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SCIDEV LTD Interim / Quarterly Report 2010
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Interim / Quarterly Report
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ABN 25 001 150 849
Level 3 2 Elizabeth Plaza North Sydney NSW 2060 Australia PO Box 1507 North Sydney NSW 2059 Australia
Phone: 02-9954-7888 Fax: 02-8904-0334 Email: [email protected] Website: www.intec.com.au ASX code: INL
Companies Announcements Office 30 August 2010 Australian Securities Exchange
Preliminary 2010 Financial Report (Appendix 4E)
In its 2010 Annual Report to be lodged with the ASX in September, Intec Ltd (ASX code: INL) will be providing a comprehensive description of all its activities up to that time.
In the meantime, I attach INL's Preliminary Final Report in accordance with Appendix 4E for the financial year ended 30 June 2010.
Yours faithfully Intec Ltd
Philip R. Wood Managing Director and Chief Executive Officer
Intec Ltd
ABN 25 001 150 849
Preliminary Final Report in accordance with Appendix 4E
Financial year ended 30 June 2010
| Results for announcement to the market | 30 June2010 | 30 June2009 | |||
|---|---|---|---|---|---|
| $'000 | $'000 | ||||
| Revenues and other income from continuingoperations | Down 48% | to | 759 | from | 1,451 |
| Loss from continuing operations | Down 65% | to | (4,304) | from | (12,320) |
| Profit/(Loss) from discontinued operations | Up | to | 2,659 | from | (8,365) |
| Net loss for period attributable to members | Down 92% | to | (1,645) | from | (20,685) |
| Dividends | Amount persecurity | Franked amountper security |
|---|---|---|
| Final dividend | Nil cents | Nil cents |
| Previous corresponding period | Nil cents | Nil cents |
| Record date for determining entitlements to the dividend | Not applicable |
Brief explanation of any of the figures reported above:
The Company and controlled entities (the Group) incurred operating losses after income tax of $1.645 million and net cash outflows from operations of $3.606 million in the year ended 30 June 2010. As of balance date, the Group had net assets of $5.475 million and cash balances of $0.192 million.
The operating loss after tax of $1.645 million represents a substantial improvement when compared to the loss recorded at 30 June 2009 of $20.685 million. The improvement was due to there being no further material asset impairments and the recognition of the value of the Hellyer royalty, which formed part of the consideration payable by Bass Metals Ltd (BSM) for the purchase of the Hellyer Assets. Settlement of the sale of the Hellyer Assets occurred in August, 2009.
The Hellyer royalty involves the payment to Intec of $2.50 per tonne of ore processed through the Hellyer Mill to a cumulative maximum payment amount of $5.0 million. BSM has publicly announced its intention to restart the Hellyer Mill during the 2011 March quarter. In its 30 June 2009 financial statements, BSM adopted a valuation of $2.756 million for the Hellyer royalty. BSM's valuation of the Hellyer royalty has been adopted by the Directors and accounted for as a profit from discontinued operations and a non-current asset.
Proceeds from the sale of the Hellyer assets were principally applied to the repayment of the Macquarie Bank debt facility and the replacement of the $3.648 million environmental bond in Victoria (that had been supplied by the Macquarie facility) with an interest-bearing cash deposit.
Revenues from continuing operations were generated from the ongoing recycling operations at Burnie, interest from Intec's environmental bonds for the EAF dust stockpile and other minor revenue sources.
Operational Activities
Intec's primary recycling service client, the ACL Group, was placed into administration on 25 August 2009. Intec has written off $0.218 million as a bad debt for services provided to the ACL Group up to that date. However, the Company continues to provide service to the Receivers and Managers of the ACL Group and all current and future revenues from this work have and will be paid in the ordinary course of business.
Victorian Spent Pickle Liquor Recycling Project
During the year, Intec completed Phase I of the spent pickle liquor recycling project in Victoria. The project has three phases designed to develop, demonstrate and implement technology for the recycling of spent pickle liquor and other wastes from the galvanizing industry. The project is the recipient of a $0.78 million grant from EPA Victoria's HazWaste Fund and is being undertaken in collaboration with GB Galvanizing Service Pty Ltd (GBG). Phase 1, which commenced in November 2009, finished within budget and comprised the successful conduct of continuous pilot plant trials over 175 hours of operation. The pilot plant trials demonstrated the successful recovery and electrowinning of zinc metal product, and also iron separation and recovery. Intec announced on 28 July 2010 that EPA Victoria had approved the commencement of Phase 2 of the project, which is expected to be completed during this calendar year.
