LARK DISTILLING CO. LTD — Annual Report 2013

Aug 29, 2013

MONTEC INTERNATIONAL LIMITED ABN 62 104 600 544 PRELIMINARY FINAL REPORT APPENDIX 4E FINANCIAL YEAR ENDED 30 JUNE 2013

1. Details of the reporting period

Reporting period	Previous corresponding period
30 June2013	30 June2012

2. Results for announcement to the market

	Key Information	Current period $	Previous corresponding period $	Change %	Amount change $
2.1	Revenuesfromordinary activities	46,440	124,008	(62)	(77,568)
2.2	Loss from ordinary activities after taxattributable tomember	(588,713)	(123,555)	376	(465,158)
2.3	The total comprehensive loss for the period attributable tomember	(602,258)	(144,139)	318	(458,119)

2.4 Dividends/Distributions

No dividends declared in current or prior year.

• 2.5 Record date for determining entitlements to dividends N/A.

• 2.6 Refer point 14 below for explanation of figures in 2.1 to 2.3 above

3. Statement of Comprehensive Income

Refer attached summary financial statements.

4. Statement of Financial Position

Refer attached summary financial statements.

5. Statement of Cash Flows

Refer attached summary financial statements.

6. Details of dividends or distributions

N/A

7. Details of dividend reinvestment plan

N/A

8. Statement of Retained Earnings

Refer attached summary financial statements.

9. Net tangible assets per security

Net tangible assets per ordinary share

2013 2012 $(0.0001) $(0.00025)

MONTEC INTERNATIONAL LIMITED ABN 62 104 600 544 PRELIMINARY FINAL REPORT APPENDIX 4E FINANCIAL YEAR ENDED 30 JUNE 2013

10. Details of entities over which control has been gained or lost during the period

N/A

11. Details of associates and joint venture entities

N/A

12. Other significant information

Refer point 14 below .

13. Accounting standards used by foreign entities

N/A

14. Commentary on results and explanatory information

The loss of the Group for the financial year after providing for income tax amounted to $588,713 (2012: $123,555).

On 24 October 2012 the Company announced a renounceable Right Issue of 703,062,000 ordinary shares at $0.001 per share to raise $703,062 to be applied to the working capital needs of the Company. The Right Issue was completed in December 2012.

Review of Operations

i. China business

During the year the Group maintained Chinese operations to the level of minimum presence, and the management continues to investigate other product opportunities, both within and outside the dairy category.

ii. Australian royalties

Royalties from licenses held in Australia have fallen $56,170 (65%) to $30,178 in 2013 (2012: $86,348).

Financial Position

The net assets of the Group have decreased by $15,108 from 30 June 2012 to net liabilities of $106,027 in 2013. This decrease is largely due to the following factors:

• Operating expenses incurred during the year;

• Impairment loss on investment of $398,212;

• Reduced Dairy Farmer license fees; partially offset by

• Net proceeds from Right issues of $587,150.

The Group’s working capital, being current assets less current liabilities, has decreased from net current liabilities of $15,108 in 2012 to net current liabilities of $106,027 in 2013.

MONTEC INTERNATIONAL LIMITED ABN 62 104 600 544 PRELIMINARY FINAL REPORT APPENDIX 4E FINANCIAL YEAR ENDED 30 JUNE 2013

15. Audit

The report is based on accounts which are audited.

Montec International Limited ABN 104 600 544 Controlled Entity

MONTEC INTERNATIONAL LIMITED

ACN 104 600 544

CONSOLIDATED ENTITY

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

Montec International Limited ABN 104 600 544 Controlled Entity

TABLE OF CONTENTS
Directors’ Report	1
Statement of Profit or Loss and Comprehensive Income	9
Statement of Financial Position	10
Statements of Changes in Equity	11
Statement of Cash Flow	11
Notes to the Financial Statements	12
Director’s Declaration	42
Auditor’s Independence Declaration	43
Independent Auditor’s Report	44

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DIRECTORS’ REPORT

Your directors present their report on Montec International Limited consolidated entity (“Group”) for the financial year ended 30 June 2013.

Directors

The names of directors in office at any time during or since the end of the year are:

Mr Terry Cuthbertson

Mr Peter Herd

Mr James Manny (resigned 21 November 2012)

Mr David Yu

Mr Gary Stewart (Alternative director for Peter Herd, appointed 29 August 2012, resigned 8 October 2012)

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

Company Secretary

The following person held the position of company secretary at the end of the financial year:

Nick Geddes FCA, FCIS Company Secretary. Mr Geddes is the principal of Australian Company Secretaries, a company secretarial practice that he formed in 1993. Nick is past President of Chartered Secretaries Australia and a former Chairman of the NSW Council of that Institute. His previous experience, as a Chartered Accountant and Company Secretary, includes investment banking and development and venture capital in Europe, Africa the Middle East and Asia. Mr. Geddes is a Chartered Accountant (Fellow of Institute of Chartered Accountants in England & Wales) and Fellow of the Institute of Chartered Secretaries (Chartered Secretaries Australia).

Operating Results

The loss of the Group for the financial year after providing for income tax amounted to $588,713 (2012: $123,555).

Principal Activities and Significant Change in Nature of Activities

The principal activity of the Group during the financial year was the marketing and licensing of monounsaturated dairy technology and identifying and assessing potential new investment opportunities for the Company’s future growth prospects.

There were no other significant changes in the nature of the Group’s principal activity during the financial year.

Dividends Paid or Recommended

No interim dividend was declared or paid during the current financial year. The directors are recommending that no final dividend be paid in respect of the year ended 30 June 2013 (2012: $nil).

Review of Operations

The consolidated entity continued to engage in its principal activity being the marketing and licensing of dairy technology, the results of which are disclosed in the attached financial statements. Business activities in the year ended 30 June 2013 have centred to investigate investment opportunities and financing activities.

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DIRECTORS’ REPORT (CONTINUED)

Review of Operations (continued)

On 24 October 2012 the Company announced a renounceable Right Issue of 703,062,000 ordinary shares at $0.001 per share to raise $703,062 to be applied to the working capital needs of the Company. The Right Issue was completed in December 2012.

i. China business

During the year the Group maintained Chinese operations to the level of minimum presence, and the management continued to investigate other product opportunities, both within and outside the dairy category.

ii. Australia royalties

Royalties from licenses held in Australia have fallen $56,170 (65%) to $30,178 in 2013 (2012: $86,348).

Financial Position

The net assets of the Group have decreased by $15,108 from 30 June 2012 to net liabilities of $106,027 in 2013. This decrease is largely due to the following factors:

• Operating expenses incurred during the year;

• Impairment loss on investment of $398,212;

• Reduced Dairy Farmer license fees; partially offset by

• Net proceeds from Right issues of $587,150.

The Group’s working capital, being current assets less current liabilities, has decreased from net current liabilities of $15,108 in 2012 to net current liabilities of $106,027 in 2013.

Significant Changes in State of Affairs

There were no significant changes in the state of affairs of the Group during the financial year.

After Balance Date Events

No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.

Future Developments, Prospects and Business Strategies

The likely developments in the operations of the Group and the expected results of those operations in future financial years are to be:

• Investment in opportunities already identified in other industries and the sale of Australian made premium products into Asia Pacific countries.

• Identifying and assessing potential new investment opportunities for the Company’s future growth prospects.

Environmental Issues

The consolidated group’s operations are not subject to significant environmental regulation under a law of China, or of the Commonwealth or of a state or territory of Australia.

