayment of ELF loans. For accounting purposes, these ELF loans and the related shares issued are treated as an in-substance issue of options. The ELF shares issued are therefore not included in the Basic EPS calculation. All options were considered anti-dilutive and excluded from the calculations above. All partly paid shares on issue are also treated in the same way as options and hence considered dilutive for the purposes the calculation. Number Number Weighted average number of ordinary shares used in calculating basic loss per share 8,269,794,193 4,358,959,986 Weighted average number of ordinary shares used in calculating diluted loss per share 8,269,794,193 4,358,959,986 |
At 30 June 2021, there were 1,775,320,034 shares held as security which are subject to the repayment of ELF loans. For accounting purposes, these ELF loans and the related shares issued are treated as an in-substance issue of options. The ELF shares issued are therefore not included in the Basic EPS calculation. All options were considered anti-dilutive and excluded from the calculations above. All partly paid shares on issue are also treated in the same way as options and hence considered dilutive for the purposes the calculation. Number Number Weighted average number of ordinary shares used in calculating basic loss per share 8,269,794,193 4,358,959,986 Weighted average number of ordinary shares used in calculating diluted loss per share 8,269,794,193 4,358,959,986 |
At 30 June 2021, there were 1,775,320,034 shares held as security which are subject to the repayment of ELF loans. For accounting purposes, these ELF loans and the related shares issued are treated as an in-substance issue of options. The ELF shares issued are therefore not included in the Basic EPS calculation. All options were considered anti-dilutive and excluded from the calculations above. All partly paid shares on issue are also treated in the same way as options and hence considered dilutive for the purposes the calculation. Number Number Weighted average number of ordinary shares used in calculating basic loss per share 8,269,794,193 4,358,959,986 Weighted average number of ordinary shares used in calculating diluted loss per share 8,269,794,193 4,358,959,986 |
|---|---|---|
| 8,269,794,193 | 4,358,959,986 |
All options on issue are out-of-the-money at reporting date and therefore considered anti-dilutive for the purposes of the diluted EPS calculation and therefore not included.
Note 17. Share-based payments
Set out below are summaries of shares and options granted under share-based payment arrangements.
ECT Shares
Shares in ECT provided as share based payments were as follows:
| Element of financial statements containing share-based payments: Corporate costs expense Engineering and pilot plant expense Plant and equipment capitalised |
Total value $ 2021 56,850 34,550 226,480 |
Total value $ 2020 164,354 - - |
|---|---|---|
| 317,880 | 164,354 |
The total number of shares issued during the year relating to the settlement of share-based payment arrangements was 374,679,666 (2020: 85,187,325).
The average issue price of shares relating to share-based payment arrangements was $0.001 (2020: $0.002)
Options
ECTOE options provided as share based payments were as follows:
17
Environmental Clean Technologies Limited Notes to the financial statements 30 June 2021
Note 17. Share-based payments (continued)
| Element of financial statements containing share-based payments: Corporate costs expense Engineering and pilot plant expense Plant and equipment capitalised |
Total value $ 2021 4,945 12,783 100,557 |
Total value $ 2020 15,667 - - |
|---|---|---|
| 118,285 | 15,667 |
The total number of options issued during the year relating to the settlement of share-based payment arrangements was 106,658,654 (2020: 17,408,263).
The average issue price of shares relating to share-based payment arrangements was $0.001 (2020: $$0.001).
The total share based payment expense recognised for the year was $104,183 (2020: $180,021).
Further details in relation to share based payments is as follows:
(a) Issue of shares to key management personnel
As approved at the Company's Annual General Meeting (AGM) held on 15 January 2021, shares in the Company were issued to directors in lieu of $25,000 of directors' fees that would have been paid in cash on 1 February 2021. The shares are held in escrow and will be released to directors quarterly in arrears. The grant date fair value of the shares issued was $0.001 each or $100,000 in aggregate which is expensed over the vesting period of 1 year. The total expense for the year was $41,664.
(b) Issue of shares for goods and services received
During the year, the Company issued shares to suppliers of goods and services. The total number of shares issued was 148,199,666 which had an aggregate value of $91,400 which was recognised as a share-based payment expense.
(c) Issue of shares for acquisition of plant and equipment
During the year, the Company issued shares to a supplier of plant and equipment attributable to the Bacchus Marsh rebuild. The total number of shares issued was 226,480,000 which had an aggregate value of $226,480. This amount was capitalised to plant and equipment.
(d) Options granted for goods and services received
During the year, the Company issued ECTOE options to suppliers for the acquisition of goods and services. The number of options granted was 106,658,654 with an aggregate value of $118,285 which was recognised as a share-based payment expense. The fair value of the options was determined on grant date using a Binomial options pricing model.
| Grant date 26 May 2021 30 June 2021 |
Number issued Fair value 3,527,766 $0.0011 103,130,888 $0.0011 106,658,654 |
Total 3,810 114,475 |
|---|---|---|
| 118,285 |
18
Environmental Clean Technologies Limited Notes to the financial statements 30 June 2021
Note 17. Share-based payments (continued)
(e) Shares issued to shareholder suppliers
During 2020, the Company received general support services from a shareholder. The shareholder was remunerated through the release of 41,666,666 shares from their ELF loan facility. As a result, such shares were recognised as issued share capital of the Company. Shares were issued at an average price of $0.0026 and the total value of shares issued was $120,833. Refer to note 12.
During 2020, a shareholder was issued 43,520,659 shares and 17,408,263 ECTOE options with a total value of $59,188. These equities were issued in recognition of the shareholder managing the transfer of equities to contractors involved in the rebuild of the Bacchus Marsh facility. The options have been recognised as a share based payment expense with the balance credited to the options reserve. Refer to note 13.
Note 18. Events after the reporting period
Capital restructure
To implement an improved capital structure for the Company moving forward, the Company has (following shareholder approval) consolidated its issued capital on a 10 to 1 basis. The Company will also conduct an unmarketable parcel sale facility which will provide the Company with the ability to rationalise small holdings. The Company currently has over 4,000 shareholders, and the Company expects that the unmarketable parcel sale facility will reduce the administrative burden and cost on the Company, and (together with the Consolidation) implement a more appropriate capital structure for the Company moving forward.
Sale of wood briquettes
In July 2021, the Company commenced selling wood briquettes. The wood briquettes are made from recycled Australian timber and are being marketed under the name ‘Wood247’. Briquettes are predominantly sold in 240L and 100L wheelie bins but are also available in 10kg bags.
ECTOE options
On 14 July 2021, the Company issued 50,000,000 ECTOE options to the shareholders that participated in the share placement. These options were issued on the same terms as the existing ECTOE options.
Coronavirus (COVID-19) pandemic
The consequences of the Coronavirus (COVID-19) pandemic are continuing to be felt around the world, and its impact on the Company, if any, has been reflected in its published results to date. Whilst it would appear that control measures and related government policies have started to mitigate the risks caused by COVID-19, it is not possible at this time to state that the pandemic will not subsequently impact the Company's operations going forward. The Company now has experience in the swift implementation of business continuation processes should future lockdowns of the population occur, and these processes continue to evolve to minimise any operational disruption. Management continues to monitor the situation both locally and internationally.
No other matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.
19