Investment in Green Resources (Asia Pacific) Holding Limited
In January 2010, the Company entered into a multi-part subscription agreement with Green Resources for the licensing of the Intec Process technology in China. Stage 1 of the subscription agreement resulted in Intec receiving seven percent (7%) of the issued capital in Green Resources, satisfied by the issue of 21,659,436 Intec ordinary shares at a price of $0.015 per share to investors nominated by Green Resources and the grant to Green Resources of a royalty-free twenty (20) year Intec Process technology licence, subject to Intec's existing licensing arrangements and specified performance arrangements. The Directors have valued the Company's 7% shareholding in Green Resources at $1.137 million of which $0.813 million has been recorded as deferred revenue.
La Jolla Cove Investors, Inc. Funding Agreement
On 16 November 2009, Intec signed a convertible note facility with La Jolla that provides up to a total of US$3 million in working capital in two equal tranches of US$1.5 million. If the facility is fully utilised it will provide Intec with all required working capital during 2010, while the Company develops its Australian, Chinese and other international projects towards selfsustaining revenue generation.
Extraordinary General Meeting
Intec held an extraordinary general meeting on 30 June 2010 to approve the following resolutions: 1. Ratification of the La Jolla convertible note facility;
-
- The issue of shares to La Jolla; and
-
- A 10:1 share consolidation.
All resolutions were passed and in relation to resolution 3, Intec's post-consolidation shares resumed trading on the Australian Securities Exchange (ASX) on 16 July 2010.
| Consolidated statement of comprehensive income | ||
|---|---|---|
| 30 June 2010$'000 | 30 June 2009$'000 | |
| Revenue from continuing operations | 549 | 925 |
| Other income | 210 | 526 |
| Administration expense | (647) | (770) |
| Bad and Doubtful Debts expense | (218) | (228) |
| Burnie Research Facility expenses | (128) | (526) |
| Depreciation and amortisation expense | (807) | (833) |
| Diminution in Value of Environmental Bonds | - | (4,404) |
| Engineering and other consultants expenses | (297) | (298) |
| Employee benefits expense | (2,343) | (2,791) |
| Finance costs | (97) | (216) |
| Impairments expense | (143) | - |
| Occupancy expense | (377) | (479) |
| Research and development expenses | (67) | (133) |
| Options expense | (117) | - |
| Other expenses | (28) | (855) |
| Exploration expenditure written-off | - | (146) |
| Diminution in value of investments in associates | - | (2,709) |
| Share of net profits/(losses) of associates accounted forusing the equity method | - | 823 |
| Loss before income tax | (4,510) | (12,114) |
| Income tax benefit/(expense) | 206 | (206) |
| Loss from continuing operations | (4,304) | (12,320) |
| Profit/(Loss) from discontinued operations | 2,659 | (8,365) |
| Loss for the year | (1,645) | (20,685) |
| Other comprehensive income | - | - |
| Income tax relating to components of other | ||
| comprehensive income | - | - |
| Other comprehensive income for the yearnet of income tax | - | - |
| Total comprehensive loss for the year | (1,645) | (20,685) |
| Loss per share for loss from continuing operationsattributable to ordinary equity holders of the company: | ||
| Basic loss per share | (0.48) | (1.82) |
| Diluted (loss) per shareLoss per share for lossattributable to ordinary equity holders of the company: | (0.48) | (1.82) |
| Basic Earnings/(Loss) per share (cents per share) | (0.18) | (3.06) |
| Diluted Earnings/(Loss) per share (cents per share) | (0.18) | (3.06) |
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
| Consolidated statement of financial position | ||