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DIRECTORS’ REPORT (CONTINUED)

Information on Directors

Mr Terry Cuthbertson	— Director (Non-Executive); Appointed Non-Executive Chairman from July
	2004.
Qualifications	— Bachelor of Business, ACA
Experience	— Non-Executive Chairman of Austpac Resources N.L., My Net Fone
	Limited, Sun Biomedical Limited, Mint Wireless Limited, South American
	Iron & Steel Corporation Limited, previously a Partner of KPMG and
	Director of KPMG Corporate Finance and NSW Partner in Charge of
	Mergers and Acquisitions, Group Finance Director of Tech Pacific Holdings
	Pty Ltd which generated over $2 billion in revenues from operations
	throughout the Asia-Pacific Region.
Interest in Shares and	— 53,717,511 ordinary shares of Montec International Limited.
Options
Special Responsibilities	— Mr Cuthbertson is the Company’s Chairman and member of the Audit
	Committee and Nomination and Remuneration Committee.
Directorships held in other	— Mr Cuthbertson is Non-Executive Chairman of Austpac Resources N.L, My
listed entities	Net Fone Limited, Mint Wireless Limited, South American Iron & Steel
	Corporation Limited, Chairman of Sun Biomedical Limited and OMI
	Holdings Limited and Malachite Resources Limited.
Mr James Manny	— Director (Non-executive), resigned 21 November 2012.
Qualifications	— Bachelor of Business
Experience	— Non-executive Director of Credit New Holland Group Limited. Previously,
	Executive Chairman of iCash Payment System Limited. Mr Manny has
	held numerous investment banking positions and expertise in treasury,
	IPO project management and capital raising.
Interest in Shares and	— 477,825 ordinary shares of Montec International Limited held indirectly.
Options	1,600,000 options held directly of Montec International Limited.
Special Responsibilities	— Chairman of the Nomination and Remuneration Committee and the Audit
	Committee.
Directorships held in other	— None.
listed entities
Mr Peter Herd	— Director (Non-executive)
Qualifications	— Bachelor of Economic (Honours), FAICD
Experience	— Previously General Manager of Dairy Farmers’ Milk and Beverage
	Division, previously Regional Director of Australasia for Coca-Cola South
	Pacific, Division President for Coca-Cola Far East in the Philippines and
	Country Manager for Hong Kong, Taiwan and Indonesia.
Interest in Shares and	— 5,850,615 ordinary shares of Montec International Limited held indirectly.
Options
Special Responsibilities	— Member of the Audit Committee and Nomination and Remuneration
	Committee.
Directorships held in other	— None.
listed entities

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DIRECTORS’ REPORT (CONTINUED)

Information on Directors (continued)

Mr David Yu	— Director (Non-executive)
Qualifications	— None.
Experience	— Mr Yu has established several businesses in Australia to complement
	business interests in China in the areas of finance, travel and retail.
Interest in Shares and	— Mr Yu has beneficiary interests in Aviation Travel Holdings Pty Ltd.
Options	16,523,651 ordinary shares of Montec International Limited held by
	Aviation Travel Holdings Pty Ltd.
Special Responsibilities	— Key relationship holder with local business in Guangdong Province,
	including dairy company, and integral to China business development.
Directorships held in other	— None.
listed entities
Mr Gary Stewart	— Alternative Director (Non-executive) for Peter Herd, appointed 29 August
	2012 and resigned 8 October 2012.
Qualifications	— LLB
Experience	— Non-Executive Director of OMI Holdings Limited, company secretary of
	Mint Wireless Limited and has been Director of public listed companies
	both in Australia and the United States of America. Mr Stewart is also a
	solicitor of the Supreme Court of New South Wales and practices as a
	Corporate Lawyer with Churchill Lawyers in Sydney, where he advises
	and works for a number of public listed companies in Australia
Interest in Shares and	— None.
Options
Special Responsibilities	— None.
Directorships held in other	— OMI Holdings Limited
listed entities

Remuneration Report (Audited)

This report details the nature and amount of remuneration for each key management person of Montec International Limited (the Company), and for the executive receiving the highest remuneration.

Remuneration Policy

The remuneration policy of the Company has been designed to align key management personnel objectives with shareholder and business objectives. The board of the Company believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best key management personnel to run and manage the consolidated group, as well as create goal congruence between directors, executives and shareholders.

The board’s policy for determining the nature and amount of remuneration for key management personnel of the consolidated group is as follows:

• The remuneration policy, setting the terms and conditions for the key management personnel, was developed by the nomination and remuneration committee and approved by the board after seeking professional advice from independent external consultants.

• All key management personnel receive a base salary (which is based on factors such as length of service and experience), superannuation, fringe benefits, with the potential for options and other incentives. Option to be issued at the discretion of the Board. Since 1 October 2008, key management personnel has either received a reduced base salary or not been paid salary.

• The nomination and remuneration committee reviews key management personnel packages annually by reference to the consolidated group’s performance and executive performance.

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DIRECTORS’ REPORT (CONTINUED)

Remuneration Report (Audited) (continued)

The performance of key management personnel is reviewed annually and is based predominantly on the forecast growth of the consolidated group’s profits and shareholders’ value. All bonuses and option incentives are issued at the discretion of the Board. Any incentives or bonuses must be justified by reference to measurable performance criteria. The policy is designed to attract the highest calibre of other key management personnel executives and reward them for performance that results in long-term growth in shareholder wealth.

Key management personnel are also entitled to participate in the employee share and option arrangements.

The key management personnel receive a superannuation guarantee contribution required by the government, which is currently 9%, and do not receive any other retirement benefits. Some individuals, however, have chosen to sacrifice part of their salary to increase payments towards superannuation.

All remuneration paid to key management personnel is valued at the cost to the company and expensed, shares given to key management personnel are valued as the difference between the market price of those shares and the amount paid by key management personnel. Options are valued using the BlackScholes methodology.

The board policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The Company’s constitution and the ASX Listing Rules specify that the aggregate remuneration of non executive directors shall be determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided between the directors as agreed. The latest determination was as outlined in the Company’s Initial Public Offering prospectus of $300,000 per annum. However, non-executive directors were not remunerated since 1 October 2008 to accomplish the reduction of expenditures for the Company. These amounts have been forfeited by the non-executive directors, not to be paid at future date. Therefore, no accrual has been made in the balance sheet at year end.

The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst directors is reviewed annually. The board considers advice from external parties as well as the fees paid to non executive directors of comparable companies when undertaking the annual review process. Fees for non-executive directors are not linked to the performance of the consolidated group. However, to align directors’ interests with shareholder interests, the directors are encouraged to hold shares in the company and are able to participate in the employee option plan.

Key Management Personnel Remuneration Policy

The board seeks to set aggregate remuneration at a level which provides the company with the ability to attract and retain directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.

The remuneration structure for key management personnel is based on a number of factors, including length of service, particular experience of the individual concerned, and overall performance of the company. The contracts for service between the company and key management personnel are on a continuing basis, the terms of which are not expected to change in the immediate future. Upon retirement key management personnel are paid employee benefit entitlements accrued to date of retirement.

Since 1 October 2008, each Non-Executive Director has not received a fee for being a director of the company.

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DIRECTORS’ REPORT (CONTINUED)

Remuneration Report (continued)

Chief Financial Officer

Since 1 November 2008, Mr Lee was not remunerated.

Use of remuneration consultants

The Company did not engage any remuneration consultants during the year.

Voting and comments made at the Company’s 2011 Annual General Meeting (AGM)

The Company received more than 99% of “yes” votes on its remuneration report for the 2012 financial year. The Company did not receive any specific feedback at the AGM on its remuneration report.

Details of Key Personnel Remuneration for the year ended 30 June 2013

The remuneration for the key management personnel during the year was as follows:

2013 Mr Terry Cuthbertson Mr Peter Herd Mr David Yu Mr James Manny Mr Gary Stewart Mr Kenneth Lee Total Key Management Personnel	Salary & Fees Superannuation Contribution Termination Benefits Non-Cash Benefits Options Total Performance Related % $ $ $ $ $ $ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
	- - - - - - -

Details of Key Personnel Remuneration for the year ended 30 June 2012

2012 Mr Terry Cuthbertson Mr Peter Herd Mr David Yu Mr James Manny Mr Kenneth Lee Total Key Management Personnel	Salary & Fees Superannuation Contribution Termination Benefits Non-Cash Benefits Options Total Performance Related % $ $ $ $ $ $ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
	- - - - - - -

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DIRECTORS’ REPORT (CONTINUED)

Options issued as Part of Remuneration for the year ended 30 June 2013

There were no options issued as part of remuneration for the year ended 30 June 2013 (2012: nil).

End of Audited Remuneration Report

Meetings of Directors

During the financial year, 10 meetings of directors (including committees) were held. Attendances by each director during the year were as follows:

Mr Terry Cuthbertson Mr Peter Herd Mr Gary Stewart Mr James Manny Mr David Yu	DIRECTORS’ MEETINGS	DIRECTORS’ MEETINGS	COMMITTEE MEETINGS	COMMITTEE MEETINGS	COMMITTEE MEETINGS	COMMITTEE MEETINGS
			AUDIT COMMITTEE		NOMINATION AND REMUNERATION COMMITTEE *
	Number eligible to attend	Number Attended	Number eligible to attend	Number Attended	Number eligible to attend	Number Attended
	10	9	1	1	-	-
	10	9	1	1	-	-
	1	1	-	-	-	-
	7	5	1	-	-	-
	10	-	-	-	-	-

• Due to the Group’s size, matters required to be discussed at a nomination and remuneration committee are covered at the monthly directors meeting.

Indemnifying Officers

During or since the end of the financial year the Company has given an indemnity or entered an agreement to indemnify, or paid or agreed to pay insurance premiums as follows:

• The Company has paid premiums to insure each of the following directors and executives against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director or executive of the Company, other than conduct involving a willful breach of duty in relation to the Company.

Mr Terry Cuthbertson Mr James Manny

Mr Peter Herd Mr Kenneth Lee Mr David Yu Mr Gary Stewart

Options

There were no options granted over unissued shares or interest during or since the financial year by the Company or controlled entity.

During the year ended 30 June 2013 no ordinary shares of Montec International Limited were issued on the exercise of options granted under the Montec International Limited Employee Option Plan. No shares have been issued since that date.

At the date of this report, the unissued ordinary shares of the Company under option are nil.

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DIRECTORS’ REPORT (CONTINUED)

Proceedings on Behalf of Company

No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.

The Company was not a party to any such proceedings during the year.

Non-audit Services

The Board of Directors, in accordance with the Audit Committee confirm that there were no non-audit services provided by the external auditors during the year ended 30 June 2013 (2012: $nil).

Auditor’s Independence Declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 43 and forms part of this director’s report.

Signed in accordance with a resolution of the Board of Directors.

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Terry Cuthbertson Chairman

Dated this 30[th] August 2013

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STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2013

Note Revenue 2 Compliance and professional fees Administrative expenses Travel expenses Insurance expenses Depreciation and amortisation expense Impairment of financial assets Finance costs Reversal of prior year accruals Loss before income tax 3 Income tax expense 4 Loss for the year Other comprehensive income Exchange differences on translating foreign operations Other comprehensive income for the period, net of tax Total comprehensive income for the period Loss for the period attributable to members of the parent entity Total comprehensive income for the period attributable to members of the parent entity Basic and diluted earnings per share (cents per share) 8	Consolidated Group 2013 2012 $ $ 46,440 124,008 (152,131) (131,928) (19,261) (19,217) (3,933) (3,631) (26,120) (23,291) - (100,144) (398,212) - (35,496) (48,962) - 79,610
	(588,713) (123,555) - -
	(588,713) (123,555)
	(13,545) (20,584)
	(13,545) (20,584)
	(602,258) (144,139)
	(588,713) (123,555)
	(602,258) (144,139)
	(0.0008) (0.004)

The Financial Statements should be read in conjunction with the accompanying notes.

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STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2013

Note CURRENT ASSETS Cash and cash equivalents 9 Trade and other receivables 10 Financial assets 14 Other current assets 11 TOTAL CURRENT ASSETS NON-CURRENT ASSETS Plant and Equipment 13 Financial assets 14 Intangible assets 15 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 16 Short-term provisions 17 Financial liabilities 18 TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Financial liabilities 18 TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 19 Reserves 20 Accumulated losses TOTAL EQUITY	Consolidated Group 2013 2012 $ $ 286,489 203,627 21,608 48,577 - 350,000 3,395 3,915
	311,492 606,119
	- - - - - -
	- -
	311,492 606,119
	201,326 130,845 16,193 16,193 200,000 550,000
	417,519 697,038
	- -
	- -
	417,519 697,038
	(106,027) (90,919)
	20,788,060 20,200,910 121,493 135,038 (21,015,580) (20,426,867)
	(106,027) (90,919)

The Financial Statements should be read in conjunction with the accompanying notes.

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STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2013

Consolidated Group Balance at 1 July 2011 Total comprehensive income for the period Balance at 30 June 2012 Total comprehensive income for the period Shares issued during the year Shares issue cost Balance at 30 June 2013	Reserves Issued Capital $ Accumulated Losses $ Share Options $ Foreign Exchange $ Total $ 20,200,910 (20,303,312) - 155,622 53,220 - (123,555) - (20,584) (144,139)
	20,200,910 (20,426,867) - 135,038 (90,919) - (588,713) - (13,545) (602,258) 703,062 - - - 703,062 (115,912) - - - (115,912)
	20,788,060 (21,015,580) - 121,493 (106,027)

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2013

FOR THE YEAR ENDED 30 JUNE 2013
	Note	Consolidated	Group
		2013	2012
		$	$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers		37,716	102,599
Payments to suppliers and employees		(194,036)	(233,416)
Interest received		2,032	3,915
Net cash used in operating activities	24a	(154,288)	(126,902)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of property, plant and equipment		-	-
Net cash provided by investing activities		-	-
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares		703,062	-
Shares issue cost		(115,912)	-
Repayment of borrowings		(350,000)	-
Proceeds from borrowings		-	200,000
Net cash provided by financing activities		237,150	200,000
Net increase in cash and cash equivalents held		82,862	73,098
Cash and cash equivalents at start of year		203,627	130,529
Cash and cash equivalents at end of year	9	286,489	203,627
The Financial Statements should be read in conjunction with the	accompanying	notes.

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The financial statement is a general purpose financial statement that has been prepared in accordance with Australian Accounting Standards, including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001 .

The financial statements cover Montec International Limited and its controlled entities as a consolidated entity (“Group”). Montec International Limited is a company limited by shares, incorporated and domiciled in Australia.

Compliance with Australian Accounting Standards ensures that the financial statements and notes of Montec International Limited and its controlled entities comply with International Financial Reporting Standards (IFRS).

The financial statements were authorised for issue by the directors on 30 August 2013.