|---|---|---|
| 30 June 2010$'000 | 30 June 2009$'000 | |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 192 | 1,990 |
| Trade and other receivables | 29 | 300 |
| Inventories | 38 | 23 |
| Non current assets classified as held for sale | - | 3,715 |
| Prepayments | 27 | 26 |
| Total current assets | 286 | 6,054 |
| Non-current assets | ||
| Trade and other receivables | 2,756 | - |
| Deposits | 121 | 121 |
| Investments | 1,163 | 26 |
| Plant & Equipment | 3,448 | 4,199 |
| Environmental Bonds | 4,425 | 756 |
| Intangible Assets | 10 | 10 |
| Total non-current assets | 11,923 | 5,112 |
| Total assets | 12,209 | 11,166 |
| LIABILITIES | ||
| Current liabilities | ||
| Trade and other payables | 441 | 886 |
| Borrowings | 594 | 42 |
| Refundable deposit | - | 500 |
| Provisions | 4,805 | 3,848 |
| Total current liabilities | 5,840 | 5,276 |
| Non-current liabilities | ||
| Provisions | 81 | 860 |
| Deferred revenue | 813 | - |
| Total non-current liabilities | 894 | 860 |
| Total liabilities | 6,734 | 6,136 |
| Net assets | 5,475 | 5,030 |
| EQUITY | ||
| Contributed equity | 68,843 | 66,753 |
| Reserves | 2,577 | 2,577 |
| Accumulated losses | (65,945) | (64,300) |
| Total equity | 5,475 | 5,030 |
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
| Consolidated statement of changes in equity | ||
|---|---|---|
| 30 June2010 | 30 June2009 | |
| $'000 | $'000 | |
| Total equity at the beginning of the financial year | 5,030 | 37,050 |
| Current year expenses recognised directly in equity | ||
| Share of associates reserves accounted for using theequity method | - | 24 |
| Net expenses recognised directly in equity | - | 24 |
| Net (Loss) recognised directly in equity | - | 24 |
| Loss for the year | (1,645) | (20,685) |
| Total recognised income and (expense) for the year | (1,645) | (20,661) |
| Transactions with equity holders in their capacity asequity holders | ||
| Contributions of equity, net of transaction costs | 2,083 | 2,278 |
| Amount transferred to equity on exercise of options | 7 | 1 |
| Transfer from asset revaluation reserve on recognition ofassets available for sale | - | (13,638) |
| 2,090 | (11,359) | |
| Total equity at the end of the financial year | 5,475 | 5,030 |
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
| Consolidated statement of cash flow | ||
|---|---|---|
| 30 June2010 | 30 June2009 | |
| $'000 | $'000 | |
| Cash flows from operating activities | ||
| Receipts from customers | 643 | 7,389 |
| Payments to suppliers and employees | (4,339) | (14,008) |
| Interest paid | (97) | (306) |
| Interest received | 187 | 155 |
| Other income | - | 592 |
| Net cash (outflows) from operating activities | (3,606) | (6,178) |
| Cash flows from investing activities | ||
| Payments for plant & equipment | (56) | (301) |
| Proceeds from sale of property, plant & equipment | 3,215 | 514 |
| Payments for security deposits | (3,669) | (756) |
| Proceeds from security deposits refunded | - | 1,010 |
| Proceeds from sale of investments in associate | - | 2,259 |
| Payment for non refundable deposit | - | (300) |
| Loans to other entities | - | (2) |
| Net cash (outflows)/inflows from investing activities | (510) | 2,424 |
| Cash flows from financing activities | ||
| Proceeds from issue of shares and options | 1,766 | 1,922 |
| Proceeds from borrowings | 579 | 27 |
| Repayment of borrowings | (27) | (1,420) |
| Net cash inflows from financing activities | 2,318 | 529 |
| Net decrease in cash held | (1,798) | (3,225) |
| Cash at the beginning of the financial period | 1,990 | 5,215 |
| Cash at the end of the financial period | 192 | 1,990 |
The above consolidated statement of cash flow should be read in conjunction with the accompanying notes.