Basis of Preparation

The financial statements has been prepared on an accruals basis and are based on historical costs modified by the revaluation of selected non-current assets, and financial assets and financial liabilities for which the fair value basis of accounting has been applied.

Significant Accounting Policies

a. Principles of Consolidation

A controlled entity is any entity that Montec International Limited has the power to control the financial and operating polices of the entity so as to obtain benefits from its activities. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are considered.

A list of controlled entities is contained in Note 12 to the financial statements. All controlled entities have a June financial year-end, except for Beijing Montec Commercial Limited, which has a December year end.

As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated financial statements as well as their results for the year then ended. Where controlled entities have entered the consolidated group during the year, their operating results have been included from the date control was obtained.

All inter-company balances and transactions between entities in the Group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed to ensure consistencies with those policies applied by the parent entity.

b. Income Tax

The charge for current income tax expense is based on the result for the year adjusted for any nonassessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

b. Income Tax (Continued)

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the consolidated group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

As all the controlled entities are foreign companies Montec International Limited has not formed a tax consolidated group under the tax consolidation regime.

c. Plant and equipment

Plant and equipment are measured on the cost basis, less accumulated depreciation and impairment losses.

Depreciation

The depreciable amount of all fixed assets is depreciated on a straight line basis over their useful lives to the consolidated group commencing from the time the asset is held ready for use.

The depreciation rates used for each class of depreciable assets are:

Class of Fixed Asset Depreciation Rate Plant and equipment 10% - 37.5 %

The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset carrying amount is written down immediately to its recoverable amount if the assets carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of profit or loss and other comprehensive income.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

d. Leases

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged on a straight-line basis unless another method is more representative of the time pattern of the users benefits.

e. Financial Instruments

Recognition and Initial Measurement

Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered within timeframes established by marketplace convention.

Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at fair value through profit or loss. Transactions costs related to instruments classified as at fair value through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below.

Derecognition

Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity is no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognized in profit or loss.

Classification and Subsequent Measurement

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost using the effective interest rate method.

(ii) Financial liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using the effective interest rate method.

Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

e. Financial Instruments (continued)

Impairment of financial assets

At each reporting date, the group assesses whether there is objective evidence that a financial instrument has been impaired. Impairment losses are recognised in the statement of profit or loss and other comprehensive income.

f. Impairment of Assets

At each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the statement of profit or loss and other comprehensive income.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

g. Financial assets

Non-current investments are measured on the cost basis as they represent investments in wholly owned subsidiaries which are consolidated in accordance with note 1(a). The carrying amount of non-current investments is reviewed annually by directors to ensure it is not in excess of the recoverable amount of these investments. The recoverable amount is assessed by comparing the underlying net assets to carrying value recognised in the Company.

h. Intangibles

Patents and acquired rights

Patents and acquired rights are recognised at cost of acquisition and are amortised over the period in which their benefits are expected to be realised and adjusted for any impairment losses. The patents expired on 12 June 2012. The carrying amount of patents and acquired rights are reviewed annually to ensure they do not exceed the recoverable amount.

i. Foreign Currency Transactions and Balances

Functional and presentation currency

The functional currency of each of the group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

i. Foreign Currency Transactions and Balances (continued)

Transaction and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in the statement of profit or loss and other comprehensive income.

Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the statement of profit or loss and other comprehensive income.

Group companies

The financial results and position of foreign operations whose functional currency is different from the group’s presentation currency are translated as follows:

• assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;

• income and expenses are translated at average exchange rates for the period, where this approximates the rate at date of transaction; and

• retained earnings are translated at the exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations are transferred directly to the group’s foreign currency translation reserve in the balance sheet. These differences are recognised in the income statement in the period in which the operation is disposed.

j. Employee Benefits

Provision is made for the consolidated group’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits expected to be settled within one year, have been measured at the amounts expected to be paid when the liability is settled plus related on-costs. Other employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. Those cashflows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cashflows.

Contributions are made by the consolidated group to employee superannuation funds and are charged as expenses when incurred.

The consolidated group operates an ownership-based remuneration scheme through the employee option plan, details of which are provided in Note 25 to the financial statements.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

k. Provisions

Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

l. Cash and Cash Equivalents

For the purpose of the statement of cash flows, cash and cash equivalents includes:

• cash on hand and at call deposits with banks or financial institutions, net of bank overdrafts.

m. Revenue

Revenue in the form of royalties from the utilisation of technology is recognised upon the sale of raw materials supplied as part of the contractual agreement with customers. Revenue is also derived from the sale of raw materials to customers which is recognised on the date of delivery.

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

Dividend revenue is recognised when the right to receive a dividend has been established.

All revenue is stated net of the amount of goods and services tax (GST).

n. Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST.

Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

o. Comparative Figures

Where required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

p. Going concern

The financial report has been prepared on the basis of a going concern notwithstanding, the consolidated group incurred a loss of $588,713 and had net cash used in operating activities of $154,288 during the year ended 30 June 2013, and had net liabilities of $106,027 at 30 June 2013. The cash flow projections of the consolidated entity evidence that the consolidated entity will require positive cash flows from additional capital or financing to continue operations. The Directors anticipate the funding provided will be sufficient to cover its liabilities when they fall due.

The consolidated group’s ability to continue as a going concern is contingent upon successfully raising additional capital. Whilst the directors are confident of raising funds either through a capital raising or financing, should the need arise, if additional funds are not generated or raised, the going concern basis may not be appropriate. As a result the consolidated group may have to realise its assets and discharge its liabilities, other than in the ordinary course of business and in amounts different from those stated in the financial report. No allowance for such circumstances has been made in the financial report.

Whilst there is significant uncertainty, the directors consider it appropriate to prepare the accounts on a going concern basis as they are satisfied that, based on the cash flow forecasts prepared including receipts from future fund raising, the consolidated group will be able to meet its debts as and when they become due and payable for a period of at least 12 months from the date of this report.

Confirmation was received from the convertible note holder that they will not call upon the convertible note for payment before September 2014.

q. Critical accounting estimates and judgments

The directors evaluate estimates and judgments incorporated into the financial statement based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group.

Key Estimates

Impairment of intangibles – Patents

The group assesses impairment at each reporting date by evaluating conditions specific to the group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates.

r. Adoption of new and revised accounting standards

During the current year the Group adopted all of the new and revised Australian Accounting Standards and Interpretations applicable to its operations which became mandatory. There were no significant effects on current period or future periods arising from the first-time application of these standards in respect of presentation, recognition and measurement of accounts.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

s. New Accounting Standards for Application in Future Periods

The following Australian Accounting Standards have been issued or amended and are applicable to the Group but are not yet effective. They have not been adopted in preparation of the financial statements at reporting date and the directors do not expect these requirements to have any material effect on the financial statements.

AASB 9: Financial Instruments and AASB 2009-11: Amendments to Australian Accounting Standards arising from AASB 9 (applicable for annual reporting periods commencing on or after 1January 2015).

The changes made to accounting requirements include:

• simplifying the classifications of financial assets into those carried at amortised cost and those carried at fair value;

• simplifying the requirements for embedded derivatives;

• removing the tainting rules associated with held-to-maturity assets;

• removing the requirements to separate and fair value embedded derivatives for financial assets carried at amortised cost;

• allowing an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument; and

• reclassifying financial assets where there is a change in an entity's business model as they are initially classified based on:

• a. the objective of the entity's business model for managing the financial assets; and b. the characteristics of the contractual cash flows.

AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements

The Standard amends AASB 124 Related Party Disclosures to remove the individual key management personnel (KMP) disclosures required by Australian specific paragraphs. This amendment reflects the AASB’s view that these disclosures are more in the nature of governance disclosures that are better dealt within the legislation, rather than by the accounting standard.

When these amendments are first adopted for the year ending 30 June 2014, they are unlikely to have any significant impact on the entity.

AASB 10 Consolidated Financial Statements (applicable for annual reporting periods ending on or after to 31 December 2013)

AASB 10 establishes a revised control model that applies to all entities. It replaces the consolidation requirements in AASB 127 Consolidated and Separate Financial Statements and AASB Interpretation 112 Consolidation – Special Purpose Entities.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

s. New Accounting Standards for Application in Future Periods (Continued)

The revised control model broadens the situations when an entity is considered to be controlled by another entity and includes additional guidance for applying the model to specific situations, including when acting as an agent may give control, the impact of potential voting rights and when holding less than a majority voting rights may give ‘de facto’ control. The adoption of the standard is not expected to impact the Company.

AASB 13 Fair Value Measurement (applicable for annual reporting periods ending on or after to 31 December 2013)

AASB 13 establishes a single source of guidance for determining the fair value of assets and liabilities. AASB 13 does not change when an entity is required to use fair value, but rather, provides guidance on how to determine fair value when fair value is required or permitted by other Standards. Application of this definition may result in different fair values being determined for the relevant assets.

AASB 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. This includes information about the assumptions made and the qualitative impact of those assumptions on the fair value determined. The adoption of the standard is not expected to impact the Company.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2012

NOTE 2: REVENUE

Note Operating activities: — royalties — interest income – other persons — other revenue Total Revenue NOTE 3: LOSS BEFORE INCOME TAX EXPENSE Loss before income tax has been determined after: Amortisation of non-current assets: — patents and acquired rights Rental expense on property Other expenses: — Legal fees Impairment of financial assets 14 Reversal of prior year accruals	Consolidated Group 2013 2012 $ $ 30,178 86,348 16,262 35,160 - 2,500
	46,440 124,008
	- (100,144) (14,255) (7,418) (682) (13,756) (398,212) - - 79,610

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2013

NOTE 4: INCOME TAX EXPENSE The prima facie tax on loss before income tax is reconciled to income tax as follows: a. Prima facie tax receivable on loss at 30% (2012:30%) Add: Tax effect of: — non-deductible amortization — other non-allowable items Less: Tax effect of: — foreign currency exchange profit not subject to income tax — other allowable items Tax effect of deferred tax assets not brought to account Income tax expense attributable to entity The applicable weighted average effective tax rates are as follows:	Consolidated Group 2013 2012 $ $ (176,614) (37,067) - 3,089 119,464 33,105 - - (155,081) (169,268) 212,231 170,141
	- -
	-% -%

The directors estimate that the Group has carry-forward income tax losses of $11,393,074 (2012: $11,180,843) available to offset against future years’ taxable income. The benefits of these losses have not been brought to account as there is no convincing evidence of future taxable profits to offset losses. The benefit will only be obtained if:

(i) The Group derives future assessable income of the nature and of an amount sufficient to enable the benefits from the deductions for the losses to be realised.

(ii) The Group continues to comply with the conditions for deductibility imposed by the law; and

(iii) No changes in tax legislation adversely affect the parent entity and its controlled entities in realising the benefit from the deductions for the losses.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2013

NOTE 5: KEY MANAGEMENT PERSONNEL COMPENSATION

a. Names and positions held of consolidated and parent entity key management personnel in office at any time during the financial year are:

Key Management Personnel

Mr Terry Cuthbertson Chairman — Non-Executive Mr Peter Herd Director — Non-Executive Mr James Manny Director — Non-Executive (resigned 21 November 2012) Mr David Yu Director — Non-Executive Mr Gary Stewart Director – Non Executive (appointed 29 August 2012 and resigned 8 October 2012) Mr Kenneth Lee Acting Chief Financial Officer

b. Options and Rights Holdings

No options are held by Key Management Personnel.

c. Shareholdings

Number of shares held by Key Management Personnel

Key Management Personnel Mr Terry Cuthbertson Mr Peter Herd Mr James Manny(iii) Mr David Yu (i) Mr Gary Stewart Mr Kenneth Lee	Balance 1/7/13 Received as Compensation Options Exercised Net Change Other (ii) Balance 30/6/13 7,951,352 - - 45,766,159 53,717,511 1,950,205 - - 3,900,410 5,850,615 477,825 - - (477,825) - 16,523,651 - - - 16,523,651 - - - - - 400,000 - - - 400,000
	27,303,033 - - 49,188,744 76,491,777

(i) Note that Mr David Yu as at 30 June 2013 has beneficiary interests in Aviation Travel Holdings Pty Ltd. 16,523,651 ordinary shares hold by Aviation Travel Holdings Pty Ltd.

(ii) Movement related to Company announced Right Issue on October 2012.

(iii) Resigned on 21 November 2012.

NOTE 6: AUDITORS’ REMUNERATION

NOTE 6: AUDITORS’ REMUNERATION	Consolidated Group
	2013	2012
	$	$
Remuneration of the auditor of the parent entity (Grant Thornton Audit
Pty Ltd) for:
— auditing and reviewing the financial statements	43,365	50,765

NOTE 7: DIVIDENDS

No interim and final dividends have been declared or paid during the current financial year, nor in the previous financial year.

The directors are not recommending a final dividend be paid in the current financial year.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2013

NOTE 8: EARNINGS PER SHARE Note a. Reconciliation of earnings to net loss Net loss Earnings used in the calculation of basic and diluted EPS b. Applying AASB 133: Weighted average number of ordinary shares outstanding during the year used in calculation of basic EPS Weighted average number of options outstanding not treated as dilutive Weighted average number of ordinary shares outstanding during the year used in calculation of dilutive EPS	Consolidated Group $ $ 2013 2012 (588,713) (123,555)
	(588,713) (123,555)
	772,250,985 356,188,438 - - 772,250,985 356,188,438

(i) As options exercise prices are in excess of the average market price for ordinary shares and the Company has made a loss during the year, they are considered anti-dilutive.

NOTE 9: 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 cash flow statement is reconciled to items in the balance sheet as follows: Cash and cash equivalents NOTE 10: TRADE AND OTHER RECEIVABLES CURRENT Trade receivables Provision for doubtful debts 10a Term receivables Other receivables Provision for impairment of other receivables	286,489 203,627
	286,489 203,627
	572 8,110 - -
	572 8,110 19,336 9,295 46,911 31,172 (45,211) -
	21,608 48,577

a. Provision for Impairment of Receivables

Current trade and term receivables are non-interest bearing loans and generally on 60 day terms. A provision for impairment is recognised when there is objective evidence that an individual trade or term receivable is impaired. These amounts have been included in the administrative expense items in the income statement.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2013

NOTE 10: TRADE AND OTHER RECEIVABLES (Continued)

Movement in the provision for impairment of receivables is as follows:

Consolidated Group Current trade receivable	Opening Balance Charge for the Year Amounts Written Off Closing Balance 1.07.2012 30.06.2013 $ $ $ $ - - - -
	- - - -

The aging of trade and other receivables are within 30 days.