Reconciliation of cash
| 30 June2010 | 30 June2009 | |
|---|---|---|
| $'000 | $'000 | |
| Reconciliation of cash at the end of the year (as shown inthe consolidated statement of cash flows) to the relateditems in the accounts is as follows: | ||
| Cash on hand and at bank | 192 | 1,990 |
| Total cash at end of financial year | 192 | 1,990 |
| Reconciliation of operating loss after income tax to net cash outflow fromoperating activities | ||
| Operating loss after income tax | (1,645) | (20,685) |
| Non cash items and non operating cash flows | ||
| included in profit and loss: | ||
| Bad and doubtful debts expense | 218 | 228 |
| Depreciation and amortisation | 807 | 833 |
| Impairments expense | 121 | - |
| Depreciation as part of loss from discontinued operations | - | 977 |
| Cost of sale of property, plant & equipment | - | 295 |
| Royalty as part of profit from discontinued operations | (2,756) | - |
| Exploration expenditure written-off | - | 146 |
| Hellyer assets impairment expense | - | 4,378 |
| Net (profit)/loss on sale of non current assets | - | 34 |
| Net (profit)/loss on sale of investments | - | (63) |
| Equity share of (profit)/losses of associated entities | - | (823) |
| Diminution in value of environmental bonds | 22 | 4,404 |
| Diminution in value of investment in associate | - | 2,709 |
| (3,233) | 13,118 | |
| Changes in assets and liabilities: | ||
| Decrease/(increase) in receivables and prepayments | 52 | 2,081 |
| Decrease/(increase) in inventories | (15) | 3,207 |
| Increase/(decrease) in creditors | (445) | (2,937) |
| Increase/(decrease) in deferred revenue | - | (4,610) |
| Increase/(decrease) in provisions | 35 | 3,648 |
| (373) | 1,389 | |
| Net cash (outflows) from operating activities | (3,606) | (6,178) |
Control gained or loss of control over entities having material effect
| Name of entity (or group of entities) | Not applicable | |
|---|---|---|
| Consolidated profit/(loss) from ordinary activities andextraordinary items after tax of the controlled entity (orgroup of entities) since the date in the current period onwhich control was acquired | Not applicable | |
| Date from which such profit/(loss) has been calculated | Not applicable | |
| Profit/ (Loss) from ordinary activities and extraordinaryitems after tax of the controlled entity (or group ofentities) for the whole of the previous correspondingperiod. | Not applicable | |
| Loss of control of entities having material effect | ||
| Name of entity (or group of entities) | Not applicable | |
| Consolidated profit/(loss) from ordinary activities andextraordinary items after tax of the controlled entity (orgroup of entities) to the date of loss of control | Not applicable | |
| Date to which such profit/(loss) has been calculated | Not applicable | |
| Consolidated profit/(loss) from ordinary activities andextraordinary items after tax of the controlled entity (orgroup of entities) while controlled during the whole ofthe previous corresponding period | Not applicable | |
| Contribution to consolidated profit/(loss) from ordinaryactivities and extraordinary items from the sale of theinterest leading to the loss of control | Not applicable | |
| Dividends | ||
| Date the dividend is payable | Not applicable | |
| Record date to determine entitlements to the dividend | Not applicable | |
| No final dividend has been declared | ||
| Consolidated Accumulated Losses | 30 June2010 | 30 June2009 |
| $A'000 | $A'000 | |
| Accumulated losses at the beginning of the financial year | (64,300) | (43,615) |
| Net loss attributable to members | (1,645) | (20,685) |
| Accumulated losses at the end of the financial year | (65,945) | (64,300) |
Details of associates and joint venture entities
Investment in associates accounted for using the equity method of accounting
| (a) Details of Associate | |||||
|---|---|---|---|---|---|
| Name of Associate | Principal Activities | Ownership interest | Carrying amount | ||
| 2010 | 2009 | 2010 | 2009 | ||
| % | % | $'000 | $'000 | ||
| Bass Metals Ltd | Mineral exploration | - | - | - | - |
| Intec Exploration Pty Ltd | Mineral exploration | - | - | - | - |
| 30 June2010 | 30 June2009 | ||||
| $'000 | $'000 | ||||
| (b) Share of reserves attributable to associates | |||||
| Share of associate's profits/(losses) taken up in theconsolidated financial statements | |||||
| Operating profit/(loss) before tax | 823 | ||||
| Income tax expense | - | ||||
| Net operating profit/(loss) after income tax as shownin the Income Statement | 823 | ||||
| Accumulated losses at the beginning of the period | (81) | ||||