NOTE 11: OTHER CURRENT ASSETS

NOTE 11: OTHER CURRENT ASSETS Prepayments NOTE 12: CONTROLLED ENTITIES a. Controlled Entities Country of Incorporation Parent Entity: Montec International Limited Subsidiaries of Montec International Limited: — Beijing Montec Commercial Limited China — Montec International (HK) Limited Hong Kong	Consolidated Group $ $ 2013 2012 3,395 3,915
	Percentage Owned 2013 2012 100% 100% 100% 100%

b. Controlled Entities Acquired

No controlled entities acquired during the year ended 30 June 2013.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2013

NOTE 13: PLANT AND EQUIPMENT

Note PLANT AND EQUIPMENT Plant and equipment At cost Accumulated depreciation Impairment of plant and equipment Total Plant and Equipment 13a	Consolidated Group 2013 2012 $ $ - 106,709 - (99,640) - (7,069)
	- -

a. Movements in Carrying Amounts

Movement in the carrying amounts for each class of plant and equipment between the beginning and the end of the current financial year.

2013 Consolidated Group: Balance at 1 July 2011 Disposals Impairment of plant and equipment Depreciation expenses Balance at 30 June 2012 Disposals Depreciation expenses Balance at 30 June 2013	Plant and Equipment Total $ $ 14,293 14,293 (4,628) (4,628) (7,069) (7,069) (2,595) (2,595)
	- - - - - -
	- -

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2013

NOTE 14: FINANCIAL ASSETS

NOTE 14: FINANCIAL ASSETS CURRENT Loan – Ellsar Investments Pty Ltd Provisions for Impairment of Investment	Consolidated Group 2013 2012 $ $ 350,000 350,000 (350,000) -
	- 350,000

The terms of the loan agreement is for 18 months, with interest at 8% per annum payable quarterly in arrears. The Company may require Ellsar Investments Pty Ltd to repay the loan amount by either:

• issue the Company such number of shares as is required to satisfy the loan amount and any outstanding interest at a deemed issue price of $0.0000001 each; or

• exercising a call option to acquire all of the issued capital of Ellsar at a purchase price of $1.00.

The loan amount is fully impairment as at 30 June 2013.

NOTE 15: INTANGIBLE ASSETS

Patents at cost Accumulated amortization Impairment write down of patents Total Intangible Assets Consolidated Group Year ended 30 June 2012 Balance at the beginning of year Amortisation charge Closing value at 30 June 2012 Year ended 30 June 2013 Balance at the beginning of year Amortisation charge Closing value at 30 June 2013	3,423,601 3,423,601 (1,686,348) (1,686,348) (1,737,253) (1,737,253)
	- -
	Patent Total $ $ 100,144 100,144 (100,144) (100,144)
	- -
	- - - -
	- -

Intangible assets have finite useful lives. The current amortisation charges for intangible assets are included under depreciation and amortisation expense per the income statement.

Royalty income beyond 12 June 2012 is subject to further arrangement with Dairy Farmers.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2013

NOTE 16: TRADE AND OTHER PAYABLES CURRENT Unsecured liabilities Trade creditors Sundry creditors and accrued expenses	Consolidated Group 2013 2012 $ $ 35,151 35,891 162,176 94,954
	201,327 130,845

NOTE 17: SHORT-TERM PROVISIONS

CURRENT
Redundancy Provision	16,193	16,193

NOTE 18: FINANCIAL LIABILITIES

CURRENT Loan – Nebral Pty Ltd and Trandara Pty Ltd (i) Loan – Nebral Pty Ltd and Trandara Pty Ltd (ii)	- 350,000 200,000 200,000
	200,000 550,000

• (i) The loan agreement between Nebral Pty Ltd (Nebral) and Trandara Pty Ltd (Trandara) and the Company. The loan is for 18 months with interest rate at 8% per annum payable quarterly in arrears. The Company may repay the loan amount by either:

• making cash repayments to Nebral and Trandara;

• subject to the Company obtaining all requisite regulatory approvals, issuing Nebral and Trandara shares in the Company at an issue price which is lower of $0.0025 or if the Company carries out a pro-rata right issue, the issue price of the shares being offered under that rights issue; or

• assigning all the Company’s rights under the loan agreement and call option agreement (refer to note 14) it entered into with Ellsar Investments Pty Ltd to Nebral and Trandara.

• this loan was repaid during December 2012 out of the proceeds of the Right issue.

• (ii) The Convertible note agreement between Nebral and Trandara and the Company. The convertible note agreement of $200,000 to provide working capital needs of the Company. The convertible note is issued for 18 months with interest rate at 12% per annum payable quarterly in arrears and convertible to ordinary shares at $0.0025 per share.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2013

NOTE 19: ISSUED CAPITAL 1,059,257,093 (2012: 356,188,438) fully paid ordinary shares 19a a. Ordinary shares At the beginning of the reporting period Share movements during the year: - Right Issue of 703,068,655 ordinary shares at $0.001 per share on 27/11/2012 - Share issue costs At reporting date b. Number of ordinary shares At the beginning of reporting period Shares issued during the financial year ended 30 June 2013: - Right Issue of 703,068,655 ordinary shares at $0.001 per share on 27/11/2012 At reporting date

Consolidated Group 2013 2012 $ $ 20,788,060 20,200,910 20,200,910 20,200,910 703,062 - (115,912) - 20,788,060 20,200,910

Consolidated Group 2013 2012 No. No. 356,188,438 356,188,438 703,068,655 - 1,059,257,093 356,188,438

The fair value ascribed to ordinary shares issued is based on the level of cash subscribed or the fair value assessed for services rendered or assets acquired with those issued shares.

Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held.

At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.

The ordinary shares have no par value.

c. Options

• i. For information relating to the Montec International Limited employee option plan, including details of options issued, exercised and lapsed during the financial year and the options outstanding at year end refer to Note 25.

• ii. For information relating to share options issued to directors and executives during the financial year refer to Note 25.

At 30 June 2013, there were no options outstanding (30 June 2012: nil).

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2012

NOTE 19: ISSUED CAPITAL (CONTINUED)

d. Capital Management

Management controls the capital of the group in order to ensure that the group can fund its operations and continue as a going concern.

NOTE 20: RESERVES

a. Option Reserve

The Company has no option reserve during the financial year ended 30 June 2013.

b. Foreign Currency Translation Reserve

The foreign currency translation reserve records exchange differences arising on translation of a foreign controlled subsidiary.

NOTE 21: CAPITAL AND LEASING COMMITMENTS

The Group has no capital lease commitments during the financial year ended 30 June 2013 and previous financial year ended 30 June 2012.

NOTE 22: CONTINGENT ASSETS AND LIABILITIES

There are no contingent assets or contingent liabilities of a material nature identified as at the date of this report.

NOTE 23: SEGMENT REPORTING

Identification of reportable segments

Montec International Limited has identified its operating segments based on the internal reports that are reviewed and used by the board of directors (chief operating decision makers) in assessing performance and determining the allocation of resources.

The Group has only one line of business, that being the sale and marketing of monounsaturated dairy technology and products in Australia and China. Operating segments are therefore determined on the same basis.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2012

NOTE 23: SEGMENT REPORTING (CONTINUED)

Basis of accounting for purposes of reporting by operating segments

Accounting policies adopted

Unless stated otherwise, all amounts reported to the Board of Directors as the chief decision maker with respect to operating segments are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group.

Inter segment transactions

Segment revenues, expenses and results include transfers between segments. The prices charged on inter-segment transactions are the same as those charged for similar goods to parties outside of the consolidated group at an arm’s length. These transfers are eliminated on consolidation.

Segment assets

Assets include all assets used by a segment and consist principally of cash, receivables, inventories, intangibles and property, plant and equipment, net of allowances and accumulated depreciation and amortisation. While most such assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly by two or more segments is allocated to the segments on a reasonable basis.

Segment liabilities

Liabilities consist principally of accounts payable, employee entitlements, accrued expenses, provisions and borrowings.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2013

NOTE 23: SEGMENT REPORTING (CONTINUED)

2013 REVENUE External sales Interest income Total segment revenue Total revenue SEGMENT RESULT Expenses Loss before income tax expense Income tax expense Loss after income tax expense ASSETS Segment assets Total assets LIABILITIES Segment liabilities Total liabilities OTHER Depreciation and amortisation of segment assets OTHER NON-CASH SEGMENT EXPENSES Impairment of financial assets	Australia China Eliminations Consolidated Group $ $ $ $ 30,178 - - 30,178 16,262 - - 16,262	Australia China Eliminations Consolidated Group $ $ $ $ 30,178 - - 30,178 16,262 - - 16,262
	46,440 - -	46,440
	(630,801) (4,352) -	46,440 (635,153)
	(584,361) (4,352) 308,034 3,458 -	(588,713) -
		(588,713)
		311,492
	308,034 3,458 -	311,492
	357,739 451,580 (391,800) 417,519
	357,739 451,580 (391,800) 417,519
	- - - - 398,212 - - 398,212

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2013

NOTE 23: SEGMENT REPORTING (CONTINUED)

2012 REVENUE External sales Interest income Other revenue Total segment revenue Total revenue SEGMENT RESULT Reversal of prior year accruals Expenses Loss before income tax expense Income tax expense Loss after income tax expense ASSETS Segment assets Total assets LIABILITIES Segment liabilities Total liabilities OTHER Depreciation and amortisation of segment assets OTHER NON-CASH SEGMENT INCOME Reversal of accruals OTHER NON-CASH SEGMENT EXPENSES Impairment of loan in subsidiary	Australia China Eliminations Consolidated Group $ $ $ $ 86,348 - - 86,348 35,160 - - 35,160 2,500 - - 2,500	Australia China Eliminations Consolidated Group $ $ $ $ 86,348 - - 86,348 35,160 - - 35,160 2,500 - - 2,500
	124,008 - - 124,008
	124,008 - 79,610 - 79,610 (325,890) (11,492) 10,209 (327,173)
	(201,882) 68,118 10,209 (123,555) - (123,555) 604,746 2,471 - 607,217
		(123,555)
		607,217
	604,746 2,471 -	607,217
	655,108 395,731 (352,703) 698,136
	655,108 395,731 (352,703) 698,136
	100,144 - - 100,144 - 79,610 - 79,610 10,209 - (10,209) -

Major customer

The Group supplies one single customer in the Australia segment which accounts for 100% of external revenue (2012: 100%).

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2013

NOTE 24: CASH FLOW INFORMATION

a. Reconciliation of Cash Flow from Operations with loss after Income Tax Loss after income tax Non-cash flows in loss Amortisation Impairment of financial assets Reversal of accruals Other non cash items Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries Increase in trade and other receivables Decrease in prepayments Decrease in inventories Increase in trade creditors and accruals Decrease in provisions Cash flow used in operations

Consolidated Group 2013 2012 $ $ (588,713) (123,555) - 100,144 398,212 - - (79,610) 21,266 1,159 (3,805) (9,494) 520 724 - - 18,232 15,738 - (32,008)

(154,288) (126,902)

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2013

NOTE 25: SHARE BASED PAYMENTS

There were no new employee share options issued during the financial year.

The closing share market price of an ordinary share of Montec International Limited on the Australian Stock Exchange at 30 June 2013 was $0.001 (30 June 2012: $0.001).

a. Movement in the number of share options held by employees are as follows: Opening balance Granted during the year Exercised during the year Lapsed during the year Net change other (i) Closing Balance Exercisable at year end	Consolidated Group 2013 2012 No. No. - - - - - - - - - -
	- -
	- -

• (i) This includes options held by employee who left the company during the year.

There were no options exercised during the year ended 30 June 2013.

Included under employee benefits expenses in the income statement is nil (2012: nil), and relates, in full, to equity-settled share-based payment transactions.

• b. There were no share options outstanding as at end of year.

• c. Details of Shares Granted

There were no shares granted to employees as remuneration in the financial year ended 30 June 2013 (2012: nil granted).

NOTE 26: EVENTS SUBSEQUENT TO REPORTING DATE

No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2013

NOTE 27: RELATED PARTY TRANSACTIONS

NOTE 27: RELATED PARTY TRANSACTIONS
	Consolidated Group
	2013	2012
	$	$
Transactions between related parties are on normal commercial terms
and conditions no more favorable than those available to other parties
unless otherwise stated.
Transactions with related parties:
i. Controlled entities
The outstanding receivables between the inter-companies have been
eliminated on consolidation.
ii. Director-related Entities
During the year ended 30 June 2013, the Company paid rent to South
American Iron and Steel Limited (SAY) in which Mr Terry Cuthbertson
also holds the position of non-executive chairman. The rental lease is
on month to month base at $1,000 per month.	12,000	4,000
iii. Key Management Personnel
No other related party transactions with directors or executives of
Montec International Limited or controlled entities occurred during the
financial year ended 30 June 2013.

iv. Share Transactions of Key Management Personnel

There is no share transactions of directors during the financial year ended 30 June 2013.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2013

NOTE 28: FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

a. Financial Risk Management Policy

The Group’s financial instruments consist mainly of deposits with banks, accounts receivable and payable, loans to and from subsidiaries.

The Board and Management monitor risks on a regular basis as part of formal board meeting and ad-hoc management discussion.

i. Financial Risk Exposures and Management

The main risks the Group is exposed to through its financial instruments are liquidity risks, foreign currency risk and credit risk.

Liquidity risks

The Group manages liquidity risk by continually monitoring forecast cash flows and generating when required additional capital funding as necessary. It is noted that the group does not have any borrowing facilities.

Foreign currency risk

The Group is exposed to fluctuations in foreign currencies arising from the sale and purchase of goods and services in currencies other than the group’s measurement currency. The management managed the foreign currency transactions on a monthly basis to avoid the fluctuation on the exchange rate, while the Group does not have any material foreign currency risk exposure. Where exposures do arise, forward foreign exchange contracts will be applied.

Credit risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets is the carrying amount, net of any provisions for doubtful debts of those assets, as disclosed in the balance sheet and notes to the financial statements.

There are no material amounts of collateral held as security at 30 June 2013.

The Group does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the Group.

b. Financial Instruments

i. Derivative Financial Instruments

The Group has not participated in the use of any derivative financial instruments during the year.

ii. Financial instrument composition and maturity analysis

The tables below reflect the weighted average effective interest rate on classes of financial assets and financial liabilities.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2013

NOTE 28: FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)

Weighted Average Effective Interest Rate Floating Interest Rate Non-interest Bearing Total $ $ $ 2013 2012 2013 2012 2013 2012 2013 2012 Financial Assets: Cash 2.10% 3.05% 286,489 203,627 - - 203,627 203,627 Trade and other receivables - - - - 21,608 48,577 21,608 48,577 Fixed Interest Rate Total $ 2013 2012 2013 2012 Financial Assets: Loan – Ellsar Investments Pty Ltd 8% 8% 350,000 350,000 Financial Liabilities: Loan – Nebral Pty Ltd and Trandara Pty Ltd 8% 8% 200,000 550,000	Weighted Average Effective Interest Rate	Weighted Average Effective Interest Rate	Floating Interest Rate	Floating Interest Rate	Non-interest Bearing	Non-interest Bearing	Total	Total
			$		$		$
	2013	2012	2013	2012	2013	2012	2013	2012
	2.10% 3.05% 286,489 203,627 - - 203,627 203,627 - - - - 21,608 48,577 21,608 48,577