| Accumulated losses at the beginning of the period | 742 | ||||
| (c) Movement in equity accounted investmentCarrying amount of investmentat beginning of the financial year | - | 4,069 | |||
| Share of associate's current yearProfits/(losses) after tax (refer (b)) | - | 823 | |||
| Share of associate's increase in reserves | - | 24 | |||
| Share of associate's capital raising costs | - | - | |||
| Acquisition of investment | - | - | |||
| Impairment of investment | - | (2,709) | |||
| Sale of investmentCarrying amount of investment | - | (2,207) | |||
| at end of financial year | - | - | |||
| Summary of financial position of associated entities | |||||
| Current assets | - | - | |||
| Current liabilities | - | - | |||
| Non-current assets | - | - | |||
| Non-current liabilities | - | - | |||
| Net assets | - | - |
| Other notes to the condensed financial statements | ||
|---|---|---|
| 30 June2010 | 30 June2009 | |
| Ratios | ||
| Loss before tax/revenue and other income | ||
| Consolidated loss from continuing operations before taxas a percentage of revenue and other income | (567.06) | (532.72) |
| Loss after tax/equity interests | ||
| Consolidated net loss after tax attributable to members asa percentage of equity (similarly attributable) at the endof the year | (30.05) | (382.91) |
| NTA Backing | ||
| Net tangible assets per ordinary share | 0.51 cents | 0.65 cents |
| Earnings per security (EPS) | ||
| Loss per share for loss from continuing operationsattributable to ordinary equity holders of thecompany: | ||
| Basic loss per share | (0.48) | (1.82) |
| Diluted (loss) per shareDiluted loss per share: Potential ordinary shares beingthe balance of the convertible note at balance date andoptions granted at balance date are not considereddilutive as the conversion of these components to equitywould result in a decrease in the net loss per share.Loss per share for loss | (0.48) | (1.82) |
| attributable to ordinary equity holders of the | ||
| company: | ||
| Basic Earnings/(Loss) per share (cents per share) | (0.18) | (3.06) |
| Diluted Earnings/(Loss) per share (cents per share)Weighted average number of ordinary shares | (0.18) | (3.06) |
| outstanding during the period used in calculating thebasic and diluted loss per share | 897,212,630 | 676,414,778 |
| Share consolidationAn extraordinary general meeting held on 30 June 2010approved a share consolidation reducing the number ofshares on issue by a factor of 10:1. Post-consolidationshares resumed trading on the ASX on 16 July 2010. |
Segment reporting – business segments, 2010
| Discontinued operations(Metal in concentrate)$'000 | R & D$'000 | Consolidated$'000 | |
|---|---|---|---|
| (i) Segment Revenue | |||
| Sales to external customers | - | 549 | 549 |
| Total sales revenue | - | 549 | 549 |
| Other revenue | 2,802 | - | 2,802 |
| Total segment revenue | 2,802 | 549 | 3,351 |
| Intersegment elimination | - | ||
| Unallocated revenue | 210 | ||
| Consolidated revenue | 3,561 | ||
| (ii) Segment Result | |||
| Segment profit/(loss) | 2,659 | (1,281) | 1,378 |
| Intersegment elimination | - | ||
| Unallocated profit/ (loss) | (3,229) | ||
| Loss before income taxIncome tax benefit/(expense) | (1,851)206 | ||
| Loss for the year | (1,645) | ||
| (iii) Segment assets & liabilities | |||
| Segment assets | 2,756 | 7,675 | 10,431 |
| Intersegment elimination | - | ||
| Unallocated assets | 1,778 | ||
| Total assets | 12,209 | ||
| Segment liabilities | - | 4,547 | 4,547 |
| Intersegment eliminationUnallocated liabilities | -2,187 | ||
| Total liabilities | 6,734 | ||
| (iv) Other segment information | |||
| Acquisition of plant & equipment | - | - | - |
| Unallocated | 56 | ||
| Total acquisition | 56 | ||
| Depreciation expense | - | 707 | 100 |
| (v) Cash flow information | |||
| Net cash flow from operating activities | - | (146) | (146) |
| Unallocated | (3,460) | ||
| Total cash flows from operating activities | (3,606) | ||
| Net cash flow from investing activitiesUnallocated | 3,215 | (3,669) | (454)(56) |
| Total cash flow from investing activities | (510) | ||
| Net cash flow from financing activities | - | - | - |
| Unallocated | 2,318 | ||
| Total cash flow from financing activities | 2,318 |
Segment reporting – business segments, 2009
| Discontinued operations(Metal in concentrate)$'000 | R & D$'000 | Consolidated$'000 | |
|---|---|---|---|
| (i) Segment Revenue | |||
| Sales to external customers | 6,391 | 1,234 | 7,625 |
| Total sales revenue | 6,391 | 1,234 | 7,625 |
| Other revenue | 1,819 | - | 1,819 |
| Total segment revenue | 8,210 | 1,234 | 9,444 |
| Intersegment elimination | - | ||
| Unallocated revenue | 1,051 | ||
| Consolidated revenue | 10,495 | ||
| (ii) Segment Result | |||
| Segment profit/(loss) | (8,365) | (6,253) | (14,618) |
| Intersegment elimination | - | ||
| Unallocated profit/ (loss) | (5,861) | ||
| Loss before income tax | (20,479) | ||
| Income tax expense | (206) | ||
| Loss for the year | (20,685) | ||
| Segment assets & liabilities | |||
| Segment assets | 3,715 | 5,024 | 8,739 |
| Intersegment elimination | - | ||
| Unallocated assets | 2,427 | ||
| Total assets | 11,166 | ||
| Segment liabilities | 600 | 4,420 | 5,020 |
| Intersegment elimination | - | ||
| Unallocated liabilities | 1,116 | ||
| Total liabilities | 6,136 | ||
| Other segment information | |||
| Acquisition of plant & equipment | 209 | 14 | 223 |
| Unallocated | 78 | ||
| Total acquisition | 301 | ||
| Depreciation expense | 977 | 716 | 1,693 |
| Cash flow information | |||
| Net cash flow from operating activities | (6,710) | (1,167) | (7,877) |
| Unallocated | 1,699 | ||
| Total cash flows from operating activities | (6,178) | ||
| Net cash flow from investing activities | (209) | (14) | (223) |
| Unallocated | 2,647 | ||
| Total cash flow from investing activities | 2,424 | ||
| Net cash flow from financing activities | - | ||
| Unallocated | 529 | ||
| Total cash flow from financing activities | 529 |
2010 Audit
The financial report is based on accounts which are in the process of being audited. The audit report is expected to contain qualifications in respect of the carrying value of the Burnie Research Facility, the Hellyer royalty, the estimation of the liabilities in relation to stockpiles of EAFD and the carrying value of the Company's shareholding in Green Resources. A reference in relation to significant uncertainty regarding continuation of the Group as a going concern is also expected. Please refer below to the Directors' response to the above matters.
Basis of preparation
The financial report has been prepared in accordance with Accounting Standards, Urgent Issues Group Consensus Views and other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.
The financial report has been prepared on an accruals basis and is based on historical costs except as modified by revaluation of certain non-current assets and, except where stated, does not take into account either changing money values or current valuations of non-current assets. Cost is based on the fair values of the consideration given in exchange for assets.
The Company and controlled entities (the Group) incurred operating losses after income tax of $1.645 million and net cash outflows from operations of $3.606 million in the year ended 30 June 2010. As of balance date, the Group had net assets of $5.475 million and cash balances of $0.192 million.
Going Concern Basis
The financial report has been prepared on a going concern basis. Based on the Group's current position, the Group will require further additional capital and/or revenue in the short term in order to continue meeting its obligations as they become due and payable. Therefore, significant uncertainty exists as to whether or not the Group will be able to continue as a going concern. The Directors are considering a number of plans and initiatives to ensure that adequate funding continues to be available for the Group to meet its business objectives. The Directors consider it likely that the Group will be successful in ensuring that adequate funding is available and therefore, no adjustments have been made to the financial report that might be necessary should the Group not continue as a going concern. Accordingly, the Directors have prepared the financial report on a going concern basis.
Burnie Research Facility
While there is significant uncertainty, the Directors consider that it is unlikely that the carrying value of non-current assets, in particular the Burnie Research Facility, would exceed the realisable value of such assets in an orderly sale process. The carrying value of the Burnie Research Facility is $3.128 million at 30 June 2010. Intec generated revenue through the Burnie Research Facility under contracts for the treatment of industrial wastes and the provision of engineering services to third parties for the year to 30 June 2010 and will continue to do so in the short to medium term under either existing or new commercial arrangements. Accordingly, the Directors have made no adjustment to the carrying value of the Burnie Research Facility at 30 June 2010.