Trade and sundry payables are expected to be paid as follows:

Less than 6 months Over 6 months	Consolidated Group 2013 2012 $ $ 6,957 7,777 194,369 123,068
	201,326 130,845

iii. Net Fair Values

The net fair values of unlisted investments where there is no organised financial market, the net fair value has been based on a reasonable estimation of the underlying net assets or discounted cash flows of the investment. For other assets and other liabilities the net fair value approximates their carrying value.

iv. Sensitivity Analysis

Interest Rate Risk and Foreign Currency Risk

The Group has performed a sensitively analysis relating to its exposure to interest rate risk and foreign currency risk at balance date. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in these risks.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2013

NOTE 28: FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)

Interest Rate Sensitivity Analysis

At 30 June 2013, the effect on profit and equity as a result of changes in the interest rate, with all other variables remaining constant would be as follows:

	Consolidated Group
	2013	2012
	$	$
Change in profit
- Increase in interest rate by 2%	325	703
- Decrease in interest rate by 2%	(325)	(703)
Change in equity
- Increase in interest rate by 2%	325	703
- Decrease in interest rate by 2%	(325)	(703)

Foreign Currency Risk Sensitivity Analysis

At 30 June 2013, the effect on profit and equity as a result of changes in the value of the Australian Dollar to the Chinese Renminbi, with all other variables remaining constant is as follows:

	Consolidated Group
	2012	2012
	$	$
Change in profit
- Improvement in AUD to RMB by 5%	(218)	(514)
- Decline in AUD to RMB by 5%	218	514
Change in equity
- Improvement in AUD to RMB by 5%	(218)	(514)
- Decline in AUD to RMB by 5%	218	514

NOTE 29: ECONOMIC DEPENDENCY

Montec International Limited is dependent on the revenue generated from the licensing arrangement with Dairy Farmers going forward.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2013

NOTE 30: MONTEC INTERNATIONAL LIMITED PARENT COMPANY INFORMATION

	2013	2012
	$	$
Parent entity
ASSETS
Current Assets	310,281	604,861
Non-current assets	-	-
TOTAL ASSETS	310,281	604,861
LIABILITIES
Current liabilities	357,739	655,108
Non-current liabilities	-	-
TOTAL LIABILITIES	357,739	655,108
EQUITY
Issued capital	20,788,060	20,200,910
Retained earnings	(20,846,310)	(20,261,949)
Share options reserves	-	-
Foreign currency revaluation reserves	10,792	10,792
TOTAL EQUITY	(47,458)	(50,247)
FINANCIAL PERFORMANCE
Loss for the year	(584,361)	(201,881)
Other comprehensive income	-	-
TOTAL COMPREHENSIVE INCOME	(584,361)	(201,881)

GUARANTEES IN RELATION TO RELATION TO THE DEBTS OF SUBSIDIARIES

No guarantees provided under the deed of cross guarantee.

CONTINGENT LIABILITIES

No contingent liabilities of a material nature identified as at the date of this report.

CONTRACTUAL COMMITMENTS

There is no contractual commitment as at 30 June 2013.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2013

NOTE 31: COMPANY DETAILS

The registered office of the Company is:

Montec International Limited

C/O Australian Company Secretaries Pty Ltd Level 3, Suite 302, 70 Pitt Street Sydney NSW 2000 Australia

The principal places of business are:

Montec International Limited

C/O Australian Company Secretaries Pty Ltd Level 3, Suite 302, 70 Pitt Street, Sydney NSW 2000

Beijing Montec Commercial Limited Beijing China Room 320, Ju An Office Building, 18 Bai Zi Wan Road, Chaoyang District Beijing PRC 100022

Montec International (HK) Limited

C/O Sky Trend Accounting Services Centre Room 1215-1216, 12/F., Houston Centre, 63 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong

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DIRECTORS’ DECLARATION

The directors of the Company declare that:

1. The financial statements and notes, as set out on pages 9 to 41 are in accordance with the Corporations Act 2001 and :

2. a. comply with Accounting Standards and the Corporations Regulations 2001 ;

3. b. give a true and fair view of the financial position as at 30 June 2013 and of the performance for the year ended on that date of the consolidated entity; and

4. c. complies with International Financial Reporting Standard as disclosed in Note 1.

5. The Chief Executive Officer and Chief Finance Officer have each declared that:

6. a. the financial records of the company for the financial year have been properly maintained in accordance with s 286 of the Corporations Act 2001;

7. b. the financial statements and notes for the financial year comply with the Accounting Standards; and

8. c. the financial statements and notes for the financial year give a true and fair view;

9. In the directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

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Terry Cuthbertson Chairman Dated this 30[th] August 2013

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Grant Thornton Audit Pty Ltd ACN 130 913 594

Level 19, 2 Market Street Sydney NSW 2000 Locked Bag Q800 QVB Post Office Sydney NSW 1230

T +61 2 8297 2400 F +61 2 9299 4445 E info.nsw@au.gt.com W www.grantthornton.com.au

Auditor’s Independence Declaration To the Directors of Montec International Limited

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Montec International Limited for the year ended 30 June 2013, I declare that, to the best of my knowledge and belief, there have been:

• a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

• b no contraventions of any applicable code of professional conduct in relation to the audit.

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

C F Farley Partner - Audit & Assurance

Sydney, 30 August 2013

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

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Grant Thornton Audit Pty Ltd ACN 130 913 594

Level 19, 2 Market Street Sydney NSW 2000 Locked Bag Q800 QVB Post Office Sydney NSW 1230

T +61 2 8297 2400 F +61 2 9299 4445 E info.nsw@au.gt.com W www.grantthornton.com.au

Independent Auditor’s Report

To the Members of Montec International Limited

Report on the financial report

We have audited the accompanying financial report of Montec International Limited (the “Company”), which comprises the consolidated statement of financial position as at 30 June 2013, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the consolidated entity comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ responsibility for the financial report

The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001. The Directors’ responsibility also includes such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. The Directors also state, in the notes to the financial report, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, the financial statements comply with International Financial Reporting Standards.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require us to 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 performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

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judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

Auditor’s opinion

In our opinion:

• a the financial report of Montec International Limited is in accordance with the Corporations Act 2001, including:

• i giving a true and fair view of the consolidated entity’s financial position as at 30 June 2013 and of its performance for the year ended on that date; and

• ii complying with Australian Accounting Standards and the Corporations Regulations 2001; and

• b the financial report also complies with International Financial Reporting Standards as disclosed in the notes to the financial statements.

Material uncertainty regarding continuation as going concern

Without qualifying our opinion, we draw attention to Note 1 (p) in the financial report which indicates that the consolidated entity incurred a net loss of $588,713 and had net cash used in operating activities of $154,288 for the year ended 30 June 2013 and, as of that date, had net current liabilities of $106,027. These conditions, along with other matters as set forth in Note 1(p), indicate the existence of a material uncertainty which may cast significant doubt about the consolidated entity’s ability to continue as a going concern and therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business, and at the amounts stated in the financial report.

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Report on the remuneration report

We have audited the remuneration report included in pages 4 to 6 of the directors’ report for the year ended 30 June 2013. The Directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s opinion on the remuneration report

In our opinion, the remuneration report of Montec International Limited for the year ended 30 June 2013, complies with section 300A of the Corporations Act 2001.

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

C F Farley

Partner Audit & Assurance

Sydney, 30 August 2013

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