EAFD Stockpiles
The Directors are investigating a range of options for the treatment and/or disposal of the EAFD stockpiles, either by the Group itself or by external parties. At the current time the Group has not determined the most advantageous treatment and/or disposal option. In view of this uncertainty, the Directors have provided for a current provision equivalent to the full amount of environmental bonds lodged in relation to the EAFD stockpiles. The Directors consider that while there is significant uncertainty, it is unlikely that the amount of the provisions would exceed the amount of security bonds lodged.
Hellyer Royalty
The Group holds a 100% interest in the Hellyer royalty, which is a unit-based royalty payable at the rate of $2.50 per tonne of ore processed through the Hellyer Mill to a cumulative maximum payment amount of $5.0 million. The non-current assets of the Group include an amount of $2.756 million representing a valuation of the contingent Hellyer royalty. BSM, which purchased the Hellyer Assets, has publicly announced its intention to restart the Hellyer Mill during the 2011 March quarter. In its 30 June 2009 financial statements, BSM adopted a valuation of $2.756 million for the Hellyer royalty. BSM's valuation of the Hellyer royalty has been adopted by the Directors and accounted for as a profit from discontinued operations and a non-current asset.
Investment in Green Resources (Asia Pacific) Holding Limited
In November 2009, the Company entered into a multi-part subscription agreement with Green Resources for the licensing of the Intec Process technology in China. Stage 1 of the subscription agreement resulted in Intec receiving seven percent (7%) of the issued capital in Green Resources, satisfied by the issue of 21,659,436 Intec ordinary shares at a price of $0.015 per share to investors nominated by Green Resources and the grant to Green Resources of a royalty-free twenty (20) year Intec Process technology licence, subject to Intec's existing licensing arrangements and specified performance arrangements. The Directors have valued the Company's 7% shareholding in Green Resources at $1.137 million of which $0.813 million has been recorded as deferred revenue.
Accounting Policies
The Appendix 4E does not include notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and the financing and investing activities of the Group as the full financial report.
The Appendix 4E should be read in conjunction with the Half-year Financial Report of Intec as at 31 December 2009 and the Annual Financial Report of Intec, due to be released in September 2010, for the year ended 30 June 2010. It is also recommended that the Appendix 4E be considered together with any public announcements made by Intec during the year ended 30 June 2010 in accordance with the continuous disclosure obligations arising under the Corporations Act, 2001.
Material factors affecting the revenues and expenses of the economic entity for the current year
Revenue of $2.756 million was recognised for the year ended 30 June 2010 representing a royalty payment and forms part of the consideration payable by BSM for the purchase of the Hellyer Assets, for which settlement occurred in August 2009.
The sale of the Hellyer Assets was completed in August 2009 and allowed the full extinguishment of the $5.0 million Macquarie Bank debt facility.
The Group has a contract for the treatment of industrial wastes generated by the Tasmanian-based ACL Group. On 25 August 2009, Receivers and Managers were appointed to the ACL Group. At balance date, the Group wrote off a bad debt of $0.218 million owing for work completed for the ACL Group prior to the appointment of the Receivers and Managers.
No other matters or circumstances have arisen since 30 June 2010 that have significantly affected or may significantly affect the Group's operations in future financial years, or the results of those operations in future financial years, or the Group's state of affairs in future financial years.
A discussion of trends in performance
Intec's corporate strategy is to acquire interests in the processing of minerals and secondary resources, including industrial wastes, where its technology creates additional value.
There are no franking credits available.
The Company is not expected to declare a dividend in the short term.
Compliance statement
The financial report is based on accounts which are in the process of being audited. The audit report is expected to contain qualifications in respect of the carrying value of the Burnie Research Facility, the Hellyer royalty, the estimation of the liabilities in relation to stockpiles of EAFD and the carrying value of the Company's shareholding in Green Resources. A reference in relation to significant uncertainty regarding continuation of the Group as a going concern is also expected.
The entity has a formally constituted audit committee.
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Date: 30 August 2010 Managing Director & Chief Executive Officer Print name: Philip R Wood